Department of Homeland Security 

Office of Inspector General 

Opportunities to Improve FEMA's 
 

Disaster Closeout Process 
 

OIG-10-49 January 2010 
Office of Inspector General 

U.S. Department of Homeland Security

 Washington, DC 25028 

January 27, 2010 

Preface 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the Homeland Security Act of 2002 (Public Law 107-296) by amendment 

to the Inspector General Act of 1978. This is one of a series of audit, inspection, and 

special reports published as part of our oversight responsibilities to promote economy, 

effectiveness, and efficiency within the department. 

This report addresses opportunities to improve FEMA’s process for closing out declared 

disasters and reporting on the status of recovery efforts. We contracted with the 

independent public accounting firm Foxx & Company to perform the audit. The contract 

required that Foxx & Company perform its audit according to generally accepted 

government auditing standards. Foxx & Company identified areas where FEMA’s disaster 

closeout process could be improved. The report contains seven recommendations 

addressed to the Administrator, Federal Emergency Management Agency. 

Foxx & Company is responsible for the attached auditor’s report, dated December 15, 

2009, and the conclusions expressed in the report. 

The recommendations herein have been developed with the best knowledge available to 

our contractor. We hope that this report will result in more effective, efficient, and 

economical operations. We express our appreciation to all who contributed to the 

preparation of this report. 

Richard L. Skinner 

Inspector General 
 December 15, 2009 

Mr. Matt Jadacki 

Deputy Inspector General for Office of Emergency Management Oversight 

Office of Inspector General 

Department of Homeland Security 

245 Murray Drive, SW, Building 410 

Washington, DC 20528 

Dear Mr. Jadacki: 

Foxx & Company performed an audit of FEMA’s disaster closeout process. The audit 

was performed according to Task Order No. TPDFIGBPA070007, dated September 30, 

2008. 

This report presents the results of the audit and includes recommendations to help 

improve the timeliness of FEMA’s disaster closeouts and its reporting on the status of 

disaster recovery activities. 

Our audit was conducted according to applicable Government Auditing Standards, July 

2007 revision. The audit was a performance audit as defined by Chapter 1 of the 

Standards, and included a review and report of program activities with a compliance 

element. We did not perform a financial audit, the purpose of which would be to render 

an opinion on the agency’s financial statements. 

We appreciate the opportunity to have conducted this audit. Should you have any 

questions, or if we can be of any further assistance, please call me at (513) 639-8843. 

Sincerely, 

Foxx & Company 

Martin W. O’Neill 

Partner 
Table of Contents/Abbreviations 
 

Executive Summary...........................................................................................................1
 


Background ........................................................................................................................2
 


Results of Audit..................................................................................................................6
 


Need for Leadership in FEMA’s Disaster Closeout Process.........................................6 
 

Recommendation ...........................................................................................................8
 


Management Comments and Contractor Analysis ........................................................9 
 

Opportunities to Improve the Closeout Process.............................................................9 
 

Recommendations........................................................................................................14 
 

Management Comments and Contractor Analysis ......................................................15
 


Appendixes 

Appendix A: Purpose, Scope, and Methodology.......................................................16 
 

Appendix B: Declarations and Closures, FY 1989 Through FY 2008......................18 
 

Appendix C: Disasters With Obligation Balances as of September 30, 2008...........19 
 

Appendix D: Management Comments on the Draft..................................................20 
 

Appendix E: Report Distribution ..............................................................................22 
 

Abbreviations 

CFR Code of Federal Regulations 
 

DHS Department of Homeland Security 
 

FEMA Federal Emergency Management Agency 
 

FOUO For Official Use Only 
 

GAO Government Accountability Office 
 

HMGP Hazard Mitigation Grant Program
 


HMTAP Hazard Mitigation Technical Assistance Program
 


NEMIS National Emergency Management Information System
 


PA Public Assistance/Public Assistance Grant Program
 


OIG Office of Inspector General 
 

SOP standard operating procedure 
 

TAC Technical Assistance Contract 
 

USC United States Code 
 
OIG
 


Department of Homeland Security 

Office of Inspector General 

Executive Summary 

Foxx & Company audited the Federal Emergency Management 

Agency’s process for closing declared disasters. The audit assessed 

aspects of the process including the agency’s policies, internal controls, 

and practices. It focused on determining whether the agency was 

closing disasters in a timely manner. The audit fieldwork was 

completed in June 2009. 

Improvements are needed to close disasters in a timely manner and to 

reduce administrative costs associated with disasters that should have 

been closed sooner. An agency-wide internal control environment with 

effective leadership and priority did not exist for timely closeout. As a 

result, disasters, programs, and projects stayed open unnecessarily for 

long periods of time. Headquarters and regional management officials 

need to emphasize the need for timely closeouts of disasters. The 

emphasis on closing disasters depends on the interests and priorities of 

individual management officials throughout the Federal Emergency 

Management Agency. 

