Iron County Forestry and 

Parks Department, 

Wisconsin, Needs 

Assistance and 

Monitoring to Ensure 

Proper Management of Its 

FEMA Grant 

March 20, 2017 

OIG-17-48-D 
 

 

 

 

DHS OIG HIGHLIGHTS

 Iron County Forestry and Parks

 Department, Wisconsin, Needs Assistance

and Monitoring to Ensure Proper Management

of Its FEMA Grant 

March 20, 2017 

Why We Did 

This Audit 

FEMA estimated that the 

Department had sustained 

$3.2 million in damages from 

severe storms and flooding in 

July 2016. We conducted the 

audit early in the grant 

process to identify areas 

where the Department may 

need additional technical 

assistance and monitoring to 

ensure compliance with 

Federal requirements. 

What We 

Recommend 

FEMA should not fund 

$72,235 of ineligible contract 

costs and should direct 

Wisconsin to provide 

additional technical 

assistance and monitoring to 

ensure the Department 

complies with applicable 

Federal procurement 

standards. 

For Further Information: 

Contact our Office of Public Affairs at (202) 

254-4100, or email us at 

DHS-OIG.OfficePublicAffairs@oig.dhs.gov 

What We Found 

Iron County Forestry and Parks Department’s, 

Wisconsin (Department) accounting policies, 

procedures, and business practices are adequate 

to account for grant funds according to Federal 

regulations and Federal Emergency Management 

Agency (FEMA) guidelines. However, the 

Department needs to revise its procurement 

policies and procedures to comply fully with all 

Federal procurement standards. If the 

Department makes these revisions and follows 

them, FEMA should have reasonable assurance 

that — 

x small and minority businesses, women’s 

business enterprises, and labor surplus area 

firms will receive sufficient opportunities to 

compete for federally funded work; 

x the risk of misinterpretations and disputes 

relating to contracts will be minimized; and 

x contracts are awarded to individuals, 

companies, or recipients who do not pose a 

business risk to the government. 

At the time of our fieldwork, FEMA had not 

completed project worksheets to define the scope 

of disaster work. Because of these uncertainties, 

Wisconsin, as FEMA’s grant recipient, should 

provide the Department additional technical 

assistance and monitoring. This should provide 

FEMA reasonable assurance that the Department 

will follow Federal procurement standards in 

spending the estimated $3.2 million in eligible 

disaster-related costs. 

FEMA Response

FEMA Region V officials generally agreed with our 

findings and recommendations. FEMA’s written 

response is included at appendix C. 

www.oig.gov OIG-17-48-D 
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OFFICE=m' INSPECTORGENERAL 

_____Q~_partment of J-I.gro~l~d Security ~--=-

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

MEMORANDUM FOR: --·------ Janet - M. Odeshoo ---­ -

Acting Regional Administrator, Region V 

Federal Emergency Management Agency 

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- -· -· -- --­

------ -<1~~ 

-FR0M: ------- - - Thomas M. Salmon 

-:.Assisfant-Irtspector General -=-===---·-- - - - - ­

Office of Emergency Management Oversight 

SUBJECT: Iron County Forestry and Parks Department, Wisconsin, 

Needs Assistance and Monitoring to Ensure Proper 

Management ofIts FEMA Grant 

Audit Report Number OIG-17-48-D 

We audited the capability of Iron County Forestry and Parks Department, 

Wisconsin (Department), to manage Federal Emergency Management Agency 

(FEMA) Public Assistance grant funds. We conducted the audit early in the 

Public Assistance process to identify areas where the Department may need 

additional technical assistance or monitoring to ensure compliance with 

Federal regulations and FEMA guidelines. By undergoing an audit early in the 

grant cycle, grant recipients have the opportunity to correct noncompliance 

before they spend the majority of their grant funding. It also allows them the 

opportunity to supplement deficient documentation or locate missing records 

before foo fuucli time- elapses. 

