Risk Assessment of 

FEMA's Grant Closeout 

Process 

January 30, 2020 

OIG-20-10 
 

 

 

 

 

 

 

 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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

January 30, 2020 

MEMORANDUM FOR: Stacy Marcott 

Acting Chief Financial Officer 

Department of Homeland Security 

Mary Comans 

Chief Financial Officer 

FROM: 

SUBJECT: Risk Assessment of FEMA’s Grant Closeout Process 

Attached is our final memo, Risk Assessment of FEMA’s Grant Closeout Process. 

We incorporated the formal comments provided by your offices. 

The memo contains no recommendations, so no further action is required at 

this time. 

Consistent with our responsibility under the Inspector General Act, we will 

provide copies of our report to congressional committees with oversight and 

appropriation responsibility over the Department of Homeland Security. We 

will post the final report on our website for public dissemination. 

Please call me with any questions, or your staff may contact Katherine Trimble, 

Deputy Assistant Inspector General for Audits, at (202) 981-6000. 

Federal Emergency Management Agency 

Sondra F. McCauley 

Assistant Inspector General for Audits 

www.oig.dhs.gov 
 

 

 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Introduction
 

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

completed its risk assessment of the Federal Emergency Management Agency’s 

(FEMA) grant closeout process, as required by the Grants Oversight and New 

Efficiency (GONE) Act of 2016, Public Law 114-117. This memorandum 

presents the results of our risk assessment and represents OIG’s reporting 

requirement under the GONE Act. We are not making any recommendations to 

FEMA in this memorandum. 

Consistent with OIG’s GONE Act section 2 obligations, our assessment 

objective was to determine whether an audit or review of FEMA’s grant closeout 

process is warranted. We identified potential risks in FEMA’s grant closeout 

process across three broad categories.1 As a result, we conclude, pursuant to 

the dictates of GONE Act section 2, that a full audit of FEMA’s grant closeout 

process is warranted. 

Background 

Enacted on January 28, 2016, the GONE Act required Federal agencies to 

report open Federal grant and cooperative agreement awards with periods of 

performance that had been expired for at least 2 years. Specifically, the GONE 

Act: 

x	 Section 2(a)(1) required agencies to submit an initial report to Congress 

and to the Secretary of Health and Human Services not later than 

December 31, 2017. 

x	 Section 2(b)(1) required agencies to submit an update to the initial report 

within one year indicating whether the open awards listed in the initial 

GONE Act submission had been closed. 

x	 Section 2(c) required the Inspector General of an agency with more than 

$500 million in annual grant funding to conduct a risk assessment to 

determine whether an audit or review of the agency’s grant closeout 

process was warranted. 

1 The three broad categories include risks associated with Unreliable Systems of Record, Lack 

of Integration in Grant Closeout Policies and Guidance, and Delays in Grant Closeout and 

Deobligation of Funds. These risks are discussed later in this memo. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Because FEMA awards approximately 98 percent of the estimated $10 billion 

DHS disperses annually in grants and cooperative agreements, and was the 

only DHS component that met the $500 million threshold, we focused our risk 

assessment on FEMA. 

To comply with the GONE Act reporting requirements, FEMA’s Office of the 

Chief Financial Officer submitted grant data to DHS’ Office of the Chief 

Financial Officer (DHS OCFO), which was combined with data received from 

other DHS agencies and reported in the Department’s fiscal year 2017 Agency 

Financial Report and 2018 update, as shown in Table 1. 

Table 1: DHS Grants Expired 2 Years or More 

Grant Program 2017 Report 2018 Update 

# of Grants Balance # of Grants Balance 

FEMA Public Assistance 

Grants 

73 $ 99,292,643 34 $ 58,691,543 

FEMA Assistance to 

Firefighter Grants 536 1,330,584 0 0 

Other FEMA Grants 200 15,103,103 27 6,201,207 

Other DHS Grants 69 654,293 12 1,646 

TOTALS 878 $116,380,623 73 $64,894,396 

Source: FEMA data summarized by DHS OIG 

In the FY 2017 report, DHS stated it had 878 open grants2 totaling more than 

$116 million that had been expired for at least 2 years. In its 2018 update, 

DHS said it had reduced those numbers to 73 grants totaling nearly $65 

million. In both reports, the majority of the grants were awarded by FEMA. 

Scope and Methodology 

We conducted our assessment work from March through August 2019, 

pursuant to the Inspector General Act of 1978, as amended, and the GONE Act 

Section 2. To complete our assessment, we: 

x reviewed applicable laws and regulations; 

x reviewed applicable DHS and FEMA policies, procedures, and 

memorandums; 

2 DHS actually reported 875 open grants. DHS advised that FEMA provided a status update 

prior to the publication of the FY 2017 Annual Financial Report, which indicated three more 

grants had been closed. However, DHS could not identify the specific grants. As the total 

dollar amount of the grants reported did not change, it can be surmised the closed grants had 

zero balances when initially reported. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

x interviewed DHS and FEMA officials; 

x reviewed DHS’ FY 2017 GONE Act Report and 2018 update; and 

x analyzed selected grant data used for DHS’ FY 2017 GONE Act Report 

and 2018 update.3 

Results of Review 

We identified risks in three broad categories associated with FEMA’s grant 

closeout process. 