Delays in closing disasters start at the grantee level and continue through 

final processing at agency headquarters. Several opportunities exist to 

improve the closeout process and expedite the release of unneeded 

obligations resulting in timely disaster closures. The opportunities 

include establishing time standards for the process, developing a system 

to track the progress of closeouts, ensuring that Technical Assistance 

Contracts are reconciled in a timely manner, closing FEMA/State 

Agreements when the state has completed its disaster recovery activities, 

establishing cost-beneficial “floors” for expenditure reconciliations, and 

establishing a system for communicating disaster closeout best practices 

throughout the agency. 

We are making seven recommendations to strengthen the internal 

control environment and improve key aspects of the agency’s process 

for closing disasters. The Federal Emergency Management Agency’s 

response is summarized and evaluated in the body of this report and 

included in its entirety as Appendix D. 

FEMA’s Disaster Closeout Process Can Be Improved 


Page 1 

Background 

The Federal Emergency Management Agency (FEMA) was 

created in 1979 by Executive Order as an independent agency for 

the centralization of emergency functions. FEMA’s mission is to 

lead the effort to manage federal response and recovery efforts 

following any national incident. On March 1, 2003, FEMA 

became part of the Department of Homeland Security (DHS). 

When natural disasters occur, it is the responsibility of the local 

community and then the state to respond. When their combined 

efforts are not sufficient to respond effectively to the direct results 

of the disaster, the Governor may request federal assistance. The 

Robert T. Stafford Disaster Relief and Emergency Assistance Act 

(Public Law 93-288), as amended (Stafford Act), governs 

assistance. The Stafford Act (42 USC 5122) authorizes the 

President to provide assistance to individuals, state and local 

governments, and certain private nonprofit organizations to help 

them respond to and recover from a disaster. The Stafford Act also 

authorizes funds for hazard mitigation. 

The Code of Federal Regulations (CFR), Chapter 1 Part 13, 

establishes the requirements for FEMA to follow in awarding 

grants to states and other grantees under FEMA/State Agreements. 

The requirements for closeouts are contained in 44 CFR 13.50. 

FEMA and other federal agencies and departments are to follow 

the Standards for Internal Control in the Federal Government 

GAO/AIMD-00-21.3.1 (11/99). These standards state that internal 

controls should provide reasonable assurance that an agency’s 

objectives for the effectiveness and efficiency of operations, 

including the use of the entity’s resources, are achieved. 

After the President declares a disaster, obligations are made in the 

Disaster Relief Fund based on estimated expenses. A disaster can 

have many categories of expenses, including contracts, grants, and 

administrative costs. Major infrastructure repairs (such as those to 

bridges, roads, and public buildings) may require years to 

complete. According to FEMA procedures, disaster closeout 

occurs once the FEMA/State Agreement has been completed and 

closed, and all expenses and grants have been disbursed and 

reconciled. 

FEMA’s Disaster Closeout Process Can Be Improved 


Page 2 

Types of Disaster Declarations 

Presidential declarations can include declarations for major 

disasters, emergencies, and fires. Each type of declaration has its 

own requirements and types of assistance. 

Major Disaster Declaration: A major disaster can include any 

natural catastrophe (including hurricane, tornado, storm, high 

water, wind-driven water, tidal wave, tsunami, earthquake, 

volcanic eruption, landslide, mudslide, snowstorm, or drought). 

Major disasters can also include any fire, flood, or explosion. If 

the President determines that any of these events in any part of the 

United States causes damage of sufficient severity and magnitude, 

he can authorize major disaster assistance under the Stafford Act to 

supplement the efforts and available resources of states, local 

governments, and disaster relief organizations in alleviating the 

damage, loss, hardship, or suffering caused thereby. 

Emergency Declaration: When the President determines that 

federal assistance is needed immediately to provide short-term 

assistance essential to save lives, to protect property and public 

health and safety, or to lessen or avert the threat of a catastrophe, 

he can declare an Emergency Declaration. The assistance usually 

supplements state and local efforts in providing emergency 

services. The amount of emergency assistance is capped at $5 

million per single event. 

Fire Management Declaration: When FEMA determines that a 

fire or fires threaten such destruction as would constitute a major 

disaster, assistance—including grants, equipment, supplies, and 

personnel—may be authorized to any state for the suppression of 

any fire on publicly or privately owned forest or grassland (42 

USC 5187). 

FEMA’s assistance to grantees (states, territories and tribes) comes 

from combinations of grant programs, depending on the type of 

disaster and extent of damage. The authorizations and 

responsibilities for managing these programs are specified in an 

agreement between the grantee and FEMA (44 CFR 206.32). This 

FEMA/State Agreement must be completed before funding is 

provided for disaster grant programs. The Public Assistance Grant 

Program (PA) and the Hazard Mitigation Grant Program (HMGP) 

have the longest periods of performance and are the programs most 

likely to delay the closure of disasters. Because of their relatively 

short period of performance, Individual Assistance programs 

typically do not delay the closure of disasters. Consequently, this 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 3 
audit concentrated primarily on the closeout process for the PA and 

HMGP. 

