Western Farmers Electric 

Cooperative, Oklahoma, 

Has Adequate Policies, 

Procedures, and Business 

Practices to Manage Its 

FEMA Grant 

January 10, 2017 

OIG-17-19-D 
 

 

DHS OIG HIGHLIGHTS 

Western Farmers Electric Cooperative, Oklahoma, 

Has Adequate Policies, Procedures, and 

Business Practices to Manage Its FEMA Grant 

January 10, 2017 

Why We Did 

This Audit 

Western Farmers Electric 

Cooperative (Cooperative) 

sustained $6.8 million in 

damages from winter 

storms and flooding in 

December 2015. We 

conducted the audit early in 

the grant process to identify 

areas where the Cooperative 

may need additional 

technical assistance or 

monitoring to ensure 

compliance with Federal 

regulations and FEMA 

guidelines. As of our audit 

cutoff date, FEMA had not 

obligated any funding and 

the Cooperative was still 

developing its disaster claim. 

What We 

Recommend 

The report contains no 

recommendations. 

For Further Information: 

Contact our Office of Public Affairs at 

(202) 254-4100, or email us at 

DHS-OIG.OfficePublicAffairs@oig.dhs.gov 

What We Found 

The Cooperative’s accounting policies, 

procedures, and business practices are adequate 

to account for FEMA grant funds according to 

Federal regulations and FEMA guidelines. 

Specifically, the Cooperative has an effective 

accounting system in place to ensure it accounts 

for disaster-related expenditures on a project-byproject basis and can properly support those 

expenditures. To track disaster expenditures, the 

Cooperative established accounting codes to 

track FEMA expenses once FEMA develops 

projects to fund the repairs. 

As of June 2016, Cooperative officials said they 

completed all disaster repairs using their own 

resources and contractors. Cooperative officials 

also said they do not intend to claim $4.1 million 

in contracting costs because they believe their 

contracting methodology did not fully comply 

with Federal requirements when hiring disaster 

contractors. Therefore, we did not assess the 

Cooperative’s procurement policies and 

procedures, nor review its contract costs. 

FEMA Response 

Because the audit does not identify any issues 

requiring further action from FEMA Region VI, we 

consider this audit closed. 

www.oig.dhs.gov OIG-17-19-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Washington, DC 20528 / www.oig.dhs.gov 


January 10, 2017 


MEMORANDUM FOR: George A. Robinson 

Regional Administrator, Region VI 

Federal Emergency Management Agency 

~1Vt·~ 

FROM: 	 Thomas M. Salmon 

Assistant Inspector General 

Office of Emergency Management Oversight 

SUBJECT: 	 Western Farmers Electric Cooperative, Oklahoma, Has 

Adequate Policies, Procedures, and Business Practices 

to Manage its FEMA Grant 

Audit Report Number OIG-17-19-D 

We audited the capability of Western Farmers Electric Cooperative, Oklahoma 

(Cooperative), to manage Federal Emergency Management Agency (FEMA) 

Public Assistance grant funds. We conducted this audit early in the Public 

Assistance Program process to identify areas where the Cooperative may need 

additional technical assistance or monitoring to ensure compliance with 

Federal regulations and FEMA guidelines. In addition, by undergoing an audit 

early in the grant cycle, grant recipients have the opportunity to correct 

noncompliance before they spend the majority of their grant funding. It also 

allows them the opportunity to supplement deficient documentation or locate 

missing records before too much time elapses. 

At the time of our fieldwork, FEMA and the Oklahoma Department of 

Emergency Management (Oklahoma), a FEMA grantee, had not awarded 

funding to repair $6.8 million in damages the Cooperative sustained from 

severe winter storms and flooding beginning December 26, 2015, and 

continuing through January 5, 2016. The grant award will provide 75 percent 

Federal funding for emergency and permanent work. Because the disaster did 

not impact insurable facilities, Federal regulation does not require the 

Cooperative to obtain insurance to cover similar damages in future disasters. 

Cooperative officials said they had completed all disaster-related repairs; 

however, they said they will only seek reimbursement for their own force 

account costs - labor, materials, and equipment - totaling about 

$2.7 million. Cooperative officials said they would not claim the approximately 

$4.1 million in contracting costs because they believe their contracting 

methodology did not fully comply with Federal policies and procedures when 

www.oig.dhs.gov 	 OIG-17-19-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

hiring disaster contractors. Therefore, we did not assess the Cooperative’s 

procurement policies and procedures, nor review any contract costs. 

Background 

The Cooperative, located in Anadarko, Oklahoma, is about 60 miles southwest 

of Oklahoma City, Oklahoma. With nearly 380 employees, the Cooperative 

owns and maintains more than 3,700 miles of transmission lines and 

330 substations providing electrical service to two-thirds of Oklahoma. From 

late December to early January, winter storms and flooding caused widespread 

damage to power lines throughout the service area. Cooperative officials 

worked quickly to restore power to its customers and said they completed 

disaster repairs in June 2016. 

We previously audited the Cooperative in 2006 (audit report DD-06-06, issued 

January 17, 2006) and determined that the Cooperative did not comply with 

Federal procurement standards or FEMA guidelines in awarding contracts 

worth $7.9 million for utility repair and debris removal work. 

Results of Audit 

The Cooperative has adequate policies, procedures, and business practices to 

account for FEMA Public Assistance grant funds according to Federal 

regulations and FEMA guidelines. The Cooperative has an effective accounting 

system in place to ensure it accounts for disaster-related costs on a project-byproject basis and maintains documentation sufficient to support those costs. 

