GAO-04-819R FEMA Accountability Over Property 

United States Government Accountability Office

Washington, DC 20548 

July 15, 2004 

The Honorable Tom Ridge 

The Secretary of Homeland Security 

Subject: Federal Emergency Management Agency: Lack of Controls and Key 

Information for Property Leave Assets Vulnerable to Loss or Misappropriation

Dear Mr. Secretary: 

As you know, prior to the transfer of the functions of the Federal Emergency 

Management Agency (FEMA), effective March 1, 2003, to the newly established 

Department of Homeland Security (DHS) within the Emergency Preparedness and 

Response Directorate (EP&R), FEMA was one of 24 Chief Financial Officers (CFO) 

Act agencies required to obtain annual financial statement audits.1

 While DHS 

obtained a financial statement audit covering the period from March 1 through 

September 30, 2003, no financial statement audit was performed for FEMA activities 

for the 5 months prior to March 1, 2003. For fiscal year 2001, FEMA received a 

qualified audit opinion,2 which was due mostly to the auditor’s inability to determine 

the accuracy of the amount reported for FEMA’s equipment as well as other property 

issues. A major contributing factor was the lack of a property management system 

that adequately met FEMA’s accounting needs or Joint Financial Management 

Improvement Program (JFMIP) requirements .

3

 Although FEMA received an 

unqualified opinion from its auditor in fiscal year 2002, the auditor reported six 

material weaknesses4 (one relating to its real and personal property system 

processes) and one reportable condition5

 as well as significant year-end adjustments 

made to property accounts. Furthermore, the audit report noted that FEMA did not 

have policies and procedures in place to ensure the accuracy of data recorded in its 

personal property system, the Logistics and Information Management System 

 

1

See 31 U.S.C. §§ 901(b), 3515(a), 3521(e) (2000). 

2

A qualified opinion states that except for the effects of the matter to which the qualification relates, the financial statements 

present fairly, in all material respects, the assets, liabilities, net position, net costs, changes in net position, budgetary resources, 

reconciliation of net costs with budgetary obligations, and custodial activities (if applicable) in conformity with U.S. Generally 

Accepted Accounting Principles. 

3

The Joint Financial Management Improvement Program (JFMIP) is a joint and cooperative undertaking of the U.S. Department 

of the Treasury, the General Accounting Office, the Office of Management and Budget, and the Office of Personnel Management 

working with each other and other agencies to improve financial management practices in government. 

4

A material weakness is a condition that precludes the entity’s internal control from providing reasonable assurance that 

misstatements, losses, or noncompliance material in relation to the financial statements or to the stewardship information 

would be prevented or detected on a timely basis. 

5

Reportable conditions are matters coming to an auditor’s attention that, in their judgment, should be communicated because 

these represent significant deficiencies in the design or operation of internal control that could adversely affect the federal

government’s ability to meet the internal control objectives. 
Page 2 GAO-04-819R FEMA Accountability Over Property 

(LIMS).6 Appendix I categorizes the weaknesses identified in FEMA’s fiscal year 2002 

audit report into nine general areas for which personal property controls need to be 

improved. 

The previously reported weaknesses as well as the very nature of FEMA’s mission, 

disaster response, which entails the acquisition of new personal property, sometimes 

very quickly, raise the risk that property may have been acquired but not recorded in 

LIMS and not accounted for by FEMA in the interim 5 months before the agency 

functions were transferred to DHS. As such, given the past weaknesses and risks 

surrounding FEMA’s property management, the objectives of our review were to 

determine (1) whether controls were in place to ensure that property acquired during 

the 5 months prior to FEMA transferring its functions to DHS was properly accounted 

for in LIMS and (2) whether FEMA has corrected previously reported property 

management weaknesses. 

To accomplish this work, we reviewed DHS’s fiscal year 2003 Performance and 

Accountability Report, FEMA’s fiscal year 2002 Performance and Accountability 

Report, reports by FEMA’s Office of Inspector General (OIG) and Independent Public 

Accountants; performed walkthroughs of FEMA’s acquisition and property 

management functions; and conducted interviews with relevant FEMA officials. 

FEMA officials provided oral comments to this report, which are summarized in the 

agency comments and our evaluation section. We conducted our review from 

October 2003 to June 2004 in accordance with U.S. generally accepted government 

auditing standards. 

Results in Brief

FEMA continues to lack the controls and key information necessary to ensure that 

personal property is properly accounted for. Accordingly, we were unable to perform 

statistically based testing to conclude whether or not FEMA properly accounted for 

property acquired during the 5 months prior to transferring its functions to DHS. We 

attempted to manually trace property items from the acquisition system and related 

documentation to the property system. Because these systems do not share common 

data identifiers such as serial numbers, purchase order numbers, and the like, we 

were unable to complete our tests of individual items. 