At the time of our fieldwork, the State of Wisconsin Emergency Management 

Agency (Wisconsin), a FEMA grant recipient, had not yet awarded any of the 

approximately $3.2 million in estimated damages the Department sustained 

from severe storms and flooding in July 2016. The award will provide 75 

percent Federal funding for debris removal, emergency protective measures, 

and permanent work unless projects meet the eligibility criteria for a higher 

Federal cost-sharing percentage under the Alternative Procedures Pilot 

Program for Debris Removal. The disaster caused damage to several of the 

Department's insurable facilities. However, in October 2016, the Department 

was still negotiating with its insurance carrier, and FEMA had not yet allocated 

insurance proceeds to reduce estimated costs to repair damages. At the time of 

our fieldwork, FEMA had not obligated funds or completed project worksheets 

to define the scope of work, nor had the Department completed most of its 

disaster-related work or filed claims for reimbursement. 

www.oig.gov OIG-17-48-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Background
 

Iron County Forestry and Parks Department, located near the southern shore 

of Lake Superior, oversees approximately 170,000 acres of forestland for Iron 

County, Wisconsin, including the facilities at Saxon Harbor. In July 2016, 

severe storms and flash flooding diverted Oronto Creek that cut a new path to 

Lake Superior and damaged facilities at Saxon Harbor. The President declared 

a major disaster on August 9, 2016. 

Figure 1: Aerial view of Saxon Harbor, Wisconsin 

Source: State of Wisconsin Emergency Management Agency 

Results of Audit 

The Department’s accounting policies, procedures, and business practices are 

adequate to account for FEMA grant funds according to Federal regulations 

and FEMA guidelines. The Department should be able to accurately account for 

disaster-related costs and maintain documentation sufficient to support 

disaster costs. Additionally, the Department’s insurance procedures and 

practices are sufficient to ensure the Department can properly manage 

insurance proceeds. However, at the time of our fieldwork, the Department did 

www.oig.dhs.gov 2 OIG-17-48-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

not have adequate procurement policies, procedures, and business practices to 

comply fully with all Federal procurement standards. Therefore, FEMA should 

not fund $72,235 of contract costs the Department improperly procured. FEMA 

should also direct Wisconsin, as FEMA’s grantee, to provide the Department 

with additional technical assistance and monitoring to ensure the Department 

follows Federal procurement standards in spending the remaining $3.17 

million ($3,240,646 minus $72,235 improperly procured contract costs) of 

estimated eligible disaster work. 

Finding A: Policies, Procedures, and Business Practices 

Project Cost Accounting 

The Department has an effective system in place to ensure it accounts for 

disaster costs and can adequately support disaster-related costs as the 

following Federal regulation and FEMA guideline require: 

x Subrecipients must maintain accounting records that adequately identify 

the source and application of Federal funds and maintain source 

documentation to support those accounting records (2 Code of Federal 

Regulations (CFR) 200.302(b)(3)). 

x Applicants must maintain all source documentation supporting project 

costs. In addition, applicants should file all supporting documentation by 

project to facilitate closeout and audits (Public Assistance Program and 

Policy Guide, FP 104-009-2, January 2016, p. 134). 

The Department designated specific accounting codes for all disaster-related 

costs. We assessed the adequacy of the Department’s policies and procedures 

to account for contract costs and for its own force account labor, equipment, 

and material. We determined the Department can properly segregate costs by 

project and maintain sufficient detailed documentation to support its disasterrelated costs. 

Insurance 

The Department’s insurance procedures and practices are adequate to ensure 

FEMA deducts accurate anticipated insurance proceeds from eligible projects 

according to Federal regulations. As of October 20, 2016, the Department was 

still negotiating with its insurance carrier and had not yet received any 

insurance proceeds. However, based on insurance records and interviews with 

Department officials, the Department will be able to properly identify 

www.oig.dhs.gov 3 OIG-17-48-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

anticipated insurance recoveries related to eligible project costs as Federal 

regulations at 44 CFR 206.250(c) require. 

In addition, we confirmed that Department officials are aware that obtaining 

and maintaining insurance on insurable facilities is a condition of current and 

future FEMA funding. The Department must obtain and maintain insurance 

that is reasonable and necessary to protect facilities repaired or replaced using 

Federal funds against future loss from the types of hazard that caused the 

major disaster (44 CFR 206.253(b)(1) and (f)). 

Procurement Practices 

At the time of our audit fieldwork, the Department did not have adequate 

procurement policies, procedures, and business practices to ensure compliance 

with the following Federal regulations: 

1. take all necessary affirmative steps to assure the use of small and 

minority businesses, women’s business enterprises, and labor surplus 

area firms when possible (2 CFR 200.321(a)); 

2. include required provisions in all their contracts (2 CFR 200.326); and 

3. confirm contracts are not awarded to debarred, suspended, or otherwise 

excluded or ineligible contractors (2 CFR 200.213). 

As a result, the Department had begun awarding contracts and had incurred 

$72,235 in contract costs without complying with these requirements. 

