Early Warning Audit of 

FEMA Public Assistance 

Grants to Lee County, 

Florida 

July 15, 2020 

OIG-20-48 
-XO\
 
 

 

 

 

DHS OIG HIGHLIGHTS
 Early Warning Audit of FEMA Public 

Assistance Grants to Lee County, Florida
 

July 15, 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 Florida (the 

recipient) and Lee County 

(the subrecipient) 

established and 

implemented policies, 

procedures, and practices 

to account for and expend 

PA grant funds awarded to 

disaster areas in 

accordance with Federal 

regulations and FEMA 

guidance. 

What We 

Recommend 

We made nine 

recommendations that, 

when implemented, should 

improve Lee County, 

Florida’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 Lee County, Florida (the County) 

established and implemented policies, procedures, and 

practices to account for and expend Public Assistance 

(PA) program grant funds awarded to disaster areas in 

accordance with Federal regulations and FEMA 

guidance. Specifically, the County: 

x	 requested FEMA funding for $1,062,234 in 

unsupported force account labor, equipment, 

and materials; 

x	 was unable to provide supporting 

documentation for $16,210 in costs incurred to 

operate an emergency shelter; 

x	 did not maintain adequate documentation to 

support $267,452 in costs incurred for road 

repair services; 

x	 did not include all required provisions in its 

contracts to obtain disaster recovery services 

related to Hurricane Irma; and 

x	 had not evaluated the risk of subrecipients’ 

noncompliance with Federal requirements, 

obtained subrecipient audit reports, or 

developed plans for monitoring subrecipients. 

These deficiencies occurred because the County did 

not always have adequate policies, procedures, and 

practices in place. Because of these deficiencies, there 

is an increased risk that PA programs were 

mismanaged and that funds were used for unallowable 

activities. 

FEMA Response 

FEMA concurred with our nine recommendations. We 

included a copy of FEMA’s management comments in 

their entirety in appendix B. 

www.oig.dhs.gov	 OIG-20-48 
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 Lee County, Florida (the County) 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 

subgrants. 

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 the County, we did not perform a financial 

audit, the purpose of which would be to render an opinion on the County’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 

The County Was Unable to Support the Allocability of All Costs 

Submitted for Reimbursement.............................................................2 

The County Did Not Maintain Adequate Documentation to Support 

Costs Incurred for Emergency Services.................................................4 

The County Did Not Maintain Documentation to Support That Costs 

Incurred for Road Repair Were Reasonable and Allowable......................6 

The County’s Contracts Did Not Contain All Required Code of Federal 

Regulations (CFR) Provisions...............................................................9 

FDEM’s Subrecipient Monitoring Process Needs Improvement..............10 

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

Appendixes 

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

Appendix B: FEMA Comments to the Draft Report ............................... 15 

Appendix C: Summary of Potential Monetary Benefits..........................18 

Appendix D: Report Distribution .......................................................... 19 

Abbreviations 

CFR Code of Federal Regulations 

DHS Department of Homeland Security 

FEMA Federal Emergency Management Agency 

FY Fiscal Year 

FDEM Florida Division of Emergency Management 

OIG Office of Inspector General
 

PA Public Assistance 

PW Project Worksheet 
 

 

 

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 certain non-profit organizations. The Stafford Act, among other things, 

authorizes PA grants for: 

x Assistance for debris removal (Category A); 

x Emergency protective measures (Category B); and 

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

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

Florida’s Lee County (the County) comprises the Cape Coral–Fort Myers, 

Florida Metropolitan Statistical Area. Its population as of the 2010 census was 

618,754. On September 10, 2017, Hurricane Irma struck the County as a 

Category 2 storm with maximum sustained winds of 89 miles per hour (mph). 

The hurricane caused an estimated $857 million in damages to the County. 

On September 10, 2017, the President issued a major disaster declaration for 

the State of Florida. 

