Early Warning Audit of 

FEMA Public Assistance 

Grants to Polk County 

School Board, Florida 

July 20, 2020 

OIG-20-50 
July 20, 2020
	
 

 

 

DHS OIG HIGHLIGHTS
 Early Warning Audit of FEMA Public Assistance

Grants to Polk County School Board, Florida
 

July 20, 2020 

Why We Did 

This Audit 

The DHS Office of Inspector 

General contracted with 

Cotton & Company LLP to 

conduct an audit to 

determine whether FEMA 

ensured that recipients 

(FDEM) and subrecipient 

(PCSB) established and 

implemented policies, 

procedures, and practices 

to ensure that they 

accounted for and expended 

Public Assistance grant 

funds awarded to disaster 

areas in accordance with 

Federal regulations and 

FEMA guidance. 

What We 

Recommend 

We made 13 

recommendations that, 

when implemented, should 

improve PCSB’s 

management of FEMA PA 

funds. 

For Further Information: 

Contact our Office of Public Affairs at 

(202) 981-6000, or email us at 

DHS-OIG.OfficePublicAffairs@oig.dhs.gov 

What We Found 

Cotton & Company LLP found that FEMA did not 

ensure that the Florida Department of Emergency 

Management (FDEM) monitored the Polk County 

School Board (PCSB) to ensure that it established and 

implemented policies, procedures, and practices to 

account for and expend Public Assistance (PA) grant 

funding in accordance with Federal regulations and 

FEMA guidance. Specifically, PCSB: 

 was unable to support $46,168 in spoilage 

costs; 

 received funding for $26,911 in ineligible 

contract costs; 

	 requested and disbursed funding received 

through a Florida PA grant for ineligible 

contract costs incurred under Project 2658 for 

debris removal and related costs; 

	 charged $897 in unallowable costs associated 

with ineligible fringe benefits for substitute 

employees; and 

	 charged $329 in unallowable costs, including 

fringe costs, associated with incorrect hourly 

rates for four employees. 

These deficiencies occurred because FEMA and FDEM 

did not ensure that the PCSB had adequate policies, 

procedures, and practices to manage and account for 

PA grant funds. Because of these deficiencies, there is 

an increased risk that PA program funds were 

mismanaged and used for unallowable activities. 

FEMA Response 

FEMA concurred with our 13 recommendations. We 

included a copy of FEMA’s management comments in 

their entirety in appendix B. 

www.oig.dhs.gov	 OIG-20-50 
 

 

Ms. Sondra F. McCauley 

Assistant Inspector General for Audits 

Office of Inspector General 

U.S. Department of Homeland Security 

Dear Ms. McCauley: 

Cotton & Company LLP performed an early warning audit of FEMA Public 

Assistance (PA) subgrants awarded to Polk County School Board (PCSB) for 

damages resulting from Hurricane Irma. We performed the audit in 

accordance with our Task Order No. HSIGAQ-17-A-00003, dated 

September 26, 2018. Our report presents the results of the audit and includes 

recommendations to help improve FEMA’s management of the audited PA 

subawards. 

We conducted our audit in accordance with applicable Government Auditing 

Standards, 2011 revision (the Standards). The audit was a performance audit, 

as defined by Chapter 6 of the Standards, and included a review and report on 

program activities with a compliance element. Although the audit report 

comments on costs claimed by PCSB, we did not perform a financial audit, the 

purpose of which would be to render an opinion on PCSB’s financial 

statements, or on the funds claimed in the Financial Status Reports submitted 

to the Department of Homeland Security (DHS). 

This report is intended solely for the use of the DHS Office of Inspector General 

and DHS management and is not intended to be, and should not be, relied 

upon by anyone other than these specified parties. 

We appreciate the opportunity to have conducted this audit. Should you have 

any questions or need further assistance, please contact us at (703) 836-6701. 

Sincerely, 

Michael W. Gillespie, CPA, CFE 

Partner 
Table of Contents 

Background .................................................................................................... 1
 

Results of Audit .............................................................................................. 2
 

PCSB Included Unsupported Food Spoilage and Vaccine Costs in Its 

Requests for Reimbursement .................................................................... 3
 

PCSB Requested Funding for Ineligible Contract Costs 

PCSB Used Incorrect Hourly Rates in Its Requests for Reimbursement for 

.............................. 4
 

PCSB Claimed Unallowable Fringe Benefit Costs....................................... 5
 

Force Account Labor ................................................................................. 7
 

PCSB Was Unable to Provide Documentation to Support an Estimated 

Insurance Reimbursement for FEMA-Funded Projects............................... 8
 

FDEM’s Subrecipient Monitoring Process Needs Improvement................... 9 

FEMA Comments and OIG Analysis.............................................................12 

Appendixes 

Appendix A: Objective, Scope, and Methodology.....................................14
 

Appendix B: FEMA Comments to the Draft Report .................................. 16
 

