Department of Homeland Security 

Office of Inspector General 

Final Letter Report: 


Potential Duplicate Benefits Between 


FEMA’s National Flood Insurance Program and Housing 


Assistance Programs 


OIG-09-102 September 2009 
 

Office of Inspector General 

U.S. Department of Homeland Security

Washington, DC 20528 

 September 11, 2009 

MEMORANDUM FOR: 	 The Honorable W. Craig Fugate 

 Administrator 

Federal Emergency Management Agency 

FROM: 	 Richard L. Skinner 

 Inspector General 

SUBJECT:	 Final Letter Report: Potential Duplicate Benefits Between 

FEMA’s National Flood Insurance Program and Housing 

Assistance Programs (OIG-09-102) 

This report provides the results of our audit of business processes and supporting systems 

used by the Federal Emergency Management Agency’s (FEMA) National Flood 

Insurance Program (NFIP) and Individuals and Households Program (IHP) to manage 

flood insurance and housing assistance for disaster victims. 

We contracted with the independent public accounting firm of KPMG LLP (KPMG) to 

perform this review. The contract required that KPMG perform its review according to 

guidance from the Office of Management and Budget and the Government 

Accountability Office. KPMG identified several areas where FEMA’s business 

processes and supporting systems could be improved. Specifically, FEMA’s risk of 

paying duplicate benefits is high because of limitations in how FEMA’s business 

processes and systems collect and maintain disaster assistance data. The process and 

system limitations reduce FEMA’s ability to operate sound management controls to 

identify and prevent duplicate payments. FEMA should implement improved business 

processes, procedures, and technology solutions to standardize the data entry for its 

benefit processing systems. Further, FEMA should correct existing data element 

inconsistencies in its benefit processing systems. KPMG is responsible for this report 

and the conclusions expressed herein. 

This report contains two recommendations. Your office has concurred with the 

recommendations and has taken action to resolve the recommendations. Your office also 

noted some of the improvements FEMA has already made to reduce the potential for 

duplication of benefits between the National Flood Insurance and Housing Assistance 
Programs. In upcoming work, we will review and validate the improvements FEMA has 

made in these programs. We consider Recommendations #1 and #2 resolved and open 

and will close them when implementation is complete. 

Consistent with our responsibility under the Inspector General Act, as amended, we are 

providing copies of our report to appropriate congressional committees with oversight 

and appropriation responsibility over FEMA. The report will be posted on our website. 

Should you have any questions, please call me, or your staff may contact Matt Jadacki, 

Deputy Inspector General, Office of Emergency Oversight, at (202) 254-4100. 

2 

 

 

Results of Review 

FEMA Needs To Better Mitigate the Risk of Duplicate Payments to Comply With 

Relevant Laws and Regulations 

KPMG reviewed select Federal Emergency Management Agency (FEMA) disaster 

assistance processes, controls, and systems to determine if duplicate benefits were paid to 

victims of hurricanes Katrina, Rita, and Wilma during the period of August 29, 2005 to 

August 31, 2006. Duplication of benefits can occur under multiple scenarios, including: 

•	 Recipients of NFIP benefits also receive insurance benefits for the same disasterrelated event. If a recipient’s damaged property is insured with homeowner insurance 

or flood insurance, the benefits paid by FEMA are required to be reduced by the 

amount of the insurance proceeds. 

•	 Recipients of FEMA IHP temporary housing benefits (e.g., cash grants) also receive 

government-provided housing units (e.g., trailers, mobile homes, hotel and motel 

rooms, apartments) or home repair assistance. 

Over 7.6 million records, totaling more than $22.7 billion in benefit claims, were 

reviewed. A Computer Assisted Audit Techniques (CAATs) software tool was used to 

identify potential duplication of benefits, and our data extraction and evaluation 

methodology was consistent with relevant Government Accountability Office (GAO) 

guidance.1 

Because of limitations in how FEMA’s business processes and systems collect and 

maintain disaster assistance data, we were unable to identify and quantify potential 

duplicate benefits. More importantly, the process and system limitations reduce FEMA’s 

ability to operate sound management controls to identify and prevent duplicate payments. 

When a disaster victim applies for benefits, applicant data may be entered into one of 

several FEMA benefit processing systems. However, these systems are not interfaced 

and they accept data in different formats, resulting in significant data inconsistencies. 

Specific examples of limitations we encountered in attempting to identify potential 

duplicate benefits follow: 

•	 We identified possible duplication of benefits based on the Registration ID and 

Applicant Name data fields in the Disaster Assistance Directorate’s National 

Emergency Management Information System (NEMIS) and NFIP’s Transaction 

Record Reporting and Processing System (TRRPS). However, we were unable to 

validate whether the payments were duplicated because payment amounts and 

1

 Auditors should not assume that computer-based data are reliable. When using computer-processed data 

as evidence, staff must take steps to provide reasonable, not absolute or complete, assurance that the data 

are valid and reliable. GAO-03-273G, Assessing the Reliability of Computer Processed Data, dated 

October 2002. 

3 

payment dates did not match. In fact, many NEMIS records did not have payment 

dates. 

•	 In NEMIS, the recipient names are contained in the LAST_NAME and 

FIRST_NAME data fields, and in TRRPS the recipient names are captured in one 

field entitled INS_NAME. When there is a co-applicant (i.e., a husband and a wife 

whose names are both on the policy), both names appear as one entry in the 

INS_NAME field (e.g., “John & Jane Doe”). This makes the comparison of the name 

information cumbersome to perform. 

•	 NEMIS and TRRPS maintain the recipient address data fields differently. For 

example, in TRRPS the address may be “103 Dueberry DR. apt F,” while in NEMIS 

the same address may be “103-F Dueberry Drive.” Although these two addresses are 

the same, they do not result in matches because of the inconsistencies in the way they 

are captured in the respective systems. Such address inconsistencies are further 

compounded by the fact that FEMA uses different address correction software in 

attempts to correct address anomalies. 