Absent integrated or adequately interfaced systems with the key information 

necessary to track and account for property, accountable and sensitive property is 

highly vulnerable to loss or misappropriation. For example, FEMA’s current property 

system, LIMS, does not interface with the acquisition or financial systems, and lacks a 

common data identifier, such as a serial number or invoice number, which would 

allow managers to track property from its acquisition to its receipt and entry in the 

property system through disposal. In addition, while the original acquisition date was 

recorded in LIMS, users of the system were able to change that date and frequently 

did so to reflect when items were transferred to other locations. 

 

6

Federal Emergency Management Agency, Annual Performance and Accountability Report Fiscal Year 2002 (Washington, 

D.C.: Jan. 24, 2003).
Page 3 GAO-04-819R FEMA Accountability Over Property 

FEMA has not corrected its reported weaknesses related to property and equipment. 

Its property system is still not JFMIP compliant. Although new data fields have been 

added to address compliance, the systems holding the data needed to populate those 

fields are not linked to LIMS and thus, do not routinely share information. While 

processes have been developed to transfer information for certain data fields 

manually, it has only been done for capitalized property, which makes up less than 1 

percent of property items and roughly 20 percent or $73 million of the total property 

value in LIMS. FEMA’s fiscal years 2001 and 2002 auditors reported material 

weaknesses related to FEMA’s accounting for real and personal property, and we 

reiterated these weaknesses in our fiscal year 2003 Performance and Accountability 

Series.7 In addition, due to the reduced materiality of FEMA’s real and personal 

property for financial statement audit purposes, these weaknesses were not included 

in the DHS’s departmentwide audit report. Instead, the material weaknesses were 

included in an observations and recommendations comment provided to EP&R 

management. Due to decreased visibility of this issue and the seriousness of these 

problems given the nature of FEMA’s operations, immediate corrective actions are 

warranted, so that these problems do not continue to grow or assets are not 

unnecessarily vulnerable to loss or misappropriation. 

This report makes six recommendations for actions, that, if fully implemented, 

should help FEMA and, consequently, DHS, better protect and account for its 

accountable and sensitive property. We obtained oral comments on a draft of this 

report from FEMA officials. They generally agreed with our conclusions and 

recommendations, but stated that some of the actions called for are already in place. 

As such, we have incorporated changes to emphasize that the appropriate officials 

not only receive the inventory certifications and documentation, but also review, 

follow-up on, and maintain them. FEMA officials also provided technical comments, 

which we incorporated as appropriate. 

Background 

Effective March 1, 2003, the functions of FEMA were transferred to the Department 

of Homeland Security (DHS) within the Emergency Preparedness and Response 

(EP&R) Directorate. Prior to the transfer to DHS, FEMA was one of the 24 CFO Act8

agencies required to obtain annual financial statement audits. Now that it is a 

component of DHS, however, it is no longer subjected to annual, stand-alone audits. 

Further, because its real and personal property issues are much smaller in scope 

compared to other agencies and components transferred to DHS, such as the U.S. 

Coast Guard, FEMA’s property is deemed less material for agencywide financial 

statement audit purposes, which results in less rigorous audit procedures and 

reviews than when it was a stand-alone agency. 

In fiscal years 2001 and 2002, when it was a stand-alone agency, the auditors reported 

that, among other things, FEMA did not have policies and procedures in place to 

ensure the accuracy of data recorded in its property system. This system, LIMS, was 

 

7

U.S. General Accounting Office, Major Management Challenges and Program Risks: Federal Emergency Management Agency,

GAO-03-113 (Washington, D.C.: Jan. 24, 2003). 

8

See 31 U.S.C. §§ 901(b), 3515(a), 3521(e) (2000). 
Page 4 GAO-04-819R FEMA Accountability Over Property 

developed in-house for the special property tracking needs of FEMA’s disasterrelated recovery mission. Since its inception in 1993, the software has been updated 

several times, resulting in different versions. LIMS II, which was implemented in 

2001, was the version in place at the time of FEMA’s transfer to DHS. According to 

FEMA officials, it was run on obsolete system software, was not JFMIP compliant, 

and was limited in functionality. Further, each regional office had its own separate 

property database, which meant that there were 31 different databases. Thus, 

managers could not effectively oversee the overall property inventory. According to 

one FEMA official, the system contained a financial module, but use of the module 

was optional because the accounting system of record was Integrated Financial 

Management Information System (IFMIS), an entirely different system; thus, the 

module was rarely used. 