Appendix C: Summary of Potential Monetary Benefits ............................. 20
 

Appendix D: Report Distribution ............................................................. 21
 

Abbreviations 

CFR Code of Federal Regulations 

DHS Department of Homeland Security 

FEMA Federal Emergency Management Agency 

FY Fiscal Year 

FDEM Florida Department of Emergency Management 

OIG Office of Inspector General 

PA Public Assistance 

PCSB Polk County School Board 
 

PW Project Worksheet 

RFR Request for Reimbursement 
 

                                                      

Background 

The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, as 

amended, 42 U.S. Code (U.S.C.) 5121-5207 (Stafford Act) authorizes the Public 

Assistance (PA) program. Following a major Presidential disaster declaration, 

the Stafford Act authorizes the Federal Emergency Management Agency (FEMA) 

to provide PA funding for disaster relief to state, local, and tribal governments 

and to certain non-profit organizations. The Stafford Act can authorize PA 

grants, among other things, for: 

 Assistance for debris removal (Category A); 

 Assistance essential to meet immediate threat to life and property resulting 

from a major disaster (Category B); and 

 Assistance for the repair, restoration, and replacement of damaged 

facilities (Categories C-G), including certain hazard mitigation measures. 

Polk County is located in central Florida, between the cities of Tampa and 

Orlando. It is Florida’s fourth-largest geographic county, with a land mass of 

2,011 square miles. There are 154 public schools in Polk County serving more 

than 100,000 students through both traditional K-12 schools and a variety of 

other programs. On September 10, 2017, Hurricane Irma struck Polk County as 

a Category 2 storm with sustained winds of 100 miles per hour. The hurricane 

caused damage to buildings, trees, and the electrical supply causing spoilage of 

supplies. On September 10, 2017, the President issued a major disaster 

declaration for the State of Florida. 

FEMA disburses PA funds to the Florida Department of Emergency 

Management (FDEM). FDEM in turn passes funds to local subrecipients 

through FloridaPA, the web-based grant funds management system. Per 

Federal grant requirements, FDEM is responsible for monitoring subrecipients 

to ensure that they manage PA funds appropriately, in accordance with FEMA 

program guidance and other Federal grant requirements. 

As of January 31, 2019, FEMA’s Emergency Management Mission Integrated 

Environment (EMMIE) system indicated that Polk County School Board (PCSB) 

had submitted 23 Project Worksheets (PWs)1 to FEMA, requesting a total of 

$1,265,483 in PA funding. As of that date, FEMA had obligated $248,795 for 1 

of the 23 projects. 

The Department of Homeland Security (DHS), Office of Inspector General (OIG) 

engaged Cotton & Company LLP (referred to as “we” in this report) to conduct a 

performance audit of FEMA PA subaward funds awarded to PCSB for damages 

1 A Project Worksheet is the primary form used to document the location, damage description 

and dimensions, scope of work, and cost estimate for each project (Public Assistance Program 

and Policy Guide, April 2018, p.174). 

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resulting from Hurricane Irma. The overall objective of this audit was to 

determine whether FEMA ensured that Florida (the recipient) and PCSB (the 

subrecipient) established and implemented policies, procedures, and practices 

to account for and expend PA grant funds awarded for damages caused by 

Hurricane Irma in accordance with Federal regulations and FEMA guidance. 

Appendix A provides additional detail regarding the objective, scope, and 

methodology of this audit. We designed this performance audit to meet the 

objectives identified in the Objective, Scope, and Methodology section of this 

report. We conducted the audit in accordance with Generally Accepted 

Government Auditing Standards issued by the Government Accountability 

Office. We communicated the results of our audit and the related findings and 

recommendations to PCSB, FDEM, FEMA, and the DHS OIG. 

Results of Audit 

FEMA did not ensure that the FDEM monitored the PCSB to ensure that PCSB 

established and implemented policies, procedures, and practices to account for 

and expend Public Assistance (PA) program grant funding in accordance with 

Federal regulations and FEMA guidance. 

Our audit identified the following findings: 

Table 1: Results of Audit 

No. Finding 

Questioned 

Costs 

1 

PCSB Included Unsupported Food Spoilage and Vaccine 

Costs in Its Requests for Reimbursement $ 46,168 

2 PCSB Requested Funding for Ineligible Contract Costs $ 26,911 

3 PCSB Claimed Unallowable Fringe Benefit Costs $ 897 

4 

PCSB Used Incorrect Hourly Rates in Its Requests for 

Reimbursement for Force Account Labor $ 329 

5 

PCSB Was Unable to Provide Documentation to Support 

an Estimated Insurance Reimbursement for FEMAFunded Projects 

6 

FDEM's Subrecipient Monitoring Process Needs 

Improvement 

Total $ 74,305 

Source: Cotton & Company LLP results of audit testing. 

These findings are discussed in greater detail below. 

