Audit of FEMA Public 

Assistance Grant Funds 

Awarded to the City of 

Pensacola, Florida 

August 16, 2017 

OIG-17-102-D 
 

 

 

 

 

 

DHS OIG HIGHLIGHTS
 

Audit of FEMA Public Assistance Grant Funds
 

Awarded to the City of Pensacola, Florida
 

August 16, 2017 

Why We Did 

This Audit 

The City of Pensacola 

(City), Florida received a 

$14.2 million Public 

Assistance grant award 

from the Florida 

Division of Emergency 

Management (Florida), a 

Federal Emergency 

Management Agency 

(FEMA) grantee, for 

damages from severe 

storms, tornadoes, 

straight-line winds and 

flooding, occurring in 

April and May 2014. 

What We 

Recommend 

FEMA should deobligate 

$587,538 of ineligible 

funding, and put those 

funds to better use. 

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 

For the projects we reviewed, the City properly accounted for 

and expended FEMA funds according to Federal regulations 

and FEMA guidelines. City officials accounted for disaster 

expenditures on a project-by-project basis; procured contracts 

for disaster work appropriately; and maintained adequate 

documentation to support the costs. 

However, FEMA mistakenly obligated $587,538 of ineligible 

funding because of a mathematical error. FEMA officials could 

not explain why no one detected this error prior to approving 

the project worksheet. 

FEMA Response 

FEMA officials agreed with our finding and recommendations. 

Appendix C includes FEMA’s written response in its entirety. 

Since FEMA has taken corrective actions to resolve all 

recommendations in this report, we consider the report 

resolved and closed with no further action required from 

FEMA. 

www.oig.dhs.gov 

OIG-17-102-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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

August 16, 2017 

MEMORANDUM FOR: Gracia Szczech 

Regional Administrator, Region IV 

Federal Emergency Management Agency 

Jd-c: _:r- FROM: John E. McCoy II 

Acting Assistant Inspector General 

Office of Emergency Management Oversight 

SUBJECT: Audit ofFEMA Public Assistance Grant Funds Awarded 

to the City ofPensacola, Florida 

Audit Report Number OIG-17-102-D 

We audited Federal Emergency Management Agency (FEMA) Public Assistance 

Program grant funds awarded to the City of Pensacola (City), Florida. As of 

September 19, 2016, the City received a Public Assistance award of $14.2 

million from the Florida Division of Emergency Management (Florida), a FEMA 

grantee, for damages resulting from severe storms, tornadoes, straight-line 

winds and flooding, occurring in April and May 2014. The award provided 

75 percent FEMA funding for debris removal, emergency protective measures, 

and permanent work. We audited four projects totaling $6.8 million (table 1), or 

48 percent of the $14.2 million award. Table 1 shows the gross and net award 

amounts before and after reductions for insurance for all projects and for those 

in our audit scope. 

Table 1: Gross and Net Award Amounts 

Gross Award Insurance Net Award 

Amount Reductions Amount 

All Projects $14,153,531 $(1,484,551) $12,668,980 

Audit Scope $ 6,801,263 $ (439,652) $ 6 ,361 ,611 

Source: FEMA and City records 

At the time of our audit, the City had not completed work on all projects and, 

therefore, had not submitted a final claim to Florida for all expenditures. 

www.oig.dhs.gov 

1 OIG- 17- 102-D 
 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Background
 

On April 28, 2014, Pensacola, the westernmost city in the Florida Panhandle, 

experienced significant flooding from as much as 23 inches of rainfall in 24 

hours. The result was high floodwaters; severe erosion and damage to 

roadways, bridges, and drainage systems; as well as structural damage to 

commercial and residential property (see figures 1 and 2). The President signed 

a major disaster declaration (DR-4177-FL) on May 6, 2014, to provide Florida 

and local governments with Federal assistance for recovery efforts from damage 

incurred during the period of April 28 to May 6, 2014. 

Figure 1: Coyle Street Road Damage 

Source: City of Pensacola 

www.oig.dhs.gov 2 OIG-17-102-D 
 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Figure 2: Vickery Community Center Flooding 

Source: City of Pensacola 

Results of Audit 

The City properly accounted for and expended FEMA funds according to 

Federal regulations and FEMA guidelines. City officials accounted for disaster 

expenditures on a project-by-project basis; procured contracts for disaster 

work appropriately, and maintained adequate documentation to support 

claimed costs. 

However, FEMA mistakenly obligated $587,538 of ineligible funding because of 

a mathematical error. FEMA officials could not explain why no one detected 

this error prior to approving the project worksheet. Therefore, we recommend 

FEMA: 

x deobligate $587,538 of ineligible costs, and put those funds to better use; 

and 

x establish adequate procedures to balance project worksheet estimates to 

avoid duplicating costs. 

Duplicate Funding - Mathematical Error 

FEMA inadvertently obligated an estimate twice when writing Project 316 for 

eligible repairs to the Vickery Community Center. This resulted in $587,538 of 

ineligible funding. Federal cost principles require costs to be necessary and 

www.oig.dhs.gov 3 OIG-17-102-D 
 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

reasonable under Federal awards.1 Further, grant funds may be used only for 

allowable costs and reasonable fees.2 

When FEMA estimated eligible repair costs for the Vickery Community Center, 

it was determined the repairs were 100 percent recoverable from the City’s 

insurer and were therefore not eligible for FEMA reimbursement. Consequently, 

FEMA reduced the repair estimate by anticipated insurance proceeds of 

$587,538, but mistakenly added repair costs again, obligating $587,538. 

Although FEMA properly deducted anticipated insurance proceeds to reflect an 

eligible repair cost of zero, the mathematical error of twice counting the repair 

cost resulted in over-funding Project 316 by $587,538. 