FEMA disburses PA funds to the Florida Division of Emergency Management 

(FDEM). Under its agreement with FEMA, FDEM, as the recipient, is 

responsible for leading, managing, and driving the overall disaster recovery 

process for the State of Florida. FDEM in turn passes funds to local 

subrecipients. Per Federal grant requirements, FDEM is responsible for 

monitoring these subrecipients to ensure that they manage PA funds 

appropriately, in accordance with FEMA program guidance and other Federal 

grant requirements. 

As of February 21, 2020, the County had submitted 20 Project Worksheets 

(PWs)1 to FEMA, requesting a total of $42,180,481 in PA funding. FEMA 

obligated $38,126,549 for 17 of the 20 projects. 

Cotton & Company LLP (referred to as “we” in this report) was engaged by the 

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

conduct a performance audit of FEMA PA subgrant funds awarded to the 

County for damages resulting from Hurricane Irma. The overall objective of 

this audit was to determine whether FEMA ensured that Florida (the recipient) 

and the County (the subrecipient) established and implemented policies, 

procedures, and practices to account for and expend PA grant funds awarded 

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 2017, p.164). 

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for damages caused by Hurricane Irma in accordance with Federal regulations 

and FEMA guidance. 

We designed this performance audit to meet the objectives identified in the 

Objective, Scope, and Methodology section of this report. Appendix A provides 

additional detail regarding the objective, scope, and methodology of this audit. 

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 the County, FDEM, FEMA, and the DHS OIG. 

Results of Audit 

FEMA did not ensure that Lee County, Florida (the County) 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, 

summarized in table 1: 

Table 1: Results of Audit 

No. Finding 

Questioned 

Costs 

1 

The County was unable to support the allocability of 

all costs submitted for reimbursement. $1,062,324 

2 

The County did not maintain adequate 

documentation to support costs incurred for 

emergency services. 16,210 

3 

The County did not maintain documentation to 

support that costs incurred for road repair were 

reasonable and allowable. 267,452 

4 

The County’s contracts did not contain all required 

Code of Federal Regulations (CFR) provisions. -

5 

FDEM’s subrecipient monitoring process needs 

improvement. -

Total $1,345,986 

Source: Cotton & Company LLP audit testing of County documentation. These findings are 

discussed in greater detail below. 

Finding 1 – The County Was Unable to Support the Allocability of All Costs 

Submitted for Reimbursement 

The County internally reconciled its reimbursement requests to its supporting 

documentation and determined that it 1) did not have sufficient documentation 

available to support the allocability of all force account costs incurred on its 

disaster recovery work, and 2) incorrectly allocated unrelated contract costs to 

Project 5762. The County determined that it lacked adequate documentation 

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of force account hours because personnel did not record their time properly 

when participating on disaster recovery tasks. Further, in responding to a 

FEMA Request for Information (RFI), the County determined that it had 

erroneously included and incorrectly charged Project 5762 for $67,899 in costs 

incurred. The County stated that it intends to cancel its outstanding funding 

requests for the $994,425 in unsupported force account costs and the $67,899 

in incorrectly allocated contract costs (total of $1,062,234). However, it has not 

yet provided documentation to support that it has done so. 

The County has policies, procedures, and business practices in place for 

recording force account labor and contract costs. However, at the time the 

County submitted the FEMA claim, it was not aware that it was required to 

document a description of the work performed to support force account hours. 

In addition, County officials stated that they did not receive proper and 

consistent guidance from FEMA during the PW review process. County 

representatives stated that FEMA experienced frequent personnel turnover, 

and when FEMA personnel did provide guidance, it was generally verbal and 

often inconsistent. 

According to 2 Code of Federal Regulations (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: 

... 

(a) Be necessary and reasonable for the performance of the Federal 

award and be allocable thereto... 

(g) Be adequately documented. 

FEMA’s Public Assistance Program and Policy Guide (PAPPG) Chapter 3, II. 

Project Formulation, D. Develop Project Cost, requires the Applicant’s cost 

estimate to contain “a level of detail sufficient for FEMA to validate that all 

components correspond with the agreed-upon Statement of Work (SOW)....” 