The PA and HMGP Closeout Processes 

The PA and HMGP have a common sequence of closure activities 

(see Figure 1). This sequence assumes that the closure of the 

disaster was not influenced by the closure of the Individual 

Assistance Program (if one was declared for the disaster). As 

indicated in Figure 1: 

�

�

�

�

Individual projects are managed by applicants and each 

project is separately closed by FEMA and the state when all 

of the costs associated with the project have been 

reconciled with supporting documentation. 

Applicants are closed when all of the applicant’s projects are 

closed and the applicant’s administrative allowance expenses 

have been reconciled to supporting documentation. 

When all of the disaster’s applicants are closed, the 

program can be closed. Programs are closed when the 

state’s administrative costs have been reconciled with 

supporting documentation. 

When all declared programs within a disaster are closed, 

the disaster can be closed. 

Figure 1. Sequence of Closeouts 

The applicable FEMA regional office manages the closeout 

process until the declared programs are closed and the state has 

agreed that the disaster can be closed. For this audit, we 

considered a program’s closeout process to be started when the 

first project was completed and ready for final inspection. 

The FEMA region’s reconciliations of declared programs’ and 

grantee administrative costs must be completed before a request to 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 4 
close the FEMA/State Agreement can be sent to FEMA 

headquarters. The region reconciles the grantee’s final financial 

status reports to FEMA’s financial management system and the 

federal payment system. 

When FEMA’s Finance Center receives the region’s request for 

closure of the disaster, center officials check the reconciliations 

and initiate the closure of other costs associated with the disaster, 

including the reconciliation and closure of Technical Assistance 

Contract (TAC) task orders that were awarded in support of the 

disaster recovery effort. When all costs have been reconciled, the 

FEMA/State Agreement is closed and the disaster is closed. 

Open Disasters as of September 30, 2008 

FEMA records show that there were 880 declared disasters with 

open FEMA/State Agreements as of September 30, 2008. Of this 

total, 744 had unliquidated obligation balances totaling about $16 

billion. The remaining 136 disasters were still open even though 

they had no unliquidated obligations. The disasters without 

unliquidated balances were open pending other than financial 

actions, such as appeals or delays caused by other priority work. 

Appendix B shows the total declarations by year and the closeouts 

of these declarations regardless of the year closed. For example, in 

FY 1989, 30 disasters were declared and 29 of the 30 had been 

closed as of September 30, 2008. 

Appendix C shows the number of open disasters with unliquidated 

obligation balances as of September 30, 2008, and the number of 

disasters that have been open for 10 or more years. 

FEMA’s records also show that the agency has had difficulty 

closing disasters. Because of the huge balances of obligations and 

unliquidated obligations earmarked for disaster recovery, there has 

been a high and continuous level of interest in timely closeouts 

from within Congress, the Government Accountability Office, and 

the DHS Office of Inspector General. 

FEMA management has also been concerned. In the late 1990s, 

FEMA’s Director chartered three closeout teams to assist regional 

office staff and state emergency management personnel in closing 

out funding activities for all past disasters. Other FEMA managers 

from headquarters or from within the regional offices occasionally 

have emphasized timely closeouts, but these initiatives have often 

stalled when the manager leaves or when other priorities arise. 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 5 
Results of Audit 
 

FEMA’s closeout processes and reporting system need improvements. First, an 

effective internal control environment that supports timely closeouts of projects, 

programs, contracts, and disasters does not exist, and centralized leadership is 

needed. Second, regional offices responsible for closeout activities do not have 

standard operating procedures (SOPs) for disaster closeouts. Third, delays in 

closing disasters occur at the grantee level and continue through final processing 

at FEMA headquarters. Opportunities are identified to improve the process, 

release funds in a timely manner, and expedite disaster closures. 

Need for Leadership in FEMA’s Disaster Closeout Process 

FEMA does not have an effective control environment for timely 

closeouts of projects, programs, contracts, and disasters. FEMA also does 

not have centralized management leadership for the closeout process. 

SOPs applicable to disaster programs, supporting offices, and regions for 

disaster closeouts have been or are being drafted, but they have not been 

finalized. The emphasis on closing disasters depends on the interests and 

priorities of management officials throughout FEMA. As a result, many 

disasters have remained open for long periods. 

As required by the Federal Managers’ Financial Integrity Act of 1982, 31 

USC 3512(c), the General Accounting Office (GAO) (now the Government 

Accountability Office) issued standards for internal control1

 in government. 

