Verification Review of 

Larimer County, Colorado, 

OIG Audit Report 

(OIG-15-34-D) 

January 4, 2017 

OIG-17-16-VR 
DHS OIG HIGHLIGHTS

 Verification Review of Larimer County, 

 Colorado, OIG Audit Report (OIG-15-34-D)
 

January 4, 2017 

Why We Did 

This Review 

We conducted this 

verification review to 

assess the progress on 

two recommendations 

from our February 2015 

report, Larimer County, 

Colorado, Needs 

Assistance to Ensure 

Compliance with FEMA 

Public Assistance Grant 

Requirements (OIG-15-34-

D), and to determine 

whether FEMA’s 

corrective actions 

achieved the intended 

results. 

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 

Colorado’s technical assistance and monitoring of 

Larimer County’s (County) procurement and 

project-related activities are effective. We also 

verified that the County can document and 

account for its disaster-related costs on a projectby-project basis and that its policies and 

procedures are adequate to account for Federal 

Emergency Management Agency (FEMA) grant 

funds according to Federal regulations and FEMA 

guidelines. 

As of August 26, 2016, the approved amount for 

the County’s award had increased from 

$22.5 million to $45.2 million. Therefore, if 

Colorado’s technical assistance and monitoring 

activities continue, the County should avoid 

misspending $45.2 million of Public Assistance 

grant funds. 

FEMA Response 

Because the verification review does not identify 

any issues requiring further action from FEMA 

Region VIII, we consider this verification review to 

be closed. 

www.oig.dhs.gov OIG-17-16-VR 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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


January 4, 2017 


MEMORANDUM FOR: Nancy J. Dragani 

Acting Regional Administrator, Region VIII 

Federal Emergency Management Agency 

~lMS~ 

FROM: 	 Thomas M. Salmon 

Assistant Inspector General 

Office of Emergency Management Oversight 

SUBJECT: 	 Verification Review ofLarimer County, Colorado, 

OIG Audit Report OIG-15-34-D 

Audit Report Number OIG-17-16-D 

We conducted a verification review to assess the Federal Emergency 

Management Agency's (FEMA) progress on two recommendations from our 

February 2015 report, Larimer County, Colorado, Needs Assistance to Ensure 

Compliance with FEMA Public Assistance Grant Requirements (OIG-15-34-D). 

We periodically conduct verification reviews to evaluate progress on selected 

audit recommendations, including whether corrective actions achieved the 

intended result. 

Background 

A storm system, with record-breaking precipitation and without advanced 

warning, caused flooding, landslides, and mudslides in 18 Colorado counties, 

most significantly on September 11, and 12, 2013. The disaster caused damage 

and destruction to a significant number of homes, and resulted in the 

evacuation of 18,147 residents, 218 injuries, and 10 deaths. The President 

issued an Emergency Declaration on September 12, 2013, and then signed a 

Major Disaster Declaration (DR-4145-CO) on September 14, 2013, authorizing 

FEMA to support State and local response and begin recovery efforts. Larimer 

County, Colorado, (County) requested and received FEMA Public Assistance 

grant funds from the Colorado State Division of Homeland Security and 

Emergency Services (Colorado), a FEMA grantee, for the storm damages. The 

award provided 75 percent funding for debris removal, emergency protective 

measures, and permanent work, for 51 large and 29 small projects.1 

In January and February 2014, we advised FEMA, Colorado, and County 

officials that we would begin an audit of the County's disaster-related grant 

Federal regulations in effect at the time of the disaster set the large project threshold at 

greater than $67,500 [Notice ofAdjustment ofDisaster Grant Amounts, Vol. 77, No. 195, Fed. 

Reg. 61,423 (Oct. 9, 2012)). 

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i 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

funds. At the time of our audit, the grant totaled $22.5 million. During our 

audit, we determined that, before February 2014, the County’s policies, 

procedures, and business practices were not adequate to account for and 

expend FEMA grant funds according to all Federal requirements, and identified 

several weaknesses in the County’s policies and procedures related to 

procurement, adequate support for costs, and accounting for costs. 

Specifically, for two large projects totaling $2.6 million we reported that the 

County did not— 

 comply with Federal procurement standards in awarding $1,506,548 in 

contracts for disaster work; 

 support contract ($747,592) and force account equipment ($3,832) costs 

adequately; and 

	 maintain adequate accounting records that would allow us to trace 

$762,856 in cost reimbursement requests to the County’s accounting 

ledgers. 

Consequently, we recommended that the Regional Administrator, FEMA 

Region VIII: 

	 direct Colorado to provide additional technical assistance and monitoring 

to the County to ensure compliance with all Public Assistance grant 

requirements. Colorado’s assistance will reduce the risk of the County 

losing $22.5 million in Federal funding as a result of noncompliance with 

Federal requirements (Recommendation 1); and 

	 direct Colorado to review the $1.5 million in costs the County incurred 

for emergency work on Projects 170 and 330 to ensure the costs are 

reasonable, supported, and eligible (Recommendation 2). 