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Finding 1 – PCSB Included Unsupported Food Spoilage and Vaccine Costs 

in Its Requests for Reimbursement 

PCSB was unable to support $45,450 in food spoilage costs that it included in 

its Request for Reimbursement (RFR) for Project 1870, Spoilage. Specifically, 

PCSB requested that FEMA reimburse $248,414 in food spoilage costs that 

Polk County schools incurred as a result of power outages caused by Hurricane 

Irma. We reviewed the spoilage reports for 85 of the Polk County schools and 

noted that 36 of the 85 reports either contained errors or did not contain 

adequate information to support the amounts claimed. In particular, we noted 

that some schools: 

	 Did not include the quantity of items spoiled when claiming 

reimbursement for certain items. 

	 Included improper quantity counts in their reports. For example, the 

spoilage report form included the cost of an item and the number of 

units in the pre-populated form. When completing the form, schools 

reported the quantity of the spoiled item by the case or portion of the 

case, rather than individually as shown on the form. 

	 Added new lines to the spoilage form for items that were pre-populated 

elsewhere on the form. This caused the schools to incorrectly value the 

items, as they did not use the correct pricing in the added lines. 

	 Incorrectly calculated the line item for the total amount of spoilage. The 

spoilage report form did not automatically multiply the quantity amounts 

by the price; instead, the schools were required to perform the 

calculations manually. We noted errors in some schools’ manual 

calculations. 

As a result of these issues, we questioned $45,450, or 18 percent of the total 

amount claimed for food spoilage. 

In addition, PCSB was unable to provide support for vaccine spoilage costs 

reimbursed under Project 1870. Specifically, we requested documentation to 

support the $18,865 that PCSB claimed for replacement vaccines. However, 

PCSB was unable to provide vendor invoices or other documentation to support 

$718 of these costs. 

According to 2 Code of Federal Regulations (CFR) 200.400(d), Policy Guide: 

The accounting practices of the non-Federal entity must be consistent with 

these cost principles and support the accumulation of costs as required by 

the principles, and must provide for adequate documentation to support 

costs charged to the Federal award. 

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According to 2 CFR 200.403, Factors Affecting Allowability of Costs: 

Except where otherwise authorized by statute, costs must meet the 

following general criteria in order to be allowable under Federal awards: 

...(g) Be adequately documented. 

According to 2 CFR 200.302, Financial Management: 

...the state’s and the other non-Federal entity’s financial management 

systems, including records documenting compliance with Federal statutes, 

regulations, and the terms and conditions of the Federal award, must be 

sufficient to permit the preparation of reports required by general and 

program-specific terms and conditions; and the tracing of funds to a level 

of expenditures adequate to establish that such funds have been used 

according to the Federal statutes, regulations, and the terms and 

conditions of the Federal award. 

PCSB did not have internal controls in place to ensure that amounts claimed 

for federal reimbursement were accurate and supported by adequate 

documentation. In particular, PCSB did not verify the completeness, accuracy, 

or reasonableness of the amounts reported for spoilage before submitting its 

RFR. 

Conclusion 

PCSB claimed $46,168 in unsupported spoilage costs under Project 1870. The 

Federal share for this project was 75%, so FEMA reimbursed $34,626 of the 

unsupported amount. 

Recommendations 

Recommendation 1: We recommend that the Regional Administrator, FEMA 

Region IV, determine the allowability of the $46,168 in unsupported spoilage 

costs and collect any amount that is determined to be unallowable from PCSB. 

Recommendation 2: We recommend that the Regional Administrator, FEMA 

Region IV, direct the State of Florida to provide additional technical assistance 

and monitoring for PCSB’s projects to ensure that PCSB establishes internal 

controls to verify that costs claimed are allowable and supported. 

Finding 2 – PCSB Requested Funding for Ineligible Contract Costs 

PCSB requested and received funding through FloridaPA grants for ineligible 

contract costs incurred under Project 2658 for debris removal and related 

costs. Specifically, we noted that PCSB claimed costs incurred for debris 

removal services provided by its contractor. However, although PCSB provided 

4 
 

 

 

invoices and copies of checks to support the amounts claimed, it was unable to 

provide a copy of its executed contract. In addition, we noted the invoices 

indicated that PCSB paid the contractor on a cost-plus-percentage-of-cost 

(cost-plus) basis. Costs incurred under cost-plus contracts are unallowable 

per FEMA policy. We therefore questioned the entire amount claimed for this 

project, or $26,911. 

According to FEMA Public Assistance Program and Policy Guide FP 104-009-

2/April 2017: Section V, (G), (2). Contracts: 

FEMA does not reimburse costs incurred under a cost plus a percentage of 

cost contract or a contract with a percentage of construction cost method. 

According to 2 CFR 200.400(d), Policy Guide: 

However, the accounting practices of the non-Federal entity must be 

consistent with these cost principles and support the accumulation of costs 

as required by the principles, and must provide for adequate 

documentation to support costs charged to the Federal award. 