PAPPG Chapter 3, II. Project Formulation, Table 10, Documentation to Support 

Costs Claimed, states that force account labor documentation should include a 

“description of work performed with [a] representative sample of daily 

logs/activity reports, if available.” 

Conclusion 

The County requested FEMA funding for $994,425 in unsupported force 

account labor, equipment, and materials, as follows in table 2: 

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Table 2: Unsupported Force Account 

Project # 

Total Project 

Cost 

Force Account 

Portion of Project 

Federal Share of 

Force Account 

7273 $13,587,543 $504,418 $453,976 

6366 107,964 17,788 16,009 

7326 18,858,256 35,724 32,152 

6655 5,354,100 240 216 

6936 73,367 44,256 44,256 

6247 343,086 427 427 

6882 136,743 25,929 23,336 

6854 25,603 8,817 7,935 

5762 538,991 356,826 321,143 

Total $39,025,653 $994,425 $899,450 

Source: Spreadsheet provided by the County on May 28, 2019 

In addition, the County determined that it had erroneously included and 

incorrectly charged Project 5762 for $67,899 (Federal share $61,109) in costs 

incurred under an unrelated contract. 

Recommendations 

Recommendation 1: We recommend that the Regional Administrator, FEMA 

Region IV, work with the State of Florida to ensure that the County’s funding 

and/or reimbursements for the above projects is properly reduced by $899,450 

for unsupported force account costs and $61,109 for unallocable contract 

costs. 

Recommendation 2: We recommend that the Regional Administrator, FEMA 

Region IV, provide additional technical assistance and monitoring for the 

County’s projects, to provide FEMA with reasonable assurance that the County 

properly accounts for force account costs, including retaining supporting 

documentation. 

Finding 2 – The County Did Not Maintain Adequate Documentation to 

Support Costs Incurred for Emergency Services 

The County was unable to provide adequate documentation to support all costs 

incurred for emergency services under Project 6683. Specifically, the County 

was unable to provide supporting documentation for $11,890 in costs incurred 

to operate an emergency shelter. The County has a lease agreement that 

allows it to use an arena in Estero, Florida as a shelter during public 

emergencies. As part of this agreement, the County is responsible for 

reimbursing the arena for the cost of operating the shelter during such 

emergencies. The arena invoiced the County for $77,487 in costs incurred to 

operate the shelter during Hurricane Irma, and the County included this 

invoice in its funding request for Project 6683. We reviewed the invoice and 

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noted that it did not include any documentation to support a lump-sum charge 

of $10,000 for labor costs incurred by nine employees, as well as an additional 

$1,000 for payroll taxes. The invoice also did not include any receipts to 

support $890 in costs incurred to purchase supplies. Therefore, we questioned 

the $11,890 charged to Project 6683. 

The County did not require the arena to provide documentation such as payroll 

records, timesheets, and receipts for items purchased to support that the costs 

were necessary and reasonable and were related to the disaster event. The 

County was aware of FEMA’s documentation requirements but elected not to 

request the missing documentation from the arena because the County knew 

that the arena was reluctant to disclose proprietary payroll information. The 

County believed that the invoiced charges were reasonable based on the 

number of days the shelter was open. 

In addition, the County was unable to provide adequate documentation to 

support $4,320 in costs incurred for emergency response services related to the 

Lee County Public Safety Radio System as a result of Hurricane Irma. The 

County obtained these services through an existing contract with a 

communications equipment provider under which the County was responsible 

for reimbursing the contractor’s costs for any emergency response services 

provided. The contractor invoiced the County for $34,221 in costs incurred for 

emergency response services provided in September 2017 as a result of 

Hurricane Irma, and the County included this invoice in its request for 

reimbursement from FEMA. We reviewed the invoice and the supporting 

documentation and noted that the contractor did not provide activity records to 

support $4,320 in labor costs billed for emergency services staff. Specifically, 

the contractor billed the County for labor hours incurred by two employees for 

whom there were no activity logs, including $2,880 for 16 hours of work 

performed by one staff member to support the County’s emergency recovery 

efforts, and $1,440 for 8 hours of work performed by another staff member to 

deliver specialized test equipment. 