Over the course of fiscal year 2002, FEMA took steps to improve its property 

accounting. For example, FEMA hired contractors to conduct an agencywide 

inventory of capitalized personal property (property valued at $25,000 or greater) to 

ensure the correct reporting of equipment and related depreciation. Based on 

inventory results, FEMA recorded prior period adjustments that increased equipment 

acquisition costs and related depreciation by $74.5 million and $71.7 million, 

respectively. In addition, FEMA had planned to acquire a new JFMIP-compliant 

acquisition system in fiscal year 2002, but plans to do so were placed on hold because 

of an OMB moratorium on technology investments for agencies transferring activities 

to DHS. Shortly after the transfer to DHS (April 2003), FEMA installed its next 

iteration of the LIMS system, LIMS III, which was designed to be a more complete 

and accountable system. It is a Web-based system that combines all of the 31 

formerly separate property databases into one system and includes enhancements, 

that, if properly implemented, would allow the system to be JFMIP compliant, 

according to FEMA officials. 

According to FEMA guidance prior to FEMA’s transfer to DHS, capitalized property9

was defined as property over $25,00010 and accountable property was property 

costing over $5,000 or that FEMA determined to be “sensitive.”11 FEMA guidance 

stated that these items are subject to special control and safeguards and will be 

accounted for and controlled through the use of a custody receipt,12 and the agency’s 

property system (i.e., LIMS). These items include items such as pagers, cellular 

telephones, personal digital assistants, electronic test equipment, hand tools, and 

personal computers. 

 

9

Capitalized property refers to nonexpendable property (excluding stewardship property, plant, and equipment) with a useful life

of 2 years or more and an acquisition cost above a predetermined dollar value threshold. 

10This threshold was increased to $50,000 by DHS. 

11FEMA defines sensitive property as accountable property (regardless of original acquisition cost), that is highly susceptible to 

misuse, loss, or theft, and will be accounted for and controlled through the use of LIMS. An annual physical inventory and a 

complete audit trail from receipt to final disposition are required for sensitive equipment. 

12Custody receipts are used when property is issued or delivered to a recipient, who is to sign for the items, retain a copy, and

return the signed original to the issuer to file. 
Page 5 GAO-04-819R FEMA Accountability Over Property 

Scope and Methodology 

To determine what controls were in place to ensure that property acquired during the 

5 months prior to FEMA’s transfer to DHS was properly accounted for in LIMS, we 

obtained property data for fiscal year 2003 from FEMA’s Property Management Unit, 

which was extracted from LIMS II, the version in place at the time of transfer. We 

attempted to verify the completeness and validity of the property information by 

comparing purchases recorded in the acquisition system for the 5-month period prior 

to its transfer to DHS, from October 1, 2002 to March 1, 2003 to entries in the LIMS 

system for the corresponding period. We determined that FEMA’s acquisition and 

property systems do not share data and lacked key data we needed to perform our 

tests. Therefore, we were unable to validate that purchases made over the 5-month 

period were properly recorded into LIMS. As a result, we narrowed our scope of 

review to the adequacy of controls over property management at the time of FEMA’s 

transfer and the status of previously reported property management weaknesses. 

To determine whether FEMA has corrected prior reported weaknesses, we 

performed walkthroughs of the purchasing, receiving, and property management 

processes; reviewed FEMA’s policies and procedures, as well as GAO’s Standards for 

Internal Control13 and JFMIP Guidance on Property Management Systems;14 reviewed 

reports by FEMA’s OIG and Independent Public Accountants, as well as DHS’s fiscal 

year 2003 Performance and Accountability Report and FEMA’s corrective action 

plans; and interviewed FEMA staff. FEMA officials provided oral comments to this 

report, which are summarized in the agency comments and our evaluation section. 

Our work was conducted from October 2003 to June 2004 in accordance with U.S. 

generally accepted government auditing standards. 

FEMA Did Not Have Controls in Place to Ensure Property Acquired Prior to 

Transfer Was Properly Accounted For 

GAO’s Standards for Internal Control in the Federal Government state that internal 

control monitoring should assess the quality of performance over time and ensure 

that the findings of audits and other reviews are promptly resolved. Also, internal 

control should generally be designed to ensure that ongoing monitoring such as 

comparisons, reconciliations, and other actions, occurs in the course of normal 

operations, to ensure that known weaknesses are resolved. FEMA lacks the controls 

and key information necessary to ensure property is properly accounted for in LIMS. 

Due to this lack of key information, we could not determine whether purchases made 

during the 5 months prior to its transfer were accurately recorded. We attempted to 

manually trace property items from the acquisition system and related 

documentation to the property system, but because these systems do not share 

common data identifiers such as serial numbers or purchase order numbers, we were 

unable to conduct valid tests. These weaknesses would summarily preclude FEMA 

 

13U.S. General Accounting Office, Internal Control: Standards for Internal Control in the Federal Government, GAO/AIMD-00-

21.3.1 (Washington, D.C.: November 1999). 