According to 44 Code of Federal Regulations (CFR) 206.205(b) and the FEMA 

Public Assistance Program and Policy Guide (FEMA FP 104-009-2, January 

2016, p. 134), recipients must account for large project expenditures on a 

project-by-project basis. Also, 2 CFR 200.302(b)(3) requires subrecipients to 

maintain accounting records that adequately identify the source and 

application of Federal funds and maintain source documentation to support 

those accounting records. To track disaster expenditures, the Cooperative 

established specific accounting codes to track its FEMA-reimbursable expenses 

after FEMA assigns project numbers and obligates the funding. 

Cooperative officials said they would not claim reimbursement from FEMA for 

contracting costs because they believe their contracting methodology did not 

fully comply with Federal requirements. We discussed this decision with FEMA 

officials who said they would fund only eligible force account costs. However, if 

the Cooperative later decides to claim contracting costs and FEMA agrees to 

www.oi 3 g.dhs.gov OIG-17-XXX-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

fund those costs, FEMA should notify us so we can assess the Cooperative’s 

contracting procedures. 

Discussions with Management and Audit Follow-up 

We discussed the results of our audit with FEMA, Oklahoma, and Cooperative 

officials during our audit. We also provided a draft report in advance to these 

officials and discussed it at exit conferences with FEMA officials on 

November 17, 2016, and Cooperative officials on December 2, 2016. Oklahoma 

officials waived their right to exit on December 6, 2016. Because the audit did 

not identify any issues requiring further action from FEMA, we consider this 

audit closed. 

The Office of Emergency Management Oversight major contributors to this 

report are Christopher Dodd, Director; Chiquita Washington, Audit Manager; 

Jacob Farias, Auditor-in-Charge; and Lena Stephenson-George, Auditor. 

Please call me with any questions at (202) 254-4100, or your staff may contact 

Chiquita Washington, Audit Manager, Central Regional Office - South, at 

(214) 436-5200. 

www.oi 4 g.dhs.gov OIG-17-XXX-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objective, Scope, and Methodology 

We audited the capability of the Western Farmers Electric Cooperative, Public 

Assistance Identification Number 000-U05EF-00, to manage FEMA Public 

Assistance grant funds. Our audit objective was to determine whether the 

Cooperative’s policies, procedures, and business practices are adequate to 

account for and expend FEMA grant funds according to Federal regulations 

and FEMA guidelines for FEMA Disaster Number 4256-DR-OK, which the 

President declared on February 10, 2016. As of August 2016, the cutoff date of 

our audit, FEMA had not obligated any funding or completed its development 

of project worksheets for damages resulting from severe winter storms and 

flooding beginning December 26, 2015, and continuing through 

January 5, 2016. 

Cooperative officials said they would only seek reimbursement for force 

account costs, or about $2.7 million (see table 1). The award will provide 

75 percent Federal funding for emergency and permanent work. As of the audit 

cutoff date, the Cooperative had not submitted any reimbursement requests for 

its disaster costs. 

Table 1: Claimed Cost Reviewed 

FEMA Category of 

Work 

Disaster Costs 

Incurred Expenditures Reviewed 

F - Utilities $ 6,785,888 $2,675,454 

Source: Office of Inspector General (OIG) analysis 

We interviewed FEMA, Oklahoma, and Cooperative officials; assessed the 

adequacy of policies, procedures, and business practices the Cooperative uses 

and plans to use to account for and expend Federal grant funds; gained an 

understanding of the Cooperative’s method of accounting for disaster-related 

costs; judgmentally selected and reviewed (generally based on dollar amounts) 

disaster transactions; reviewed applicable Federal regulations and FEMA 

guidelines; and performed other procedures considered necessary to 

accomplish our objective. 

www.oi 5 g.dhs.gov OIG-17-XXX-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A (continued) 

We did not assess the Cooperative’s procurement policies, procedures, and 

business practices for compliance with Federal procurement standards 

because Cooperative officials said they would not seek reimbursement for 

contract costs. If later, FEMA obligates contracting costs or the Cooperative 

seeks reimbursement for those costs, we will assess whether we should 

conduct a follow-up review. We did not perform a detailed assessment of the 

Cooperative’s internal controls over its grant activities because it was not 

necessary to accomplish our audit objective. 

We conducted this performance audit between August and November 2016 

pursuant to the Inspector General Act of 1978, as amended, and according to 

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 upon our 

audit objective. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based upon our audit objective. In 

conducting this audit, we applied the statutes, regulations, and FEMA policies 

and guidelines in effect at the time of the disaster. 

www.oi 6 g.dhs.gov OIG-17-XXX-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

Report Distribution 

Department of Homeland Security 

Secretary 

Chief of Staff 

Chief Financial Officer 

Under Secretary for Management 

Chief Privacy Officer 

Audit Liaison, DHS 

Federal Emergency Management Agency 

Administrator 

Chief of Staff 

Chief Financial Officer 

Chief Counsel 

Chief Procurement Officer 

Director, Risk Management and Compliance 

Audit Liaison, FEMA Region VI 

Audit Liaison, FEMA (Job Code G-16-042) 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

External 

Director, Oklahoma Department of Emergency Management 

Oklahoma Legislative Auditor 

Chief Executive Officer, Western Farmers Electric Cooperative 

www.oi 7 g.dhs.gov OIG-17-XXX-D 
 

 

 

 

 

 

 

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