The contractor did not retain activity logs for the emergency services staff and 

therefore did not provide this documentation to support its invoices. The 

County was aware of FEMA’s documentation requirements but accepted the 

contractor’s invoice because it was aware that the contractor had needed to 

respond quickly to provide communication services during the emergency 

situation. 

According to 2 CFR 200.302 Financial management: 

(b) ...The financial management system of each non-Federal entity must 

provide for the following: 

... 

(3) Records that identify adequately the source and application of funds 

for federally-funded activities. These records must contain information 

5 
 

 

 

pertaining to Federal awards, authorizations, obligations, unobligated 

balances, assets, expenditures, income and interest and be supported 

by source documentation. 

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: 

(a) Be necessary and reasonable for the performance of the Federal 

award and be allocable thereto under these principles.... 

(g) Be adequately documented. 

Conclusion 

The County requested FEMA funding for $16,210 in unsupported contract 

costs for Project 6683 ($11,890 plus $4,320). 

Recommendations 

Recommendation 3: We recommend that the Regional Administrator, FEMA 

Region IV, work with the State of Florida to determine the allowability of the 

unsupported costs of $16,210 for Project 6683 and collect any amounts that 

are determined to be unallowable. 

Recommendation 4: We recommend that the Regional Administrator, FEMA 

Region IV, work with the State of Florida to adequately review costs and ensure 

that the request for funding includes sufficient supporting documentation 

before approving the costs for FEMA reimbursement. 

Finding 3 – The County Did Not Maintain Documentation to Support That 

Costs Incurred for Road Repair Were Reasonable and Allowable 

The County did not maintain adequate documentation to support $267,452 in 

costs incurred for road repair services under Project 6683. The County 

obtained these services through purchase orders that it issued under two preexisting contracts for roadway construction work on an as-needed basis. We 

reviewed the contract terms, the purchase orders, and the contractor invoices 

and noted that the scope of work and the billing method specified in the 

purchase orders and the contractor invoices did not agree with the contract 

terms. The County was unable to provide any documentation to support that 

the rates and services billed were reasonable and in accordance with the 

contract terms and conditions. Specifically: 

In April 2017, the County entered into a unit-price contract to obtain 

road repair services, including minor paving, drainage, and concrete 

improvements. On September 12, 2017, the County issued a $93,440 

6 

x
 

 

 

x

purchase order under this contract to obtain services related to the 

temporary repair of shell roads. However, on October 5, 2017, the 

contractor submitted a $93,440 invoice for stone hauling and placement 

performed on a time-and-materials basis, including expenses related to 

labor, materials, and subcontract costs. 

In May 2017, the County entered into a second unit-price contract to 

obtain road repair services, including minor paving, drainage, and 

concrete improvements. On November 8, 2017, the County issued a 

$174,012 purchase order under this contract to obtain services related to 

the temporary repair of shell roads. However, on September 30, 2017 

(39 days before the County issued the purchase order), the contractor 

submitted a $174,012 invoice for work performed on several roads on a 

time-and-materials basis, including expenses related to labor, 

equipment, and stone. 

Both contracts require that all project pricing be determined using the rates set 

forth in the contract fee schedule, which establishes unit prices based on 

individual items of work provided. The contract fee schedule did not contain 

billing rates for labor and equipment, and the contractors’ invoices did not 

include sufficient identifying information to enable us to determine whether the 

contractors had invoiced the stone at the unit prices established in the 

contract fee schedule. 

Both contracts state that “no changes to this Agreement or the performance 

contemplated hereunder will be made unless the same are in writing and 

signed by both the Contractor and the County” and that the County “will not 

pay for any additional service, work performed or product provided before a 

written amendment to this Agreement.” The May 2017 contract further states 

that “a purchase order must be issued by the County before commencement of 

any work or purchase of any goods related to this agreement.” The purchase 

orders and contractor invoices did not comply with these contract terms. The 

County thus allowed the contractor to work without approved funding. 

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: 

(a) Be necessary and reasonable for the performance of the Federal 

award and be allocable thereto under these principles.... 