The standards provide the overall framework for establishing and 

maintaining internal controls for addressing major performance and 

management challenges. The standards also identify areas of greatest risk 

of fraud, waste, abuse, and mismanagement. The first standard is the need 

for a positive control environment, which is the foundation for the other 

standards established by the GAO. The control environment standard states 

that “management and employees should establish and maintain an 

environment throughout the organization that sets a positive and supportive 

attitude toward internal control and conscientious management.” 

(GAO/AIMD 00.21.3.1) 

FEMA’s weak control environment over disaster closeouts allows 

disasters to stay open for a considerable length of time after the disaster 

recovery effort has been completed. Obligated funds not needed for the 

open disasters could be deobligated and made available for use in other 

disaster relief activities. 

1

 The term “internal control” is synonymous with the term “management control” as used in Office of 

Management and Budget (OMB) Circular A-123. 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 6 
FEMA does not have a centralized process for closing out disasters, and 

the leadership resides, for the most part, within each of the 10 regional 

offices and the FEMA Finance Center. Our discussions with headquarters 

officials indicated a growing interest at the headquarters level in closing 

disasters in a timely manner. The headquarters officials with whom we 

met relied on the regional offices for disaster closeout. 

Leadership is needed at the headquarters level to establish a control 

environment that supports timely project, program, and disaster closeouts. 

Headquarters management’s commitment to timely closures of disasters 

should be visible, positive, and supportive. An effective leader at FEMA 

headquarters could provide the necessary support for closing disasters in a 

timely manner. The leader could be an individual or an Executive Council 

led by an executive officer. 

Although new disasters are a priority, FEMA officials agreed that when 

management emphasized the disaster closeout process, closeouts 

increased, as demonstrated by the establishment of closeout teams in the 

late 1990s. However, FEMA management has not consistently 

emphasized the need for timely closeouts, and FEMA has not had a good 

track record for the timely closeouts of disasters. As of 

September 30, 2008, 61 disasters with unliquidated obligation balances 

were still open 10 years or more after the disaster was declared. An 

additional 131 disasters that were closed as of September 30, 2008, had 

been open for 10 years or more from their date of declaration. 

FEMA-wide SOPs are needed to provide structure to the process and to 

establish clear boundaries for regional officials to ensure grantee 

compliance with federal requirements. In the absence of FEMA-wide 

SOPs, some regional offices have improvised their own closeout 

management processes or tracking systems. Each of the program offices 

and some of the other headquarters divisions were in the process of 

drafting SOPs for their areas of responsibility. Officials at nearly all 

locations told us that SOPs have been “being developed” for some time. 

An SOP for closing out projects, programs, and disasters, with recognition 

of individual program requirements, would significantly improve the 

closeout environment. Management’s creation and endorsement of SOPs 

would organizationally improve the closeout process. 

There is no established method to encourage best practices for disaster 

closeouts throughout FEMA. For example, in our opinion, one region has 

developed an impressive system for tracking the status of individual 

project and program closeout activities. Another region has developed a 

program to train its regional and state officials on financial closeout 

requirements. At the time of the audit, FEMA officials were not aware of 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 7 
any plans to institutionalize the tracking system or the training program 

FEMA-wide. 

To improve disaster closeout efforts, FEMA officials involved in the 

closeout process need to be held accountable for their performance. 

FEMA does not use disaster closure actions in assessing employee 

performance. Annual evaluations could include a rewards and recognition 

system that acknowledges exemplary performance of managers at all 

levels within FEMA. This could encourage creativity and extra efforts to 

close out disasters in view of conflicting priorities and shortages of 

experienced staff. 

Recommendation: 

We recommend that the Administrator, Federal Emergency 

Management Agency: 

Recommendation #1: Establish a leadership function (i.e., an 

individual, Executive Council lead by an Executive Officer, or a 

separate office) within FEMA headquarters that will: 

a.	 	Serve as FEMA’s point of contact for closeout activities; 

b.	 Be organizationally positioned to have oversight over all 

closeout actions; 

c.	 	Be responsible for developing standard operating 

procedures for the closeout process and ensure that the 

standard procedures are followed unless exceptions are 

approved because of extraordinary circumstances; and 

d.	 Establish a system for encouraging and recognizing 

efforts and successes (including best practices) of offices 

and individuals for timely closeout of disasters. 

FEMA’s Disaster Closeout Process Can Be Improved 


Page 8 

Management Comments and Contractor Analysis 

FEMA concurred with the recommendation. The administrator has 

directed the establishment of a headquarters working group to take 

proactive and appropriate actions to complete the closeout of older 

disasters. Membership in the group includes representatives from the 

Office of Chief Financial Officer, Operations (Response and Recovery), 

Mitigation, Mission Support, Grants Program, and the Office of Chief 

Counsel. The Headquarters group will work closely with the regional 

offices to give priority to closing out open disasters. The tasks of the 

group will include developing incentives for closeouts, sharing best 

practices, developing standard operating procedures and training, and 

holding senior officials accountable for performance goals. The first 

meeting of the group was held November 18, 2009. We consider this 

recommendation resolved because steps are being taken to implement it. 