PCSB was unable to locate the executed contract and was not aware that costplus basis procurements were unallowable. 

Conclusion 

PCSB received funding for $26,911 in ineligible contract costs under Project 

2658 although it has not yet submitted RFRs for this project. 

Recommendations 

Recommendation 3: We recommend that the Regional Administrator, FEMA 

Region IV, ensure that the State of Florida does not reimburse PCSB for the 

$26,911 in ineligible costs. 

Recommendation 4: We recommend that the Regional Administrator, FEMA 

Region IV, direct the State of Florida to provide additional technical assistance 

and monitoring for PCSB’s projects to ensure that PCSB policies and contracts 

comply with the applicable regulations. 

Finding 3 – PCSB Claimed Unallowable Fringe Benefit Costs 

PCSB requested reimbursement under Project 2658 through FloridaPA for 

fringe benefits related to ineligible employees. Specifically, PCSB submitted a 

total of $235,140 in RFRs for force account labor under this project. We 

reviewed the payroll records that PCSB provided to support these RFRs and 

noted that PCSB applied the fringe benefit rate to all 17 substitute employees 

5 
 

 

 

 

 

 

 

 

 

listed in the RFRs. PCSB’s labor policy states that substitute employees “shall 

have no seniority rights nor accrue fringe benefits.” Because the substitute 

employees did not receive fringe benefits from PCSB, PCSB did not incur all 

fringe benefit costs claimed for these employees and therefore should not have 

included the costs in its RFRs. 

According to PCSB’s Custodial/Maintenance/Vehicle Services Labor Policy, 

Section E: Substitute Employees: 

Substitute employees may be hired to fill vacant positions for no more than 

thirty (30) consecutive work days, except when they are hired to work for a 

regular employee who is not able to work because of a disability, a duly 

authorized leave, vacation, or a suspension. Substitute employees hired to 

work for a regular employee who is unable to work because of a disability, 

a duly authorized leave, vacation, or a suspension, shall be notified, in 

writing, they are working only until the regular employee returns to work. 

Said substitute employee shall sign the letter as an acknowledgement. 

Persons so hired shall have no seniority rights nor accrue fringe benefits. 

According to 2 CFR 200.403(c), Factors Affecting Allowability of Costs: 

...Be consistent with policies and procedures that apply uniformly to both 

federally-financed and other activities of the non-Federal entity. 

According to PCSB personnel, staff members did not understand how to apply 

the fringe benefit rate to substitute employees when requesting reimbursement. 

Conclusion 

PCSB charged Project 2658 for $897 in unallowable costs associated with 

ineligible fringe benefits for substitute employees. 

Recommendations 

Recommendation 5: We recommend that the Regional Administrator, FEMA 

Region IV, ensure that the State of Florida does not reimburse PCSB for the 

$897 in unallowable costs. 

Recommendation 6: We recommend that the Regional Administrator, FEMA 

Region IV, direct the State of Florida to provide additional technical assistance 

and monitoring for PCSB’s projects to provide FEMA with reasonable assurance 

that PCSB will properly account for costs related to force account labor. 

6 
 

 

 

 

 

Finding 4 – PCSB Used Incorrect Hourly Rates in Its Requests for 

Reimbursement for Force Account Labor 

PCSB used incorrect hourly rates in its RFRs for force account labor under 

Project 2658. Specifically, PCSB submitted a total of $235,140 in RFRs for 

force account labor under this project through FloridaPA. We selected a 

sample of 65 PCSB employees whose labor was included in this total and 

reviewed the documentation that PCSB provided to support the amounts 

reported in the RFRs. We noted that the hourly rates recorded on the 

timesheets and payroll records for four of the employees did not agree with the 

hourly rates claimed on the RFRs, for a net difference of $329. 

According to 2 CFR 200.400(d), Policy Guide: 

The accounting practices of the non-Federal entity must be consistent with 

these cost principles and support the accumulation of costs as required by 

the principles, and must provide for adequate documentation to support 

costs charged to the Federal award. 

According to 2 CFR 200.84: 

Questioned cost means a cost that is questioned by the auditor because of 

an audit finding: 

...(b) Where the costs, at the time of the audit, are not supported by 

adequate documentation; 

According to 2 CFR 200.403(c), Factors Affecting Allowability of Costs: 

...Be consistent with policies and procedures that apply uniformly to both 

federally-financed and other activities of the non-Federal entity. 

According to PCSB personnel, staff members did not realize that they should 

verify the hourly rates when requesting reimbursement for project costs to 

ensure that PCSB’s complex accounting system has applied the correct hourly 

rate for each employee. 

7 
 

 

 

 

Conclusion 

PCSB charged Project 2658 for $329 in unallowable costs, including fringe 

costs associated with the incorrect hourly rates for four employees. 