14Joint Financial Management Improvement Program, Federal Financial Management System Requirements: Property 

Management Systems Requirements, JFMIP-SR-00-4 (Washington, D.C.: October 2000).
Page 6 GAO-04-819R FEMA Accountability Over Property 

itself from conducting any conclusive internal assessments and therefore, there is a 

risk that property may have been purchased but not properly recorded in LIMS. 

FEMA did not perform fundamental internal control activities and track key 

information necessary to document and account for property to ensure that 

purchases made during the 5 months prior to its transfer to DHS were properly or 

accurately recorded. Timely, accurate, and useful financial information is essential 

for making day-to-day operating decisions. Maintaining the government’s operations 

more efficiently, effectively, and economically; meeting the goals of federal financial 

management reform legislation; supporting results-oriented management approaches; 

and ensuring accountability on an ongoing basis are also critical. According to the 

Joint Financial Management Improvement Program Property System 

Requirements Guide,15 property management systems must be able to track an item 

from acquisition through changes in location to disposal. The guide also states that 

the property system must forward physical receipt information including quantity and 

date of physical receipt to the acquisition system and core financial system. Thus, the 

property system should be capable of interfacing with other financial or mixed 

systems. However, we found that despite FEMA’s efforts to improve its current 

property system, LIMS III, it still does not interface or share common data identifiers 

with any of the other systems, including the financial and acquisition systems. 

Previously Reported Property Management Weaknesses Have Not Been 

Corrected 

We found that FEMA has not corrected material weaknesses related to its accounting 

for real and personal property that its auditor reported in fiscal year 2001 and again in 

fiscal year 2002; and which we reiterated in our fiscal year 2003 Performance and 

Accountability Series.16 Such weaknesses include noncompliance with JFMIP 

requirements, key systems lacking interfaces with each other, and not performing 

required annual inventories of accountable and sensitive property. Among the 

lingering issues carried over to DHS is that a number of factors have combined to 

make FEMA’s property control weaknesses less visible from a DHS-wide perspective, 

but no less severe from the perspective of FEMA operations. Therefore, EP&R must 

recognize the seriousness of these issues as it impinges on FEMA operations and 

develop a course of action to resolve or mitigate the issues. 

In fiscal year 2002, the auditor reported that FEMA did not have adequate accounting 

systems and processes to ensure that all property, plant, and equipment were 

properly recorded, accurately depreciated, and tracked in accordance with its 

policies and applicable federal accounting standards. Specifically, the independent 

auditor reported that FEMA’s personal property management system, known as 

LIMS, was not interfaced with its financial system, IFMIS, thus requiring numerous 

manual workarounds to ensure accounting information is accurately recorded. LIMS, 

used primarily to track the location and availability of equipment for its mission of 

disaster response, cannot perform accounting functions required by JFMIP. To 

address this, FEMA officials stated that data fields were added to LIMS in its most 

 

15JFMIP-SR-00-4.

16GAO-03-113. 
Page 7 GAO-04-819R FEMA Accountability Over Property 

recent upgrade (May 2003) so that the system would meet JFMIP requirements. 

Having the capability to handle accounting information did not entirely resolve this 

problem, however. During our review, we found that these data fields were not 

automatically populated because the system is not linked electronically to, and, thus, 

not able to routinely share information with, the acquisition systems or IFMIS. While 

processes have been developed to transfer some data manually, it is limited to the 

data for capitalized property, which makes up less than 1 percent of property items 

and 20 percent or $73 million of the total property value in LIMS as shown in table 1. 

Thus, data for FEMA’s accountable and sensitive property, which constitute the 

majority of the property and which, by their very nature are more susceptible to theft 

or pilferage are excluded from this process. 

Table 1: Property Totals in LIMS as of May 31, 2004 

Type of property Number of items Recorded amount

(1) Capitalized 537 $73,337,581 

Percent of total >1% 21%

(2) Accountable or sensitive 987,087 $237,005,963 

Percent of total 25% 67%

(3) Expendable 2,940,894 $45,351,881 

Percent of total 75% 13%

Total 3,928,518 $355,695,425 

Source: GAO analysis of LIMS data. 

(1) Property with an initial acquisition cost of more than $50,000 with an expected service life of 2 years or more. 

(2) Property with an initial acquisition cost of more than $5,000 or property, which by their nature are vulnerable to theft or

pilferage, for which controls and official property records are maintained and physical inventories are conducted. 

(3) Property of a low dollar value, which loses its identity when consumed or when incorporated into another item, or with an 

expected service life of less than 1 year. 