(g) Be adequately documented. 

According to 2 CFR 200.404, Reasonable costs: 

A cost is reasonable if, in its nature and amount, it does not exceed that 

which would be incurred by a prudent person under the circumstances 

7 
 

 

prevailing at the time the decision was made to incur the cost. The 

question of reasonableness is particularly important when the non-Federal 

entity is predominantly federally-funded. In determining reasonableness of 

a given cost, consideration must be given to: 

(a) Whether the cost is of a type generally recognized as ordinary and 

necessary for the operation of the non-Federal entity or the proper and 

efficient performance of the Federal award. 

(b) The restraints or requirements imposed by such factors as: sound 

business practices; arm’s-length bargaining; Federal, state, local, tribal, 

and other laws and regulations; and terms and conditions of the 

Federal award. 

(c) Market prices for comparable goods or services for the geographic 

area. 

(d) Whether the individuals concerned acted with prudence in the 

circumstances considering their responsibilities to the non-Federal 

entity, its employees, where applicable its students or membership, the 

public at large, and the Federal Government. 

(e) Whether the non-Federal entity significantly deviates from its 

established practices and policies regarding the incurrence of costs, 

which may unjustifiably increase the Federal award’s cost. 

The County did not have an adequate invoice review process in place, as 

evidenced by the fact that it reviewed the contractor billings and approved 

them even though the billings did not comply with the contract terms. The 

State of Florida and FEMA did not provide sufficient and consistent oversight, 

technical assistance, and monitoring to ensure that the County had a proper 

contracting process in place. 

Conclusion 

The County charged Project 6683 for $267,452 in road repair costs ($93,440 

plus $174,012) that the contractors did not bill in accordance with contract 

terms and that were not supported by adequate documentation, making the 

costs ineligible for grant funding. 

Recommendations 

Recommendation 5: We recommend that the Regional Administrator, FEMA 

Region IV, work with the State of Florida to determine the eligibility of the 

contract costs and disallow these costs if the contractors did not bill the costs 

in accordance with contract terms and did not adequately support the billings. 

8 
 

 

Recommendation 6: We recommend that the Regional Administrator, FEMA 

Region IV, provide additional technical assistance and monitoring for the 

County’s projects, to provide FEMA with reasonable assurance that the County 

properly accounts for contract costs, including obtaining and retaining 

supporting documentation. 

Finding 4 – The County’s Contracts Did Not Contain All Required Code of 

Federal Regulations (CFR) Provisions 

The County did not include all required provisions in its contracts to obtain 

disaster recovery services related to Hurricane Irma for Project 6683. 

Specifically, the County omitted: 

x	 The Contract Work Hours and Safety Standards Act provision from the 

May 2017 contract for road repair services; this provision is required 

under 2 CFR Part 200, Appendix II (E). 

x	 The Equal Employment Opportunity provision from the April 2017 

contract for road repair services; this provision is required under 2 CFR 

Part 200, Appendix II (C). 

The County did not have adequate internal controls in place to ensure that all 

of its contracts contained all required CFR provisions before executing the 

contracts and requesting that FEMA reimburse the related costs. The County 

was not aware that it was required to include these provisions in its contracts 

prior to the disaster event. In addition, FEMA did not provide specific training 

on contract compliance. 

According to 2 CFR Part 200, Appendix II (C), Equal Employment Opportunity: 

....all contracts that meet the definition of “federally assisted construction 

contract” in 41 CFR Part 60-1.3 must include the equal opportunity clause 

provided under 41 CFR 60-1.4(b), in accordance with Executive Order 

11246, “Equal Employment Opportunity” (30 FR 12319, 12935, 3 CFR 

Part, 1964-1965 Comp., p. 339).... 

According to 2 CFR Part 200, Appendix II (E), Contract Work Hours and Safety 

Standards Act: 

....all contracts awarded by the non-Federal entity in excess of $100,000 

that involve the employment of mechanics or laborers must include a 

provision for compliance with 40 U.S.C. 3702 and 3704, as supplemented 

by Department of Labor regulations (29 CFR Part 5). 