Recommendations 

Recommendation 7: We recommend that the Regional Administrator, FEMA 

Region IV, ensure that the State of Florida does not reimburse PCSB for the 

$329 in unallowable costs. 

Recommendation 8: We recommend that the Regional Administrator, FEMA 

Region IV, work with the State of Florida to request that PCSB review the 

hourly wage amounts for all employees and adjust the RFR accordingly. 

Recommendation 9: We recommend that the Regional Administrator, FEMA 

Region IV, direct the State of Florida to provide additional technical assistance 

and monitoring for PCSB’s projects to provide FEMA with reasonable assurance 

that PCSB will properly account for costs related to force account labor. 

Finding 5 – PCSB Was Unable to Provide Documentation to Support an 

Estimated Insurance Reimbursement for FEMA-Funded Projects 

PCSB was unable to provide documentation to support the anticipated or 

actual insurance proceeds that would reduce FEMA’s share of the disaster 

costs because it is in litigation with the insurance carriers regarding the 

amount of estimated damages. PCSB provided a proposed interim statement of 

loss from Hurricane Irma, dated August 1, 2019, that showed an adjusted net 

claim of $445,354 for damage to buildings and structures and for food 

spoilage. PCSB’s representative noted that a third party that the insurance 

carriers had appointed to review the damage prepared this statement. 

However, PCSB did not agree with the estimate and is currently in litigation 

with the insurance carriers. PCSB was unable to provide an estimate of the 

damages that insurance proceeds would ultimately cover, or of the extent to 

which these proceeds relate to FEMA-funded projects. We were therefore 

unable to determine the amount of actual or potential claim proceeds that 

PCSB should have deducted from the eligible project costs. 

According to 44 CFR 206.250(c), entities must deduct actual and anticipated 

insurance recoveries from otherwise eligible costs. 

According to FEMA Public Assistance Program and Policy Guide, FP 104-009-

2/April 2017: Section IV, P, 1. Insurance Proceeds: 

FEMA cannot provide PA funding that duplicates insurance proceeds. 

Consequently, FEMA reduces eligible costs by the amount of 

8 
 

 

	 Actual insurance proceeds, if known; or 

	 Anticipated insurance proceeds based on the Applicant’s insurance 

policy, if the amount of actual insurance proceeds is unknown. 

FEMA subsequently adjusts the eligible costs based on the actual 

amount of insurance proceeds the Applicant receives. 

FEMA requires the Applicant to take reasonable efforts to pursue claims to 

recover insurance proceeds that it is entitled to receive from its insurer(s). 

If the Applicant expends costs to pursue its insurance claim, FEMA offsets 

the insurance reduction with the Applicant’s reasonable costs to pursue 

the claim. 

PCSB is in ongoing litigation with its insurance carriers regarding the amount 

of the claim reimbursement. As a result, it is unable to provide documentation 

to support an agreed-upon amount and how it should apply this amount to 

PCSB projects. 

Conclusion 

PCSB may receive reimbursement from FEMA for project costs that will be 

eligible for reimbursement by the insurance carrier once the litigation is 

settled. 

Recommendations 

Recommendation 10: We recommend that the Regional Administrator, FEMA 

Region IV, direct the State of Florida to monitor the progress of PCSB’s 

litigation with the insurance carrier and ensure that PCSB subsequently 

includes appropriate insurance payments against claims. 

Recommendation 11: We recommend that the Regional Administrator, FEMA 

Region IV, direct the State of Florida to determine the allowability of the 

amounts that PCSB claims for insurance-related costs and collect any amounts 

that the State of Florida determines to be unallowable. 

Finding 6 – FDEM’s Subrecipient Monitoring Process Needs Improvement 

FDEM’s subrecipient monitoring process needs improvement. Specifically, 

FDEM has not evaluated the risk of subrecipients’ noncompliance with Federal 

requirements, obtained subrecipient audit reports, or developed plans for 

monitoring subrecipients. The State of Florida’s fiscal year (FY) 2018 Single 

Audit reported significant noncompliance with respect to FDEM’s subrecipient 

monitoring. Instead of evaluating risk, FDEM has relied on 100 percent 

validation of subrecipients’ costs prior to reimbursement and monitoring of 

subrecipients’ quarterly reports to minimize the risk of noncompliance. 

However, we identified a number of unsupported and/or unallowable costs that 

9 
 

 

 

 

 

 

 

 

FDEM deemed allowable and allocable. FDEM reimbursed those costs to the 

subrecipient. FDEM’s cost-validation process therefore does not appear to 

have been effective. 

FDEM representatives provided information regarding the status of actions that 

it has taken to implement a subrecipient monitoring program. FDEM has 

established a Compliance Unit that will oversee subrecipient risk assessments, 

monitoring, and obtaining and reviewing Single Audit reports. It has developed 

a standard operating procedure (SOP) for the subrecipient compliance program, 

which is awaiting final management approval. For the 2017/2018 fiscal year, 

FDEM pulled reports from its FloridaPA system of record to identify the 

population of audits and is in the process of reviewing those reports. For 

current and future years, FDEM has purchased an audit-tracking module as 

part of the grants management software. 