As a result of these and other process and system limitations, FEMA’s risk of paying 

duplicate benefits is high. During our audit, FEMA officials voiced similar concerns in 

identifying and preventing duplicate payments because of these limitations. 

FEMA needs to better mitigate the risk of duplicate payments to comply with relevant 

laws and regulations. For example, the Robert T. Stafford Disaster Relief and Emergency 

Assistance Act (Stafford Act) requires that no person will receive disaster assistance for a 

loss which they have also received financial assistance from another benefit program or 

insurance. In addition, the Improper Payments Information Act of 2002 (IPIA) requires 

each agency to identify programs and activities that may be susceptible to significant 

improper payments. The IPIA specifically identifies duplicate payments as an improper 

payment. Further, the Clinger-Cohen Act of 1996 requires federal agencies to design an 

information technology enterprise architecture that facilitates the sharing of data to 

facilitate program management. 

Process and system limitations related to FEMA’s ability to identify and prevent 

duplicate payments have been reported at least since 2002. For example, prior to the 

formation of the Department of Homeland Security (DHS), the FEMA Office of 

Inspector General (OIG) issued the report Duplication of Benefits: National Flood 

Insurance Program and the Disaster Housing Program’s Minimal Repair Grants.

2 In 

this report, the OIG identified duplicate benefits as a significant problem for FEMA, and 

recommended that additional compatibility was needed between FEMA systems to more 

efficiently identify and prevent duplicate benefits. FEMA responded to the report by 

stating that it would: (1) work to enhance standardization and automated cross-checking 

features of the various databases used in management and administration of its programs, 

and (2) develop consistent data entry and maintenance standards for key data elements 

maintained in the NFIP and NEMIS databases, as well as develop an automated interface 

2 I-02-02, dated June 10, 2002. 

4 

and data warehouse capability to query key data elements between the systems. 

However, since the issuance of the June 2002 report, FEMA has taken no substantive 

action to implement these recommendations. Consequently, the challenges identified in 

the 2002 FEMA OIG report continue to exist. Further, in December 2006, GAO testified 

before Congress that FEMA made tens of millions of dollars of potentially improper 

and/or fraudulent payments associated with both Hurricanes Katrina and Rita.3 In a 

follow up March 2007 report, GAO recommended that FEMA develop processes for 

comparing IHP benefit data with FEMA direct housing assistance data to identify and 

prevent duplicate benefit assistance.4 

In conclusion, FEMA is at significant risk of not identifying and preventing duplicate 

benefit payments. These longstanding limitations impact FEMA’s ability to comply with 

relevant federal laws and regulations. 

Recommendations 

We recommend that the Administrator, Federal Emergency Management Agency: 

1.	 Implement improved business processes, procedures, and technology 

solutions to standardize the data entry capabilities for NEMIS, TRRPS, and 

other benefit processing systems. Key components of this improvement effort 

should be the standardization of data elements and the use of consistent 

address correction software across FEMA. 

2.	 Once the standardization procedures are established as part of 

Recommendation #1, FEMA should correct existing data element 

inconsistencies in NEMIS, TRRPS, and other benefit processing systems. 

Management Comments and OIG Analysis 

We obtained written comments from the Acting Director, Office of Policy and Program 

Analysis. We have included a copy of the comments in Appendix B. The Acting 

Director, Office of Policy and Program Analysis concurred with both recommendations 

and noted some of the improvements FEMA has already made to reduce the potential for 

duplication of benefits between the National Flood Insurance and Housing Assistance 

Programs. In upcoming work, we will review and validate the improvements FEMA has 

made in these programs. 

3

 GAO-07-252T, Hurricanes Katrina and Rita Disaster Relief: Continued Findings of Fraud, Waste, and 

Abuse, dated December 6, 2006. 

4

 GAO-07-300, Hurricanes Katrina and Rita Disaster Relief: Continued Findings of Fraud, Waste, and 

Abuse, dated March 2007. 

5 

Appendix A 

Purpose, Scope, and Methodology 

The objectives of the audit were to determine whether: (1) 

disaster victims received duplicative financial assistance from 

FEMA’s NFIP and IHP; (2) cash grants for temporary housing 

were provided to those already receiving government-provided 

housing units such as trailers, mobile homes, hotel/motel rooms, 

and apartments; (3) additional awards of government-provided 

housing units such as trailers, mobile homes, hotel/motel rooms, 

and apartments were provided to those already receiving a form 

of temporary housing assistance; and (4) cash grants for home 

replacement were provided to recipients who already received 

home repair assistance. 

The independent public accounting firm KPMG LLP (KPMG), 

under contract with the DHS OIG, performed this audit. The 

contract required that KPMG perform the audit according to 

guidance from the Office of Management and Budget and the 

GAO. The results of the review are based on interviews of 

relevant agencies, and institutions, direct observations, and a 

review of applicable data and documents. 

The fieldwork for this review was conducted between January 

2007 and February 2008. This audit was performed according to 

generally accepted government auditing standards and pursuant to 

the Inspector General Act of 1978, as amended. 

We appreciate the efforts by FEMA management and staff to 

provide the information and access necessary to accomplish this 

review. 

6 

Appendix B 

Management Comments to the Draft Letter Report 

7 

Appendix B 

Management Comments to the Draft Letter Report 

8 

Appendix C 

Report 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 

FEMA OIG Liaison (Project Code 09-051-EMO) 

FEMA Acting Assistant Administrator, Mitigation Directorate 

FEMA Assistant Administrator, Disaster Assistance Directorate 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as appropriate 

9 

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; 

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• 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. 

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