However, the recommendation will remain open until FEMA provides 

evidence that it is fully implemented. 

Opportunities to Improve Closeout Process 

FEMA’s process for closing declared disasters needs improvements. 

Delays in FEMA’s disaster closeout process start at the grantee level and 

continue through final processing at FEMA headquarters. As a result, 

funds obligated for disasters but not needed by FEMA grantees are not 

deobligated and released for other uses. In addition, FEMA has incurred 

unnecessary administrative costs associated with monitoring and oversight 

of disasters that should have been closed. 

According to 44 CFR 13.50(b), within 90 days after the expiration of a 

grant, the grantee must submit financial, performance, and other reports as 

required by the grant. If the grantee does not materially comply with these 

requirements, 44 CFR 13.43 provides remedies for noncompliance. These 

remedies include temporarily withholding cash payments, suspending or 

terminating the current program award, or withholding further awards for 

the program. In addition, FEMA/State Agreements require grantees to 

comply with the provisions of the Stafford Act and FEMA’s regulations in 

44 CFR for the declared disaster assistance programs. The regulations 

include time periods for grantees to submit progress reports and close 

projects and programs. 

There were 744 declared disasters with open FEMA/State Agreements and 

unliquidated obligation balances as of September 30, 2008, as indicated in 

Table 1. 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 9 
Table 1. Disasters as of September 30, 2008 

Type of Disaster 

Major Disasters 

Emergency Declarations 

Fire Management Declarations 

Total Number of Disasters 

Number of Disasters 

550 

103 

91 

744 

The unliquidated obligations for the 744 disasters were approximately $16 

billion, and almost $500 million of the unliquidated obligations were for 

disasters that had been declared prior to 1999. 

FEMA had several sources of information on the status of disasters and on 

the status of programs and projects authorized for those disasters. These 

sources included the Disaster Financial Status Report (DFSR), the 

National Emergency Management Information System (NEMIS), and the 

Financial Information Tool (FIT) report. At the time of our audit, NEMIS 

was the automated information system used by grant program officials for 

management and oversight of the programs. The DFSR tracks the closeout 

status of programs by individual disaster. However, this information 

system did not provide alerts to notify regional staff and other FEMA 

officials when closeout or other program actions are needed to prevent or 

reduce delays in the closure of projects, programs, or disasters. According 

to FEMA officials, the processes and timing for inputting status 

information are not the same among these information systems. As a 

result, comparisons of reports from these systems at a point in time will 

show different status information for programs and projects. 

We selected 104 open disasters and met with headquarters and regional 

officials to determine why the disasters were still open. Our discussions 

with the FEMA officials and our review of applicable documentation 

identified several reasons for delays in the disaster closeout process. 

Grantee Delays 

The state administrative agency (grantee) and its approved 

applicants control when a project or program is ready to be closed. 

Delays at the grantee level have been caused by staff shortages, 

inexperienced staff, conflicting priorities, and a need for closure 

incentives, resulting in the following: 

�	 

�	 

Not completing final inspections and reconciliations of 

individual projects; 

Not requesting to close programs after all projects have been 

closed; 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 10 
 

�

�

�

	 Not reconciling program and financial requirements, including 

reconciliation of state management costs; 

	 Reluctance to return grant funds to FEMA; and 

	 FEMA-approved extensions beyond the grant performance 

period. 

Regional officials said that delays of a year or more have 

frequently been experienced at the grantee level. These delays 

constitute noncompliance with federal requirements. 

Regional Office Delays 

Regional office officials said that progress in closing projects and 

programs is not tracked, and they cannot estimate the delays that 

have occurred on specific closeout actions. The officials said that 

the volume, frequency, and types of newly declared disasters can 

significantly influence the progress made in closing older disasters. 

Delays have also occurred for the following reasons: 

�	 

�	 

�	 

�	 

�	 

�	 

A perceived lack of authority or an unwillingness within 

FEMA to compel states to comply with federal requirements; 

A perception that headquarters will not support aggressive 

actions with noncompliant grantees because the action might 

not be politically acceptable; 

Staff pulled off closeout work to respond to new disasters; 

Shortage of staff experienced in closing out projects, programs, 

or disasters; 

Lack of incentives for FEMA staff to make closeout work a 

priority; and 

Difficulties in reconciling state management cost expenditures. 

In several instances, regional officials have taken initiatives to 

improve closeout practices and reduce the time to close disaster 

programs and FEMA/State Agreements. These efforts included 

the following: 

�	 

�	 

�	 

Assisted grantee staff in completing requirements, either 

through FEMA officials visiting state offices or colocating 

FEMA staff at state offices; 

Developed tracking systems to identify when certain required 

program documents should be received from grantees and then 

followed up with grantees if the documents were not received; 

Developed performance measures for closing disaster grant 

programs and FEMA/State Agreements; and 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 11 
 

� Documented and flowcharted the closeout process for regional 

staff to use as a reference guide. 