According to 2 CFR 200.331, Requirements for Pass-through Entities: 

All pass-through entities must: 

...(b) Evaluate each subrecipient’ s risk of noncompliance with Federal 

statutes, regulations, and the terms and conditions of the subaward for 

purposes of determining the appropriate subrecipient monitoring described 

in paragraphs (d) and (e) of this section, which may include consideration 

of such factors as: 

(1) The subrecipient’s prior experience with the same or similar 

subawards; 

(2) The results of previous audits including whether or not the 

subrecipient receives a Single Audit in accordance with Subpart F - Audit 

Requirements of this part, and the extent to which the same or similar 

subaward has been audited as a major program; 

(3) Whether the subrecipient has new personnel or new or substantially 

changed systems; and 

(4) The extent and results of Federal awarding agency monitoring (e.g., if 

the subrecipient also receives Federal awards directly from a Federal 

awarding agency).

 (d) Monitor the activities of the subrecipient as necessary to ensure that 

the subaward is used for authorized purposes, in compliance with Federal 

statutes, regulations, and the terms and conditions of the subaward; and 

that subaward performance goals are achieved. Pass-through entity 

monitoring of the subrecipient must include: 

(1) Reviewing financial and performance reports required by the passthrough entity. 

(2) Following-up and ensuring that the subrecipient takes timely and 

appropriate action on all deficiencies pertaining to the Federal award 

provided to the subrecipient from the pass-through entity detected 

through audits, on-site reviews, and other means. 

10 
 

 

 

 

(3) Issuing a management decision for audit findings pertaining to the 

Federal award provided to the subrecipient from the pass-through entity 

as required by § 200.521 Management decision. 

... (f) Verify that every subrecipient is audited as required by Subpart F - 

Audit Requirements of this part when it is expected that the subrecipient’s 

Federal awards expended during the respective fiscal year equaled or 

exceeded the threshold set forth in § 200.501 Audit Requirements. 

(g) Consider whether the results of the subrecipient’s audits, on-site 

reviews, or other monitoring indicate conditions that necessitate 

adjustments to the pass-through entity's own records. 

FDEM did not assess the risk of noncompliance, nor did it review 

subrecipients’ Single Audit reports and follow up on audit findings. FDEM’s 

policies and procedures did not adequately address Federal Uniform Guidance 

requirements for evaluating and monitoring subrecipients. FDEM had 

alternative procedures for monitoring subrecipients that it considered sufficient 

to minimize the risk of noncompliance, including validating all costs reported 

by subrecipients prior to reimbursement and reviewing the quarterly reports 

submitted to FDEM. 

FEMA approved FDEM’s 2017 PA Administrative Plan, which detailed FDEM’s 

administrative processes for managing FEMA’s PA program funding but did not 

include steps to meet the requirements of 2 CFR 200.331. 

Conclusion 

Without reviewing subrecipient audit reports, evaluating the risk of 

noncompliance, and developing monitoring plans, the grantee increases the 

risk of undetected significant deficiencies and grant noncompliance. The FY 

2018 Single Audit report stated that in FY 2018, FDEM was responsible for 

1,068 active large projects related to 19 declared disasters with obligations 

totaling $896,642,516. 

Recommendations 

Recommendation 12: We recommend that the Regional Administrator, FEMA 

Region IV, assess the status and adequacy of FDEM’s corrective actions and 

confirm that its revised subrecipient monitoring program sufficiently addresses 

the requirements of 2 CFR 200.331. 

Recommendation 13: We recommend that the Regional Administrator, FEMA 

Region IV, amend the approved PA Administrative Plan to reflect the processes 

that FDEM has implemented to strengthen its subrecipient monitoring. 

11 
 

FEMA Comments and OIG Analysis 

FEMA provided its written response to this report on June 12, 2020. FEMA 

concurred with all thirteen recommendations and indicated that it would 

complete its implementation of the recommendations by June 30, 2021. If 

implemented, the actions that FEMA outlined in its response will satisfy the 

intent of the recommendations. We have summarized FEMA’s comments in 

response to each recommendation below and have included a copy of its 

comments in their entirety in appendix B. 

Recommendation 1. FEMA will reduce the approved subgrant as necessary if 

PCSB is unable to provide sufficient documentation that the spoilage costs are 

allowable. 

Recommendation 2. FEMA will work with the State to provide additional 

technical assistance and monitoring for PCSB projects. 

Recommendation 3. FEMA will reduce the approved subgrant as necessary if 

PCSB is unable to provide sufficient documentation that the contract costs are 

eligible. 

Recommendation 4. FEMA will work with the State to provide additional 

technical assistance and monitoring for PCSB projects. 