Another weakness reported in both FEMA’s fiscal years 2001 and 2002 audit reports 

is that property acquisition dates were changed when items were transferred within 

FEMA and among disaster sites to reflect the transfer dates. Thus, the original 

purpose of the data field, to show when the item was purchased, has been altered to 

cater to the needs of FEMA’s mission. 

A related problem is that LIMS does not contain data fields to record purchase order 

or invoice numbers that can be used to link property items to accounting-related and 

acquisition records. The problems outlined above contribute to weak linkages for 

substantiating the acquisition date and valuation of property, which is paramount not 

only for computing depreciation, but for overall accountability. These issues can 

contribute to financial statement implications, as was the case in fiscal year 2002 
Page 8 GAO-04-819R FEMA Accountability Over Property 

when FEMA had to record a prior period adjustment as of September 30, 2001, to 

increase equipment acquisition cost and accumulated depreciation by $74.5 million 

and $71.7 million, respectively. In general, property items should track to their 

supporting procurement information, and accounting records should correlate to any 

FEMA property located at either FEMA sites or in the custody of others. 

Although FEMA officials had hoped to acquire a new property management system, 

plans to do so were deferred in 2002 because OMB issued a systems purchase 

moratorium for agency functional areas being transferred to DHS. To help address its 

issues regarding accountability over property, FEMA hired contractors to perform an 

inventory of its capitalized property in 2002. The contractor found 11 specific areas 

that they believed “warranted further attention by FEMA to ensure the completeness 

and accuracy of the agency’s capital property.” One of the areas noted was the need 

for FEMA to complete a wall-to-wall inventory of all property. The contractors 

reported that a significant number of items were identified during the inventories that 

were not in LIMS. According to the report, it “seems that when headquarters requests 

an inventory of capitalized equipment, typically the field simply ‘prints’ what is in 

LIMS and then validates its on-site or deployed location.” 

Such an approach does not account for or help identify noncapitalized property such 

as accountable and personal property that is not recorded in LIMS. FEMA’s weak 

inventory practices were reported on again in FEMA’s fiscal year 2002 audit report, as 

the auditor noted that some Accountable Property Officers (APO) did not check 

property on-site against LIMS records (i.e., a floor-to-book test) and that some 

locations did not provide a current or complete certified inventory17 as part of the 

baseline inventory effort. Such inventory practices cast doubt as to the completeness 

and reliability of FEMA’s property information. 

Despite agency guidance requiring annual inventories for capital, accountable, and 

sensitive property, as well as its status as an action item from its fiscal year 2002 

audit, inventories for accountable or sensitive property were not completed by all site 

locations in fiscal year 2003. One official told us this could be because FEMA wanted 

to wait until bar-coding capability was fully functional in LIMS, which would help 

provide for better and more accurate tracking of inventory, but that capability was 

never fully implemented. Also, since each region is responsible for doing its own 

inventory of capitalized and accountable property and sending a memo to FEMA 

headquarters certifying that an inventory was completed; and because the 

organizational structure for FEMA’s property management section has changed 

significantly since the fiscal year 2002 financial statement audit, according to FEMA 

officials, there may have been confusion among field staff as to the person 

responsible for receiving the memos. 

Because FEMA is just a piece of a much larger DHS and no longer receives a standalone audit, it receives much less audit attention and problems that are identified are 

not necessarily material when viewed DHS-wide. For example, FEMA control 

weaknesses found during the 2002 audit were not included in DHS’s departmentwide 

audit report, but instead were included in an observations and recommendations 

comment provided to EP&R. In addition, FEMA’s capitalization threshold was raised 

 

17According to FEMA’s Personal Property Management guidance, Property Management Officers (PMO) and APOs must certify 

that an annual inventory was accomplished as prescribed. 
Page 9 GAO-04-819R FEMA Accountability Over Property 

from $25,000 to $50,000 upon transferring its functions to DHS, which results in less 

audit coverage for property on an agencywide basis. This elevated capitalization level 

could result in an unintentional lack of accountability over property that was 

formerly required to be tracked and inventoried for financial statement purposes. A 

prime illustration of this is the previously mentioned manual transfer of the 

acquisition dates, which is currently limited to capitalized property, thus excluding 

accountable and sensitive items. Further, due to its relatively decreased prominence 

at DHS from an audit perspective, FEMA will not receive the visibility and oversight 

afforded the annual financial statement audits, as it had before transferring its 

functions to DHS. Thus, it is incumbent upon FEMA to effectively account for, track, 

and inventory all of its property to ensure that it does not lose what it has gained as a 

result of its property management improvements. 