Because FEMA regional staff perceives that they do not have the 

authority to compel states to comply with federal requirements, 

they generally are not using the enforcement provisions in 

44 CFR 13.43. Regional officials said withholding future funding 

or deobligating funds for existing grants is politically 

unacceptable. 

However, in one region a grantee was not closing programs, and 

FEMA regional officials told the grantee that, until it closed the 

programs, FEMA would not provide reimbursement for incurred 

state management costs on new disasters. According to the 

regional officials, the office also blocked a grantee’s drawdowns 

from the federal account because the grantee had not provided 

required progress reports. At the time of our audit, the impacts of 

these actions were pending final resolution. 

In another region, FEMA regional staff colocated with state 

officials to help the state fulfill closeout efforts. According to 

regional officials, this practice has produced favorable results. In 

another case, regional staff offered assistance to a state but the 

state refused the offer. Some regions, however, do not have staff 

available to provide such assistance. 

Headquarters Delays 

FEMA Finance Center and other headquarters officials attributed 

delays in closeouts at the headquarters level to the following: 

�	 

�	 

�	 

The need for more staff at the FEMA Finance Center; 

A backlog in the reconciliation of Technical Assistance 

Contracts (TAC) task orders , and 

The difficulty in reconciling disaster financial activities to the 

exact amount. 

Staff Shortages: FEMA officials said the amount of work that 

must be done at the FEMA Finance Center has increased and staff 

shortages have led to priorities that do not always favor timely 

closeouts. 

Task Order Reconciliations Backlog: FEMA officials at 

headquarters and in the regional offices cited the backlog of task 

order reconciliations as the most frequent cause of delays in the 

disaster closeout process. 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 12 
PA/TAC task orders were the only contracts that were causing 

delays in the closure of disasters at the time of our audit. FEMA 

procedures require that task orders for technical assistance be 

reconciled prior to the closure of the FEMA/State Agreement. 

Task orders are awarded under the Hazard Mitigation Technical 

Assistance Program (HMTAP) and PA’s Technical Assistance 

Contracts. Although HMTAP reconciliations were also 

backlogged a few years ago, an aggressive effort by Mitigation 

headquarters officials eliminated the backlog. 

As of April 30, 2009, 74 disasters were ready for closeout pending 

the reconciliation of task orders. Those disasters had been 

declared as early as August 1999. Although headquarters PA 

officials were trying to expedite the reconciliation process, FEMA 

officials projected that the PA/TAC task order reconciliations 

would not be current until sometime in 2010. 

TAC task orders, which are not part of the state’s recovery efforts, 

are contracts awarded directly by FEMA to support disaster 

recovery and are not paid from grant program funds awarded to the 

states. Consequently, the reconciliation and closure of TACs 

should not be a factor in determining when a FEMA/State 

Agreement is closed. A disaster should be closed when the state’s 

recovery effort has been completed and the funding for the 

declared disaster programs has been fully reconciled. 

Exact Amount Reconciliations: FEMA reconciles all disaster 

financial activities to the last dollar. Headquarters and regional 

office officials with whom we met endorsed the establishment of 

“floors” for the various closeout reconciliations activities; that is, 

the reconciliations would be considered reconciled at a dollar value 

greater than zero. The floors could be different for various types 

of activities. For example, the floor for a grant program could be 

higher than the floor for administrative allowances. Office of 

Management Budget Circular A-133 for audits of federal programs 

uses a threshold of $10,000 for reporting questioned costs in Single 

Audits. The Circular A-133 threshold could be considered in 

establishing the “floors” for closeout reconciliations. 

Some disasters are still open because very small differences remain 

unreconciled. We observed many remaining balances of less than 

$100 that had been awaiting reconciliation for several years. Of 

the 744 open disasters, 45 had less than $10 remaining to be 

reconciled. The reconciliation of disaster activities to the exact 

amount, particularly when the outstanding amounts are relatively 

small, is not a cost-effective use of FEMA resources. 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 13 
As a result of the delays in disaster closeouts at the grantee level, 

within regional offices, and at FEMA headquarters, FEMA 

continues to incur costs associated with monitoring open disasters 

that should have been closed long ago. In addition, the unliquidated 

obligation balances include funds that should be deobligated. 

Deobligation would make the unspent funds available for other uses. 

Recommendations: 

We recommend that the Administrator, Federal Emergency Management 

Agency: 

Recommendation #2: Support regional office initiatives 

compelling grantee compliance with the FEMA/State Agreement 

terms and disaster program requirements. 