Recommendation 5. FEMA will reduce the approved subgrant as necessary if 

PCSB is unable to provide sufficient documentation that the fringe benefit 

costs are allowable. 

Recommendation 6. FEMA will work with the State to provide additional 

technical assistance and monitoring for PCSB projects. 

Recommendation 7. FEMA will reduce the approved subgrant as necessary if 

PCSB is unable to provide sufficient documentation that the force account 

labor costs are allowable. 

Recommendation 8. FEMA will work with the State to request that PCSB 

review the hourly wage amounts for all employees and adjust the RFR 

accordingly. 

Recommendation 9. FEMA will work with the State to provide additional 

technical assistance and monitoring for PCSB projects. 

Recommendation 10. FEMA will work with the State to monitor PCSB’s 

litigation with the insurance carrier and ensure PCSB includes appropriate 

insurance payments against claims. 

12 
 

Recommendation 11. FEMA will work with the State to determine the 

allowability of the amounts PCSB claims for insurance-related costs and 

reduce the approved subgrants for any benefits duplicated by insurance. 

Recommendation 12. FEMA will work with the State to assess the status and 

adequacy of DEM’s corrective actions and confirm its revised subrecipient 

monitoring program sufficiently addresses the requirements of 2 CFR 200.331. 

Recommendation 13. FEMA will work with the State to amend its approved 

PA Administrative Plan to reflect the processes the State has implemented to 

strengthen its subrecipient monitoring. 

13 
 

 

Appendix A 

Objective, Scope, and Methodology 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) 

was established by the Homeland Security Act of 2002 (Public Law 107−296) by 

amendment to the Inspector General Act of 1978. 

Cotton & Company performed an early warning audit of FEMA Public 

Assistance (PA) subgrants awarded to Polk County School Board (PCSB) for 

damages resulting from Hurricane Irma. The overall objective of the audit was 

to determine whether FEMA ensured that recipients and subrecipients 

established and implemented policies, procedures, and practices to ensure that 

they accounted for and expended PA grant funds awarded to disaster areas in 

accordance with Federal regulations and FEMA guidance. We conducted the 

performance audit to identify areas of non-compliance with grant requirements 

where Federal disaster funding may be at risk and where the subrecipient may 

need additional technical assistance or monitoring to ensure compliance. 

Our audit scope included a review of FEMA and the State of Florida’s policies, 

procedures, and practices for ensuring that subrecipients account for and 

expend PA grant funds in accordance with Federal regulations and FEMA 

guidance. We reviewed the subrecipient’s policies, procedures, and business 

practices for accounting for and expending grant funds, as well as contracting 

for grant funds awarded or that may be awarded. Our audit scope also 

included determining whether the subrecipient’s policies, procedures, and 

business practices enable the subrecipient to account for and expend FEMA 

grant funds according to Federal regulations and FEMA guidance. We 

conducted interviews with FEMA, State, and subrecipient officials. We 

reviewed documents that support the eligibility of the subrecipient, the 

projects, and the claimed project costs. 

We selected our sample of projects for testing from a universe of projects 

downloaded from FEMA’s computerized information system (EMMIE). We 

verified whether source documents supported the payments and claimed costs. 

We did not place any significant reliance on or test the data from EMMIE, but 

deemed it sufficient to meet our audit objective. We compared FEMA’s 

obligated amounts to the State of Florida’s payments and the subrecipient’s 

claimed costs and verified whether source documents supported the payments 

and claimed costs. 

We conducted this performance audit between February and December 2019 

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 

14 
 

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

basis for our findings and conclusions based upon our audit objectives. 

15 
 

Appendix B 

FEMA Comments to the Draft Report 

16 
 

Attachment: FEMA Management Response to Recommendations 

Contained in OIG-19-006-AUD-FEMA 

OIG r econunendcd that the Regional Administmtor, FEMA Region IV: 

Rcconunendation 1: Detennine the allowability of the $46,168 in unsupported spoilage costs 

and collect any amount that is detem1ined to be unallowable from PCSB. 

Response: Concur. FEMA will make reductions to the approved subgrant as necessary if PCSB 

is unable to provide sufficient documentation that the spoilage costs ru·e allowable. 

Expected Completion Date (ECD): 06/30/2021.. 

Recommendation 2: Direct the State of Florida to provide additional technical assistance ru1d 

monitor for PCSB's projects to ensure that PCSB establishes internal controls to verify that costs 

claimed are allowable and supported. 

Response: Concur. FEMA Region IV will work the State of Florida to provide additional 

technical assistance and monitoring for PCSB prnjects to ensure PCSB establishes internal 

controls. ECD: 06/30/2021. 

Rec<>nun endation 3: Ensure that the State of Florida does not reimburse PCSB for $26,911 in 

ineligible costs. 