9 
 

 

Conclusion 

If the County doesn’t include all required provisions in its contracts, 

contractors may not be aware of the need to comply with Federal employment 

requirements. 

Recommendations 

Recommendation 7: We recommend that the Regional Administrator, FEMA 

Region IV, work with the State of Florida to educate the County representatives 

on including the required CFR provisions in their contracts and to increase 

monitoring to ensure compliance with related Federal provisions. 

Finding 5 – FDEM’s Subrecipient Monitoring Process Needs Improvement 

The Florida Division of Emergency Management’s (FDEM’s) subrecipient 

monitoring process needs improvement. Specifically, FDEM had 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 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 costs 

that were not supported as allowable and allocable although FDEM had 

reimbursed these costs to the subrecipient. Therefore, FDEM’s cost-validation 

process is not consistently effective. 

FDEM representatives provided information regarding the status of actions that 

FDEM has taken to implement a subrecipient monitoring program. FDEM 

established a Compliance Unit that will oversee subrecipient risk assessments, 

monitor, and obtain and review Single Audit reports. In addition, FDEM 

developed a standard operating procedure (SOP) for the subrecipient 

compliance program that is awaiting final management approval. For the 

2017/2018 fiscal year, FDEM pulled reports from its Florida PA system of 

record to identify the population of audits and is in the process of reviewing 

those reports. For current and future years, FDEM purchased an audit 

tracking module as part of its grants management software package. 

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: 

10 
 

 

 

 

 

 

 

 

 

 

 

 

(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. Passthrough entity monitoring of the subrecipient must include: 

(1) Reviewing financial and performance reports required by the 

pass-through 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. 

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

the Federal award provided to the subrecipient from the passthrough 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 the 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. 

11 
 

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

administrative processes for managing FEMA’s PA program funding. However, 

the plan 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 8: We recommend that the Regional Administrator, FEMA 

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

respect to establishing a subrecipient monitoring program and reviewing 

subrecipient Single Audit reports. 

Recommendation 9: 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. 

FEMA Comments and OIG Analysis 

FEMA provided its written response to this report on May 22, 2020. FEMA 

concurred with all nine recommendations and provided a completion date of 

May 31, 2021 for all the recommendations. If implemented, FEMA’s actions 

will satisfy the intent of each of the recommendations. We summarized FEMA’s 

comments below and included a copy of their comments in their entirety in 

appendix B. 

Recommendation 1. FEMA Region IV will review the applicable documentation 

and will make reductions to the approved subgrant if the County cannot 

provide sufficient documentation demonstrating the eligibility of its force 

account and allocability of contract costs. 

Recommendation 2. FEMA Region IV will work with the State to provide 

additional technical assistance and monitoring for the County’s projects. 

Recommendation 3. FEMA Region IV will work with the State to determine the 

allowability of the unsupported costs related to Project 6683. 

Recommendation 4. FEMA Region IV will work with the State to ensure that 

FEMA PA grant requests for reimbursement are adequately reviewed before 

payments are processed. 

12 
 

 

 

Recommendation 5. FEMA Region IV will work with the State to determine the 

eligibility of the contract costs and any potential disallowances of these costs. 

Recommendation 6. FEMA Region IV will provide additional technical 

assistance and monitoring for the County’s projects. 

Recommendation 7. FEMA Region IV will work with the State to educate 

County representatives regarding the inclusion of required contract provisions 

and to increase monitoring to ensure compliance with related Federal 

provisions. 

Recommendation 8. FEMA Region IV will assess the status and adequacy of 

the State’s corrective actions with respect to establishing a subrecipient 

monitoring program and reviewing subrecipient Single Audit reports. 

Recommendation 9. FEMA Region IV will work with the State to amend its 

approved PA Administrative Plan to reflect the processes 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 Lee County, Florida (the County) 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 this 

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 did not place any significant reliance on the data from FEMA’s 

computerized information system because we compared FEMA’s obligated costs 

to State payments and subgrantee claimed costs. We also verified that the 

payments and claimed costs were supported by source documents. 