Conclusions 

Federal agency property management systems are critical for establishing financial 

accounting and maintaining accountability over property. Such systems assist 

property managers in managing their property in accordance with missions and roles 

established by Congress. FEMA’s lack of adequate systems and processes to ensure 

that all property, plant, and equipment are properly recorded, accurately depreciated, 

and tracked not only creates an environment where property is highly susceptible to 

loss or misappropriation with little risk of detection, but also affects the accuracy of 

the property and financial information used by managers to make key agency 

decisions. Even with the improvements made thus far, the overall lack of 

transparency in FEMA’s acquisition and property management processes could result 

in highly sensitive and accountable property not being entered into the property 

system and thus not accounted for. If this situation continues over time, it could 

affect FEMA’s and ultimately DHS’s ability to effectively manage its limited resources 

and assets. This is extremely important for an organization such as FEMA whose 

mission requires it and its property to be highly versatile and mobile on a moment’s 

notice. Therefore, it is important that FEMA management establish adequate financial 

management systems and internal controls over these highly vulnerable assets. 

Recommendations for Executive Action 

In order to establish adequate internal control over property management and reduce 

vulnerability to fraud, waste, and abuse, we recommend that the Secretary of the 

Department of Homeland Security direct the Under Secretary for Emergency 

Preparedness and Response or Under Secretary for Management to take the 

following six actions: 

• Require FEMA’s property system to be linked to acquisition and financial systems 

so certain key information can be available for effective property management. 

• Require floor-to-book inventories in addition to current inventory processes. 
Page 10 GAO-04-819R FEMA Accountability Over Property 

• Develop a tracking system to ensure that all FEMA locations complete a 

comprehensive inventory of all property, including accountable and sensitive 

items, on an annual basis. 

• Reiterate and clarify property management procedures for certifying and 

documenting inventories. 

• Maintain documentation of inventory results and certifications in a central 

location at headquarters for management review. 

• Identify employees responsible for receiving, reviewing, following up on, and 

maintaining inventory certifications and results from FEMA’s field and disaster 

locations. 

Agency Comments and Our Evaluation 

We obtained oral comments on a draft of this report from FEMA officials. They 

generally agreed with our conclusions and recommendations. However, they stated 

that some of the actions called for are already in place. As a result, we have 

incorporated changes to emphasize that the appropriate officials not only receive the 

inventory certifications and documentation, but also review, follow-up on, and 

maintain them. Further, we recognize the fact that some of the actions in our 

recommendations, namely those dealing with the need for an integrated property 

management system and the issuance of policy, are now under the direction of DHS 

and will likely take time to be implemented at the departmental level. FEMA officials 

also provided technical comments, which we incorporated as appropriate. 

This report contains recommendations to you. The head of a federal agency is 

required by 31 U.S.C. 720 to submit a written statement on actions taken on these 

recommendations. You should submit your statement to the Senate Committee on 

Governmental Affairs and House Committee on Government Reform within 60 days 

of the date of this report. A written statement must also be sent to the House and 

Senate Committees on Appropriations with the agencies’ first request for 

appropriations made more than 60 days after the date of the report. 

___________________________________________________________________________ 

We are sending copies of this report to the Chairs and Ranking Members of the 

Senate Governmental Affairs Committee, the House Government Reform Committee, 

and other interested congressional committees, as well as the Director of the Office 

of Management and Budget, and other interested parties within DHS. We will provide 

copies to others upon request. This report will also be available on GAO’s Web site at 

http://www.gao.gov. 

We acknowledge and appreciate the cooperation and assistance provided by FEMA 

officials during our review. If you or your staff have any questions or wish to discuss 

this report, please contact please contact me at (202) 512-6906 or by e-mail at 

williamsM1@gao.gov or Casey Keplinger, Assistant Director, at (202) 512-9323 or by 
Page 11 GAO-04-819R FEMA Accountability Over Property 

e-mail at keplingerc@gao.gov. Major contributors to this report were Cary Chappell, 

Lisa Crye, and Saurav Prasad. 

Sincerely yours, 

McCoy Williams 

Director, Financial Management and Assurance 
Page 12 GAO-04-819R FEMA Accountability Over Property 

Appendix I: Reportable Weaknesses from FEMA’s Fiscal Year 2002 

Performance and Accountability Report 

In fiscal year 2002, FEMA’s independent auditor identified several weaknesses, which 

we have categorized into nine general areas for which personal property controls 

need to be improved (see table 2). Additionally, FEMA’s corrective actions as of May 

19, 2004 have been included. 

Table 2: Reportable Weaknesses from FEMA’s Fiscal Year 2002 Performance and 

Accountability Report

Reportable weaknesses Corrective actions as of May 19, 2004 

FEMA’s personal property management system, 

LIMS, is not interfaced with IFMIS, and requires 

numerous manual workarounds to ensure 

accounting information is accurately recorded. 