Response: Concur. FEMA will make reductions to the approved subgrant as necessary if PCSB 

is unable to provide sufficient documentation that the contract costs are eligible. ECD: 

06/30/2021 . 

Rec<>mmendation 4: Direct the State of Florida to provide additional technical assistance and 

monitor for PCSB's projects to ensure that PCSB policies and contracts comply with the 

applicable regulations. 

Res)lonse: Concur. FEMA Region lV wi II work wit11 the State of Florida to provide additi011al 

teclmical assistance and monitor for PCSB projects to ensure PCSB policies and contracts 

comply wit11 the applicable regulations. ECO: 06/30/202l. 

Reconunendation 5: Ensure that the State of Florida does not reimburse PCSB for the $897 in 

unallowable costs. 

Response: Concur. FEMA will make reductions to the approved subgrru1t as necessary if PCSB 

is unable to provide sufficient documentation t11a t the fringe benefit costs are allowable. (ECO): 

06/30/202 I . 

2 

17 
 

Reco1mnendation 6: Direct the State of Florida to provide additional technical assistance and 

monitor for PCSB's projects to provide FEMA w ith reasonable assurance that PCSB will 

properly account for costs related to force account labor. 

Response: Concu.-. FEMA Region IV will work the State of Florida to provide additional 

technical assistance and monitoring for PCSC projects to ensure they are prope rly accounting for 

costs related to force account labor. ECD: 06/30/2021. 

Recommendati.on 7: Ensure that the State of Florida does not reimburse PCSB for the $329 in 

unallowable costs. 

Response: Concur. FEMA will make reductions to the approved subgrant as necessary if PCSB 

is unable to provide sufficient documentation that the force account labor costs are allowable. 

ECD: 06/30/202 t. 

Recommendation 8: Work with the State of Florida to request that PCSB review the hourly 

wage amounts for all employees and adjust the RFR accordingly. 

Response: Concur. FEMA Region IV will work with the State of Florida to request that PCSB 

review the hourly wage amounts for all employees and adjust the RFR accordingly. ECD: 

06/30/2021 . 

Recommendation 9: Direct the State of Florida to provide additional technical assistance and 

monitor for PCSB's projects to provide FEMA with reasonable assurance that PCSB will 

properly account for costs related to force account labor. 

Response: Con cu.-. FEMA Region IV wi II work the State of Florida to provide additional 

technical assistance and monitoring for PCSC projects to ensure they are properly accounting for 

costs related to force account labor. ECD: 06/30/2021 . 

Reconunendation 10: Direct the State of Florida to monitor the progress of PCSB's litigation 

with the insurance carrier and ensure that PCSB subsequently includes appropriate insurance 

payments against claims. 

Response: Concm-. FEMA Region IV will work with the State of Florida monitor the progress 

of PCSB's litigation with the insurance carrier and ensure that PCSB subsequently includes 

appropriate insurance payments against claims. BCD: 06/30/2021. 

3 

18 
 

Recommendation 11: Direct the State of Florida to detennine the allowability of the amounts 

that PCSB claims for insurance-related costs and collect any amounts that the State of Florida 

detennines to be unallowable. 

Response: Concur. In accordance with Section 31.2 of the Robert T. Stafford Disaster Relief 

and Emergency Assistance Act, FEMA Region IV will work with the State of Florida to 

dete nnine the allowability of the amounts th.at PCSB claim~ for insurance-related costs and make 

necessary reductions to the approved subgrants for any benefits duplicated by ins urance. ECD: 

OG/30/2021 . 

Recommendation 12: Assess the status and adequacy ofFDEM's corrective actions and 

con:fim1 that its revised subrecipient monitoring program sufficiently addresses tlie requirements 

of2 CFR 200.331. 

Response: Concur. FEMA Region IV will work the State of Florida to assess the status and 

adequacy of"FDEM 's corrective actions and confinn that its revised subrecipient monitoring 

program sufficiently addresses the requirements of2 C.F.R. § 200.331. ECD: 06/30/2021. 

RcconunemJation 13: Amend the approved PA Administrative Plan to reflect the processes that 

FDEM has implemented to strengthen its subrecipient monitoring. 

Response: Concu.-. FEMA Region IV will work with the State of Florida to amend their 

approved PA Administrative Plan to reflect the processes that the State has implemented to 

strengthen its subrecipient monitoring. ECD: 06/30/2021. 

4 

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Appendix C 

Summary of Potential Monetary Benefits 

Recommendation Type of Potential Monetary Benefit Amount 

Federal 

Share 

Funds Put to Better Use $ - -$ 

3,5,7 Questioned Costs - Ineligible 28,137 28,137 

1 Questioned Costs - Unsupported 46,168 34,626 

Totals $ 74,305 $ 62,763 

Source: Cotton & Company LLP analysis of the County’s claimed costs. 

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Appendix D 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chiefs of Staff 

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Under Secretary, Office of Strategy, Policy, and Plans 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

21 
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