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 

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

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

14 
 

Appendix B 

FEMA Comments to the Draft Report 

15 
 

Attac.hment : FEMA Management Response to Recommen dations 

Contained in OIG-19-011-AUD-FEl\fA 

OIG recommended that the Regional Administrntor, FE!\IA Region IV: 

Recommendation I: Work with the State of Florida to ensure that the County's ftmcling and/or 

reimbursements for the above projects is properly reduced by $899,450 for tmsupported force 

account costs and $61,109 for tmallocable contract costs. 

Response: Concur. FEMA Region IV will review the doctm1entation currently on file and v.~11 

work with the State of Florida and the County to acquire any additional doctl!lle.ntation. To the 

extent pennitted by Section 705 of the Stafford Act, FEMA will make reductions to the approved 

subgrant as necessary ifthe Cotmty is tmable to provide sufficient doctuuentation de.n1onstrating 

the eligibility of its force account costs and allocability of contract costs. Expected Completion 

Date (ECD): 05/3112021. 

Recommendation 2: Pro\~de additional technical assistance and monitoring for the Cotmty's 

projects, to provide FEMA with reasonable assurance that the Cotmty properly accounts for force 

account costs, inclucling retaining supporting doctm1entation. 

Response: Concur. FEMA Region IV \vill work with the State of Florida to provide additional 

technical assistance and monitoring for the Cotmty' s projects. ECD: 05/3112021. 

Recommendation 3: Work with the State of Florida to determine the allowability of the 

tmsupported costs of$16,210 for Projec.t 6683 and collect any amounts that are determined to be 

tUlallow<ible . 

Response: Concur. FEMA Region IV \vill work with the State of Florida to determine the 

allowability of the unsupported costs related to Project 6683 to the extent pennitted by Section 

705 of the Stafford Act. ECD: 05/3112021. 

Recommendation 4: Work with the State of Florida to adequately review costs and ensure that 

the request for ftmding inchtdes sufficient supporting doctuuentation before approving the costs 

for FEMA reimbursement. 

Response: Concur. FEMA Region IV \vill work with the State of Florida to ensure that requests 

for reimbursement ofFEMA Public Assistance grants are adequately reviewed before payments 

are processed. ECD: 05/3112021. 

Recommendation 5: Work with the State of Florida to determine the eligibility of the contract 

costs and disallow these costs ifthe contractors did not bill the costs in accordance \vith contract 

terms and did not adequately support the billings. 

2 

16 
 

17 
 

 

 

Appendix C 

Summary of Potential Monetary Benefits 

Finding 

Types of Potential Monetary 

Benefit Amount2 

Federal 

Share3 

1, 3 Questioned Costs – Ineligible $335,351 $328,561 

1, 2 Questioned Costs – Unsupported $1,010,635 $915,660 

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

2 Ineligible costs include $67,899 (Note 1) and $267,452 (Note 3). Unsupported costs include 

$994,425 (Note 1) and $16,210 (Note 2).
 3 Ineligible costs include $61,109 (Note 1) and $267,452 (Note 3). Unsupported costs include 

$899,450 (Note 1) and $16,210 (Note 2).
 

18 
 

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 

Assistant Secretary for Office of Policy 

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 

19 
Additional Information and Copies 

To view this and any of our other reports, please visit our website at: 

www.oig.dhs.gov. 

For further information or questions, please contact Office of Inspector General 

Public Affairs at: DHS-OIG.OfficePublicAffairs@oig.dhs.gov. 

Follow us on Twitter at: @dhsoig. 

OIG Hotline 

To report fraud, waste, or abuse, visit our website at www.oig.dhs.gov and click 

on the red "Hotline" tab. If you cannot access our website, call our hotline at 

(800) 323-8603, fax our hotline at (202) 254-4297, or write to us at: 

Department of Homeland Security 

Office of Inspector General, Mail Stop 0305 

Attention: Hotline 

245 Murray Drive, SW 

Washington, DC 20528-0305