Recommendation #3: Establish time standards for completion of 

key steps in the closeout process, install alerts in the appropriate 

management information systems to promote proactive action if 

delays begin to occur, and establish a system for tracking the 

progress of closeout actions. 

Recommendation #4: Revise FEMA closeout procedures to 

exclude the reconciliation of Technical Assistance Contract task 

orders and allow FEMA/State Agreements to be closed when the 

state’s recovery effort has been completed and the funding for the 

declared disaster programs has been fully reconciled. 

Recommendation #5: Establish policies and procedures that limit 

reconciliations to a level that is cost-beneficial, such as $10,000 or 

another amount acceptable to FEMA, rather than reconciling 

amounts to zero. 

Recommendation #6: Develop a system to communicate and use 

closeout best practices across FEMA regional offices, including 

colocating staff with states when appropriate, considering the 

frequency and types of disasters experienced in the region. 

Recommendation #7: Consider the re-establishment of closeout 

teams dedicated to expediting disaster closeouts. 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 14 
Management Comments and Contractor Analysis 

Appendix D contains a copy of the written comments we received from the 

FEMA Director, Office of Policy and Program Analysis. FEMA stated that 

it will provide a detailed corrective action plan for the implementation of 

each of the recommendations with its 90-day letter following the issuance of 

the final report. Therefore, these recommendations will remain open until 

the corrective action plan is received. 

FEMA’s Disaster Closeout Process Can Be Improved 


Page 15 

 

�

�

�

Appendix A 

Purpose, Scope, and Methodology 

Foxx & Company audited the Federal Emergency Management 

Agency’s process for closing declared disasters. The objective of 

the audit was to assess aspects of the process, including the 

agency’s policies, internal controls, and practices. The audit 

focused on determining whether FEMA was closing disasters in a 

timely manner. 

The scope of the audit included major disaster declarations, 

emergency declarations, and fire management declarations. The 

cutoff date for the audit was September 30, 2008. 

Sample Selection: To assess FEMA’s policies, internal controls, 

and practices for closing out disasters, we selected 104 open 

disasters and met with headquarters and regional office officials to 

determine why the disasters were still open. Foxx & Company 

initially selected a sample of 54 open disasters for inclusion in the 

audit from the September 17, 2008, FEMA Financial Information 

Tool report. FEMA’s Financial Information Tool report listed 678 

open disasters. Foxx & Company used criteria approved by the 

Office of Inspector General to select the sample. The sample 

included: 

Major disasters 39 
 

Emergency declarations 10 
 

Fire management declarations 5
 

54
 

The following criteria were used to select the sample: 

Date of declaration – 500-plus days since declaration 

Estimated damage – Highest amounts preferred 

o Amount allocated 

o Amount obligated 

o Unobligated allocations 

o Unliquidated obligations 

Grantee – Select more than one state per regional office 

After visiting FEMA headquarters and the 10 regional offices, the 

Foxx team decided to extend the sample of 54 by selecting the 5 

oldest open disasters from each region. Each region provided 

explanations for why these five disasters were still open as of 

September 30, 2008. 

FEMA’s Disaster Closeout Process Can Be Improved 

Page 16 
Appendix A 

Purpose, Scope, and Methodology 

An advance request for key documentation supporting FEMA’s 

closeout process for disasters and disaster program declarations 

was made before the entrance conference but after the OIG 

announced the audit to FEMA. The initial work included 

interviews with key FEMA headquarters and FEMA Finance 

Center officials in Washington, DC, and Berryville, VA, 

respectively. Documentation supporting the closeout policies, 

practices, and process was requested, as appropriate, from the 

officials interviewed. 

Following the initial headquarters work, the team visited each 

regional office to discuss and obtain documentation concerning the 

sample disasters and related programs. The visits were critical to 

the identification of why disasters were not being closed in a 

timely manner. 

The regional office visits identified additional information that had 

to be obtained from FEMA headquarters and Finance Center 

officials. Return visits were made to these locations to obtain the 

additional information. The fieldwork was completed when the 

draft report was presented to OIG officials for review and approval 

in July 2009. All required steps in the DHS/OIG reporting process 

were performed after the fieldwork was completed. 

The performance audit was conducted in accordance with 

Government Auditing Standards, July 2007 Revision. The 

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 supports the findings and 

conclusions based on our audit objectives. 