City and Florida officials were aware of the error; however, they did not notify 

FEMA. When we discussed our finding with FEMA Region IV officials on 

January 26, 2017, they could not provide a reason for not detecting the error 

before approving the project worksheet. After our discussion, FEMA officials 

generated Version 1 to Project 316 in April 2017, and deobligated the $587,538 

in duplicate costs. 

Recommendations 

We recommend that the Regional Administrator, FEMA Region IV: 

Recommendation 1: Deobligate $587,538 (Federal share $440,654) from 

Project 316 for duplicated costs FEMA mistakenly obligated and put those 

funds to better use. 

Recommendation 2: Establish adequate procedures to balance project 

worksheet estimates and avoid duplicating costs. 

1 2 Code of Federal Regulations (CFR) Part 225, Appendix A, Section C.1.a (Cost Principles for
 

State, Local, and Indian Tribal Governments)
 

2 44 CFR 13.22(a)
 

www.oig.dhs.gov 4 OIG-17-102-D 
 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Discussion with Management and Audit Follow-Up 

We discussed the results of our audit with the City, Florida, and FEMA officials 

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

and discussed it at the exit conference on May 1, 2017. FEMA officials 

concurred with our finding and recommendations. 

The Office of Emergency Management Oversight major contributors to this 

report are Larry Arnold, Director; Melissa Williams, Audit Manager; Alicia 

Lewis, Auditor-in-charge; Alfonso Dallas Jr., Auditor; and Tai Cheung, 

Independent Reference Reviewer. 

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

Paul Wood, Acting Deputy Assistant Inspector General, at (202) 254-4100 or 

Larry Arnold, Director, Gulf Coast Regional Office, at (228) 822-0387. 

Evaluation of Management Comments 

FEMA officials provided a written response to this report on May 25, 2017, and 

agreed with our finding and recommendations (see appendix C). FEMA has 

taken corrective action to resolve recommendations 1 and 2; therefore, we 

consider these recommendations resolved and closed with no further action 

required from FEMA. 

www.oig.dhs.gov 5 OIG-17-102-D 
 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objective, Scope, and Methodology 

We audited FEMA Public Assistance Program grant funds awarded to the City 

(Public Assistance Identification Number 033-55925-00). Our audit objective 

was to determine whether the City accounted for and expended FEMA funds 

according to Federal regulations and FEMA guidelines. 

As of September 19, 2016, the City received a Public Assistance award of $14.2 

million for damages resulting from FEMA Disaster Number 4177-DR-FL that 

occurred in April 2014. The audit covered the period April 28, 2014, through 

September 19, 2016, the cutoff date of our audit, and provided 75 percent 

funding for 22 large projects and 55 small projects.3 We audited four large 

projects totaling $6.8 million, or 48 percent of the net funds awarded to the 

City. See additional discussion about the audit scope and gross and net awards 

(p. 2 and table 1). 

We interviewed FEMA, Florida, and City officials; gained an understanding of 

the City’s method of accounting for disaster-related costs; reviewed the City’s 

procurement policies and procedures and contracting documents; judgmentally 

selected and reviewed (generally based on dollar values) project costs and 

procurement transactions for the projects in our audit scope. We also 

performed other procedures considered necessary to accomplish our objective. 

We did not perform a detailed assessment of the City’s internal controls over its 

grant activities because it was not necessary to accomplish our audit objective. 

We conducted this performance audit between September 2016 and May 2017, 

under the authority of 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. We conducted this audit by applying the statutes, 

3 Federal regulations in effect at the time of the 2014 storms set the large project threshold at 

$120,000. Federal Register Volume 79, Number 38, Page 10685, Amendment to the Public 

Assistance Program’s Simplified Procedures Project Thresholds (February 26, 2014). 

www.oig.dhs.gov 6 OIG-17-102-D 
 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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

disaster. 

www.oig.dhs.gov 7 OIG-17-102-D 
 

 

 

 

 

 

 

 

 

 

 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

Potential Monetary Benefits 

Table 2: Projects Audited and Questioned Costs 

Project 

Number 

Category of Work -

Project Scope4 

Amount 

Awarded 

Amount 

Claimed 

Questioned 

Cost 

Total 

Questioned 

Costs 

304 

C-Coyle Street-SFM 

Project $ 1,747,449 $ 1,350,212 $ 0 $ 0 

316 E-Vickery Building 1,169,633 1,316,455 587,538 587,538 

526 

D-Spanish Trail 

Pond 1,231,619 1,229,695 0 0 

569 C-Piedmont Road 2,212,910 1,978,156 0 0 

Totals $6,361,611 $5,874,518 $587,538 $587,538 

Source: Office of Inspector General (OIG) analysis of FEMA and City Records 

Table 3: Summary of Potential Monetary Benefits 

Type of Potential Monetary Benefit Amounts Federal 

Share 

Questioned Costs – Ineligible $ 587,538 $ 440,654 

Questioned Costs – Unsupported 0 0 

Totals $587,538 $440,654 

Source: OIG Analysis of findings in this report 

4 FEMA classifies disaster-related work by type: debris removal (Category A), emergency 

protective measures (Category B), and permanent work (Categories C through G). 

www.oig.dhs.gov 8 OIG-17-102-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix C 

FEMA’s Response to Report 

www.oig.dhs.gov 9 OIG-17-102-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix D 

Report Distribution List 

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 

Associate Administrator for Policy, Program Analysis, and 

International Affairs 

Audit Liaison, FEMA Region IV 

Audit Liaison, FEMA (Job Code G-16-053) 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

External 

Director, Florida Division Emergency Management 

State Auditor, Florida 

www.oig.dhs.gov 10 OIG-17-102-D 
 

 

 

 

 

 

 

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