Unreliable Systems of Record 

DHS policy4 requires that information technology be acquired and maintained 

to allow for the achievement of mission objectives. Past OIG audits have 

revealed deficiencies with FEMA’s various information technology systems. For 

example, in our report FEMA's Longstanding IT Deficiencies Hindered 2017 

Response and Recovery Operation, OIG-19-58, August 27, 2019, we detailed 

how FEMA information technology systems lacked functionality necessary to 

accomplish mission tasks, including non-integrated systems that did not 

support efficient data tracking and exchange. We concluded this lack of 

systems integration prevented efficient tracking and management of individual 

grants. 

FEMA uses various systems to manage and monitor grant closeouts, including: 

x Non-Disaster Grants Management System (ND Grants) 

x Grants Reporting Tool (GRT)
 

x Emergency Management Mission Integrated Environment (EMMIE) 

x National Emergency Management Information System (NEMIS)
 

x Mitigation Electronic Grants Management System (MT-eGrants) 

x Assistance to Firefighters Grants Management System (AFG eGrants) 

However, during the fieldwork for this risk assessment, we found these systems 

were not always reliable. FEMA officials explained they could not rely on these 

systems because of data integrity issues. Also, as we stated in our August 27, 

2019 report, FEMA indicated the various systems the agency was using were 

not integrated. To compensate, FEMA used various external databases and 

spreadsheets to manually monitor grant closeouts. 

3 Because this was a risk assessment, we did not conduct a thorough validation or make
 

conclusions on the validity of the data submitted by DHS.
 4 DHS Instruction 142-02, Information Technology Integration and Management,
 

February 6, 2014
 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Information from these manual processes was also used to prepare GONE Act 

reports. For example, FEMA’s financial management system, the agency’s only 

system that includes all of its grants from its various grant programs, does not 

provide a grant’s period of performance (POP) date for all of FEMA’s grants. A 

grant’s POP date was the basis provided by the GONE Act for determining 

whether the grant needed to be reported. To obtain the POP dates for the other 

grants, FEMA had to use a variety of sources, including its various programspecific grant management systems, manually prepared spreadsheets, and 

locally maintained databases. Reliance on such manual processes may 

increase the risk that grant awards will not be closed out properly and on time. 

Lack of Integration in Grant Closeout Policies and Guidance 

The Comptroller General establishes internal control standards for Federal 

programs and processes.5 These standards stipulate management should 

effectively communicate to personnel the policies and procedures of a program 

so personnel can implement the control activities for their assigned 

responsibilities. 

FEMA did not have standardized integrated processes or policies for grant 

closeout across all grant programs. Rather, the policies and guidance varied 

depending on the specific grant program. The lack of integrated grant closeout 

policies and guidance may make it difficult to effectively manage the grant 

oversight process, and may increase the risk of significant delays in closing 

expired or inactive grants. 

Delays in Grant Closeout and Deobligation of Funds 

Federal regulations require agencies close out Federal awards once they have 

determined the award recipients have completed the applicable administrative 

actions and required work.6 Additionally, recipients of awards made after 

December 24, 2014 must liquidate all obligations within 90 days after the end 

of the period of performance, unless the awarding agency has authorized an 

extension or a program statute specifying a different liquidation period exists.7 

As illustrated in Table 1, in 2017, DHS reported 878 open grants totaling more 

than $116 million that had been expired for at least 2 years. In its 2018 

update, DHS reported it had reduced those numbers to 73 grants totaling 

5 U.S. Government Accountability Office, Standards for Internal Control in the Federal 

Government, Section 3.01, GAO-14-704G, September 2014 

6 44 CFR § 13.50(a) and 2 CFR § 200.343 7 2 CFR § 200.343(b) 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

nearly $65 million. In both years, the majority of those grants were awarded by 

FEMA. 

Further, in our report The State of Washington’s Oversight of FEMA’s Public 

Assistance Grant Program for Fiscal Years 2015–2017 Was Generally Effective, 

OIG-19-64, September 2019, we noted multiple instances when recipients for 

completed grants did not submit closeout requests timely, and FEMA did not 

pursue those requests. This resulted in many grants not being closed out 

within a reasonable timeframe. 

Delayed follow up on grant funds that remain after a grant’s period of 

performance has expired may unnecessarily prolong the final disbursement of 

grant funding to grantees and subgrantees whose budgets may be significantly 

affected by the delays. Deobligating the remaining funding for completed 

grants sooner would allow those funds to be put to better use. 

Conclusion 

We identified several risks related to FEMA’s grant closeout process and 

determined that a full audit is warranted. This memorandum does not contain 

recommendations to FEMA. 

Management Comments and OIG Analysis 

DHS and FEMA provided a consolidated response to our draft memo, which is 

included in its entirety in appendix A. DHS and FEMA leadership concurred 

with our risk assessment, and provided details on improvements already made 

and planned future improvements to FEMA’s grant closeout processes. 

While FEMA has initiated improvements to its grant closeout processes, 

significant risks remain. We will coordinate with FEMA, as appropriate, about 

a future full audit of FEMA’s grant closeout processes. 

Major Contributors 

The Office of Audits major contributors to this report are Brooke Bebow, 

Director; Louis Ochoa, Audit Manager; Renee Gradin, Auditor-in-Charge; 

Shawn Cosman, Auditor; Darrel Francis, Auditor; Curtis Watkins, Program 

Analyst; Deborah Mouton-Miller, Communications Analyst; and Lauren Moore, 

Independent Referencer. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

DHS and FEMA Comments 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

Memo Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief 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 

www.oig.dhs.gov 9 OIG-20-10 
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