FEMA’s Disaster Closeout Process Can Be Improved 


Page 17 

0

20

40

60

80

100

120

140

160

89 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8

Declarations

Closures

Appendix B 

Declarations and Closures, FY 1989 Through FY 2008 

Table B-1. Declarations and Closures,
 


FY 1989 Through FY 2008 
 

Fiscal Year Declarations Closures Open 

1989 30 29 1 

1990 39 37 2 

1991 41 41 0 

1992 55 46 9 

1993 65 61 4 

1994 57 53 4 

1995 35 31 4 

1996 149 141 8 

1997 58 43 15 

1998 124 101 23 

Fiscal Year Declarations Closures Open 

1999 106 74 32 

2000 103 73 30 

2001 103 51 52 

2002 127 80 47 

2003 115 40 75 

2004 129 34 95 

2005 139 42 97 

2006 152 33 119 

2007 133 3 130 

2008 141 8 133 

Total 1901 1021 880 

Table B-1 Information in Line-Chart Format 

FEMA’s Disaster Closeout Process Can Be Improved 


Page 18 

 

 

Appendix C 

Disasters With Obligation Balances at September 30, 2008 

Table C-1. Open as of September 30, 2008 

Declarations Number Unliquidated Balance 

(millions) 

Major Disaster 550 $ 15,784.0 

Emergency 103 $ 440.5 

Fire Management 91 $ 23.9 

Total 7442 $ 16,248.4 

Table C-2. Open 10 Years or More 

Declarations Number Unliquidated Balance 

(millions) 

Major Disaster 58 $ 497.2 

Emergency 3 $ .4 

Fire Management 0 $ 0 

Total 61 $ 497.6 

2

 An additional 136 disasters without unliquidated obligation balances were open as of September 30, 2008. 
 

FEMA’s Disaster Closeout Process Can Be Improved 
 

Page 19 
 
EC 1 1 alJ9

l~"'I~_efll_"'Stno...,·

JOO t Srrn<. S\\

"'--'-" IX.' ;"O.I7!

t~,~.,FEMA

MEMORANDUM FOR: Man100acld

Deputy In~pa-tor ~l

Offite ofEmergency Management Oversight

Office of 111Spct:tor Gcncrol

FROM: David 1. Kaufman t1H _______ Director I'..... Office of Policy and Progntm Al\I1lysis

SUBJECT: Comments on OIG Dnlft Report, Opportllnities 10 Improl'e

FEMA 's Disaster CIQseorlf Process

Thank you for the opportunity to l'e\'iew and comment on the Office of Inspector

General's (OIG's) subject dnlft audit report. Tl'Chnical comments h:l\'e been provided

under separate CO\'ef. As the Fedt."r.l.l Emergency Management Agency (FEMA) works

toward refining its programs, thc alG's indcpcndt."t analysis of program pcrfonnancc

greatly benefits our ability to continuously improve our aeti\'itics.

In recognition ofsome ofthe issucs raised during your audit, and as part of our

continuing efforts to improve FEMA's administrative cfficicney. the Administrator has

directed the cstablishment of a headquarters working group to tuke proactive lind

approprimc actions to completc the c1ost."Out of older disasters. Led by the Office ofthe

Chief Financial Officer. membership on this working group includes represent:lli\'cs from

Operations (Response and Recovery), Mitigaliun. Mission Support, Grants Programs and

the Office ofChiefCounsel. They will bc responsible for insuring coordinall'd action and

facilitating the rcsolulion of problems. The Headquarters working group will work

closely with lhe regional offices to give priority 10 closing 01,11 open disasters.

Among the tasks identililxl for the 1V0rk group arc dt."Veloping inecntivcslcontrols to

t."sure faster diSllSter c1ost:out within e.~isting rcgUllitiollS. shnring best

prJeticcslmethodology lImong regions. developing standard opcrJting procedures llnd

training and holding senior officials accountable for J'l.'Tfonnance b'Oals. Closeout b'Oals

will be identified and progress will be monitored for each region.

The first mooing ofthe working group took plilce November 18. 2009. following a

presentation 10 the senior leadership on Octobt.'T 9. 2009 during which the Administrator

CJl.presst:d his support for this effort and his expectation that ffil-asurab1c progress would

be made.

....·... r~II"'4"

Appendix D 

Management Comments on the Draft Report 

FEMA’s Disaster Closeout Process Can Be Improved 
 

Page 20 
 
Page 2

FEMA ooncu.rs with the draft TCpOTt'S seven rec:orrunendations. In our 9O-day letter

followina the issuance of your final report. we will provide a detailed ooJTeCtive action

plan for implementation of each ofthe report's seven recommendations.

Thank you again for the opportunity to oomment on this draft report and we look forward

to workina with you on other- issues as we both strive to improve FEMA.

Appendix D 

Management Comments on the Draft Report 

FEMA’s Disaster Closeout Process Can Be Improved 
 

Page 21 
 
Appendix E 

Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff for Operations 

Chief of Staff for Policy 

Deputy Chiefs of Staff 

General Counsel 

Executive Secretariat 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Federal Emergency Management Agency 

Administrator 

Chief of Staff 

Chief Financial Officer 

Director, Office of Management 

FEMA Audit Liaison (Project Code DC7A03) 

Office of Management Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as appropriate 

FEMA’s Disaster Closeout Process Can Be Improved 
 

Page 22 
 
ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4100, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.