Officials participated in DHS’s eMerge2

working group November 2003 to May 2004. 

eMerge2

 stands for “electronically Managing 

enterprise resources for government 

effectiveness and efficiency.” It is a businessfocused system that seeks to consolidate and 

integrate DHS’s budget, accounting, cost 

management, asset management, 

acquisitions, and grant functions. 

FEMA does not have a property management system 

that meets its accounting needs and JFMIP 

requirements. LIMS is used primarily to track the 

location and availability of equipment. LIMS cannot 

perform the accounting functions required by 

JFMIP. 

Officials participated in DHS’s eMerge2 

working group November 2003 to May 2004. 

LIMS continues to change acquisition dates for 

equipment when items are transferred within FEMA, 

and it does not contain data fields, such as purchase 

order or invoice numbers, that link equipment to the 

accounting records. Acquisition dates are important 

for depreciation calculations. Equipment needs to be 

linked to the accounting records so that equipment 

can be substantiated as to acquisition date and 

valuation. In general, property items should track to 

supporting procurement information, and 

accounting records should correlate to any FEMA 

property located at either FEMA sites or in the 

custody of others. 

LIMS has been updated to no longer allow the 

acquisition date to be changed after its initial 

entry without the prior approval of FEMA’s 

Inventory Management Specialists. 

Although FEMA conducted an agencywide inventory 

of equipment, it has not entered all of the results into 

LIMS. As a result, baseline inventory information is 

scattered among LIMS, contractor reports, 

spreadsheets, and other non-LIMS (“cuff”) records. 

Unless LIMS is fully and completely updated and 

maintained, FEMA is at high risk of losing the ability 

to substantiate the baseline numbers it has worked 

so hard to obtain. To ensure accurate accounting 

records going forward, FEMA also will need to 

perform reconciliations and use workarounds to 

compensate for LIMS’s inability to interface with the 

accounting records and maintain acquisition dates, 

and to adjust for property acquisitions, disposals, 

• FEMA has completed an inventory of 

capitalized property

• FEMA has established a schedule for 

efforts and tasked APOs to update 

necessary data. In addition, FEMA tasked 

the Automated Inventory Control (AIC) 

group to assist and verify data.

• Issuance of regulations is pending upon 

development of eMerge2

, scheduled for 

October 2004.

• AIC verified and validated input data for 

completeness and accuracy. Oversight 

was provided by the Facilities 
Page 13 GAO-04-819R FEMA Accountability Over Property 

Reportable weaknesses Corrective actions as of May 19, 2004 

and impairments. Management and Service Division 

(FMSD).

FEMA has not fully implemented a centralized 

facilities management system. 

• FEMA completed the Real Property Asset 

Management Desk Book and Guide. 

Updates were completed in May 2004. 

• Management directives are now issued by 

DHS. FEMA is implementing process to 

review and prioritize repairs and 

improvements to real property under 

EP&R control. 

• Put a process in place for planning and 

programming future years’ budget plan. 

Fiscal years 2005-2009 developed with 

yearly revisions planned to support 

budget cycle. 

• Identified budget and accounting codes 

for programming into fiscal year 2004 

spending plan and future year budgeting 

and planning requirements. Now under 

the responsibility of FMSD. 

Although FEMA has developed processes for 

identifying, valuing, and tracking Construction in 

Process (CIP) and deferred maintenance, these 

processes have not been fully implemented. Reports 

related to CIP and deferred maintenance are to be 

submitted by accountable property officers (APOs) 

and facilities managers on a quarterly basis. FEMA, 

however, has not implemented procedures to ensure 

timely submission and proper follow-up on 

delinquent or inadequate reports. For its fiscal year 

2002 financial statements, FEMA developed the 

deferred maintenance information through a onetime engineering assessment provided by a 

contractor on a selected number of FEMA locations. 

• Annual inventory is due by the end of 

fiscal year 2004. 

• Participating in DHS Property Council. 

• Property manuals issuance on hold 

pending eMerge2 development. 

• Implemented on a quarterly basis that 

property management request and review 

CIP and deferred maintenance amounts 

are identified, validated, and tracked. 

Data for October 2003 – March 2004 is 

due June 2004. 

• Implemented on a quarterly basis the 

review of data for accuracy regarding 

property additions and deletions. 

FEMA does not have procedures to ensure that 

equipment is consistently recorded on either a 

system or a component basis. For example, the 

auditor found that some regions recorded servers as 

a single unit in LIMS, while other regions entered the 

components of the server as individual items in 

LIMS. Therefore, servers might be recognized as a 

capitalizable item in one region but not in another 

because the individual components were under the 

capitalization threshold. Also, the auditor found that 

equipment sometimes was recorded twice – once as 

part of a system, and once as a component. 