Results of Review 

Our review validated that Colorado’s additional technical assistance and 

continuous monitoring of the County’s procurement and project-related 

activities are effective. Our review also verified that the County can document 

disaster-related costs on a project-by-project basis and that its policies and 

procedures are adequate to account for FEMA grant funds according to Federal 

regulations and FEMA guidelines. As of August 26, 2016, the approved amount 

for the County’s award increased from $22.5 million to $45.2 million. 

Therefore, if Colorado’s technical assistance and monitoring activities continue, 

the County should avoid misspending $45.2 million of Public Assistance grant 

funds. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

To determine whether FEMA’s implementation of these recommendations 

achieved the intended results, we interviewed FEMA, Colorado, and County 

officials. We also reviewed the County’s policies, procedures, and business 

practices subsequent to our 2015 audit report and assessed the adequacy of 

the County’s policies and procedures to account for and expend the County’s 

contract, force account labor, and equipment costs. Additionally, we reviewed 

eight contracts totaling $24.8 million the County awarded for disaster-related 

permanent work. 

Implementation of Recommendations 

FEMA’s corrective actions met the intent of our recommendations, which we 

closed as of July 28, 2015. For recommendation 1, FEMA directed Colorado to 

provide the County with additional technical assistance and monitoring. In 

March 2015, FEMA and Colorado officials met with County officials to discuss 

improving its accounting and procurement processes. In addition, Colorado 

conducted monthly conference calls with the County to discuss its disasterrelated projects and procurement procedures that included various refresher 

workshops addressing Federal regulation requirements for soliciting small and 

minority firms and women’s business enterprises.2 

Consequently, the County revised its Comprehensive Emergency Management 

Plan to include a (1) Public Assistance Program and Financial Management 

Annex, (2) Disaster Declaration Annex, and (3) Disaster Policy (i.e., provides 

directions to all County departments on emergency actions and changes to 

existing day-to-day policies in the event of a locally declared disaster). Further, 

based on our review of the eight disaster-related contracts the County awarded, 

we determined the County complied with Federal procurement standards. 

For recommendation 2, FEMA directed Colorado to review the County’s 

$1.5 million in emergency-related costs for Projects 170 and 330. On June 13, 

2014, Colorado determined those costs were reasonable, supported, and 

eligible. In addition, the County is now able to document its disaster-related 

costs on a project-by-project basis. Therefore, if Colorado’s technical assistance 

and monitoring activities continue, the County should avoid misspending 

$45.2 million of Public Assistance funding requested for this disaster. 

Discussion with Management 

We discussed the results of our review with FEMA, Colorado, and County 

officials during our audit. We considered their comments in developing our 

final report and incorporated their comments as appropriate. We also provided 

a draft report in advance to these officials and discussed it at exit conferences 

2 44 Code of Federal Regulations (CFR) 13.36(e) 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

with FEMA and Colorado officials on October 18, 2016, and County officials on 

October 18, 2016. Because the verification review did not identify any issues 

requiring further action from FEMA, we consider this verification review closed. 

The Office of Emergency Management Oversight major contributors to this 

report are Paige Hamrick, Director; David B. Fox, Audit Manager; 

Dwight McClendon, Auditor-In-Charge; and Rodney Johnson, Auditor. 

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

Paige Hamrick, Director, Central Regional Office - North, at (214) 436-5200. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objective, Scope, and Methodology 

The objective of this verification review was to assess the progress on the two 

recommendations from our February 2015 report, Larimer County, Colorado, 

Needs Assistance to Ensure Compliance with FEMA Public Assistance Grant 

Requirements (OIG -15-34-D). The objective also included determining whether 

corrective actions on the recommendations achieved the intended results. 

We interviewed FEMA, Colorado, and County officials; gained an understanding 

of their monitoring; reviewed the County’s policies, procedures, and business 

practices both before and after our 2015 audit report; assessed the adequacy of 

the County’s revised policies and procedures to account for the County’s 

contracts and force account labor and equipment; judgmentally selected and 

reviewed transactions (generally based on dollar value); and reviewed selected 

disaster related costs for Projects 170 and 330. In addition, we reviewed 

applicable Federal regulations and FEMA guidelines and performed other 

procedures considered necessary to accomplish our objective. We did not 

perform a detailed assessment of the County’s internal controls over its grant 

activities because it was not necessary to accomplish our verification review 

objective. 

We conducted this verification review between July and October 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 

verification review objective. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based upon our verification 

review objective. In conducting this verification review, we applied the statutes, 

regulations, and FEMA policies and guidelines in effect at the time of the 

disaster. 

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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 VIII 

Audit Liaison, FEMA (Job Code G-16-037) 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

External 

Director, Colorado Department of Public Safety, Division of Homeland 

Security and Emergency Management 

Audit Liaison, Colorado Department of Public Safety, Division of Homeland 

Security and Emergency Management 

State Auditor, Colorado Office of the State Auditor 

County Manager, Larimer County, Colorado 

County Finance Manager, Larimer County, Colorado 

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