Specifically, the auditor found equipment in FEMA's 

mobile response vehicles that was sometimes 

double-counted in LIMS–once as part of the vehicle, 

and once as a component. This situation made it 

more difficult to obtain an accurate inventory 

valuation. 

• FEMA has completed an inventory of 

capitalized property. 

• Established a schedule for efforts and 

tasked APOs to update necessary data. 

Tasked the AIC group to assist and verify 

data. 

• Issuance of regulations is pending upon 

development of eMerge2

, scheduled for 

October 2004. 

• AIC verified and validated input data for 

completeness and accuracy. FMSD 

provides oversight. 
Page 14 GAO-04-819R FEMA Accountability Over Property 

Reportable weaknesses Corrective actions as of May 19, 2004 

FEMA does not have procedures to ensure that 

property inventories are performed properly. To 

establish a baseline inventory, FEMA required its six 

APOs to perform equipment inventories. A FEMA 

contractor then validated these inventories. During 

its review, the auditor found that some regional 

inventories were not performed properly, a finding 

consistent with the validation contractor's findings. 

For example, some APOs did not check property onsite against LIMS records; i.e., they did not do a 

"floor-to-book" test. The auditor also identified 

several locations that did not provide a current or 

complete certified inventory as part of the baseline 

inventory effort. These omissions indicate that the 

required annual inventories that APOs are to 

perform might also be incomplete. 

Property manuals issuance is on hold pending 

further eMerge2

 development. Issuance of 

further agency directives is now under the 

purview of DHS. 

FEMA does not have procedures to ensure that 

equipment is consistently recorded on either a 

system or a component basis. For example, the 

auditor found that some regions recorded servers as 

a single unit in LIMS, while other regions entered the 

components of the server as individual items in 

LIMS. Therefore, servers might be recognized as a 

capitalizable item in one region but not in another 

because the individual components were under the 

capitalization threshold. Also, the auditor found that 

equipment sometimes was recorded twice – once as 

part of a system, and once as a component. 

Specifically, the auditor found equipment in FEMA's 

mobile response vehicles that was sometimes 

double-counted in LIMS–once as part of the vehicle, 

and once as a component. This situation made it 

more difficult to obtain an accurate inventory 

valuation. 

• FEMA has completed an inventory of 

capitalized property. 

• Established a schedule for efforts and 

tasked APOs to update necessary data. 

Tasked the Automated Inventory Control 

(AIC) group to assist and verify data. 

• Issuance of regulations is pending upon 

development of eMerge2

 scheduled for 

October 2004. 

• AIC verified and validated input data for 

completeness and accuracy. Oversight by 

FMSD. 

FEMA does not have procedures to ensure that 

property inventories are performed properly. To 

establish a baseline inventory, FEMA required its six 

APOs to perform equipment inventories. A FEMA 

contractor then validated these inventories. During 

its review, the auditor found that some regional 

inventories were not performed properly, a finding 

consistent with the validation contractor's findings. 

For example, some APOs did not check property onsite against LIMS records; i.e., they did not do a 

"floor-to-book" test. The auditor also identified 

several locations that did not provide a current or 

complete certified inventory as part of the baseline 

inventory effort. These omissions indicate that the 

required annual inventories that APOs are to 

perform might also be incomplete. 

Property manuals issuance is on hold pending 

eMerge2

 development. Further any issuance 

of agency directives is now under the purview 

of DHS. 
Page 15 GAO-04-819R FEMA Accountability Over Property 

Reportable weaknesses Corrective actions as of May 19, 2004 

FEMA does not have procedures to ensure that all 

equipment is entered into LIMS. Based on the 

auditor’s inquiries of the APOs and FEMA 

management, they verified that two significant 

equipment items had never been entered into LIMS, 

although various FEMA programmatic offices 

monitored this equipment. As a result, their related 

acquisition cost, accumulated depreciation, and net 

book value had never been reflected in FEMA's 

financial statements. Specifically, radio 

communication equipment located throughout the 

United States, as part of FEMA's National Radio 

System (FNARS) and government-furnished 

equipment (GFE) located at a contractor site, had 

never been entered into LIMS. The acquisition cost 

of the FNARS and GFE property items were valued 

at $27,876,000 and $882,000, respectively. 

• Annual inventory is due by the end of 

fiscal year 2004. 

• Participating in DHS Property Council. 

• Property manuals issuance on hold 

pending eMerge2

 development. 

• Implemented on a quarterly basis that 

property management request and review 

that CIP and deferred maintenance 

amounts are identified, valid, and 

tracked. Data for October 2003 – March 

2004 due June 2004. Implemented on a 

quarterly basis the review of data for 

accuracy regarding property additions 

and deletions.

Source: FEMA Annual Performance & Accountability Report Fiscal Year 2002.

(195021)