Compliance is essential to ensure that (1) disadvantaged firms receive sufficient 

opportunities to bid on federally funded work; (2) the risk of misinterpretations 

and disputes relating to contracts is decreased; and (3) the government is 

protected from doing business with individuals, companies, or recipients who 

pose a business risk to the government. Therefore, FEMA should not fund 

$72,235 of ineligible contract costs incurred because the Department did not 

comply with Federal procurement requirements. 

We reviewed the Department’s policies, procedures, and business practices in 

effect at the time of the disaster. We also reviewed the methodology it used to 

solicit or award contracts for this disaster (see table 1). At the time of our 

fieldwork, the Department had awarded two contracts — one for debris removal 

and one for architectural and engineering (A&E) services. The Department had 

also selected another firm for debris removal, but had not yet awarded the 

contract. After we made Department officials aware they had not complied with 

all Federal procurement standards, they informed us that they had decided to 

terminate the contract for A&E services and cancel the award for the second 

debris removal contract. 

www.oig.dhs.gov 4 OIG-17-48-D 
 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Table 1: Procurement Actions Reviewed 

Scope 

of Work 

Amount 

Awarded or 

Estimated 

Action Taken 

Amounts of 

Ineligible 

Cost 

Debris Removal $ 109,928 Terminated Before Awarded $ 0 

Demolition and 

Debris Removal 17,250 Awarded and Completed 17,250 

A&E 1,587,833 Awarded, Terminated Before Completion1 54,985

 Totals $1,715,011 $72,235 

Source: Department procurement records and Office of Inspector General (OIG) analysis 

Disadvantaged Firms — The Department did not take the required steps to 

assure the use of disadvantaged firms when possible for any of the three 

procurement actions we reviewed. These steps include (1) placing qualified 

small and minority businesses and women’s business enterprises on 

solicitation lists; (2) assuring such business enterprises are solicited whenever 

they are potential sources; (3) using the services and assistance, as 

appropriate, of such organizations as the Small Business Administration and 

the Minority Business Development Agency of the Department of Commerce; 

and (4) requiring the prime contractor, if subcontractors are used, to take the 

affirmative steps as well. Department officials said they were not aware of the 

requirement to affirmatively solicit these types of disadvantaged businesses. 

However, the Department had awarded the A&E contract to a small business, 

and was in the process of awarding a $109,928 contract for debris removal to 

another small business.2 

Required Contract Provisions — The Department did not include all required 

provisions in the contracts it awarded. The required provisions include those 

for remedies and termination, compliance with labor and environmental laws, 

and prohibition of “kickbacks.” These provisions describe the rights and 

responsibilities of the parties and minimize the risk of misinterpretations and 

disputes. 

Debarred Contractors List — The Department did not correctly confirm its 

contractors were not debarred, suspended, or otherwise excluded or ineligible 

from receiving federally funded contracts. Department officials said they were 

not aware of the requirement to use the Federal debarment list, but they 

routinely use Wisconsin’s Department of Natural Resources debarment list. 

However, Wisconsin officials said the State’s debarment website listed 

1 The Department officials terminated this contract after we informed them of the Federal 

procurement violations.
 2 According to Department officials, the Department did not want to award the $109,928 debris
 

removal contract until after we had completed our fieldwork.
 

www.oig.dhs.gov 5 OIG-17-48-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Wisconsin’s debarred contractors and may not include federally debarred, 

suspended, or otherwise ineligible contractors. To be certain, we verified that 

none of the three contractors was debarred, suspended, or otherwise excluded 

from participating in Federal programs or activities. 

As a result of our audit, the Department revised its procurement policies, 

which the Iron County Board of Supervisors adopted in December 2016. In 

addition, because it had not complied fully with Federal procurement 

standards, the Department terminated its contract with its A&E firm and also 

did not award the $109,928 debris removal contract. Department officials 

acknowledged that they had improperly procured their contracts but said they 

plan to seek FEMA reimbursement for the $72,235 in disaster-related contract 

costs they had incurred. 

Finding B: Grant Management 

The Department could benefit from additional technical assistance and 

monitoring to ensure it complies with Federal procurement standards. In its 

FEMA-State Agreement (FSA-4276-FEMA-DR-WI, p. 2), Wisconsin agreed to 

comply and require all subrecipients to comply with the requirements of all 

applicable laws and regulations including the Stafford Act and FEMA policies 

and guidance.3 In addition, 2 CFR 200.331(d) requires recipients to monitor 

the subrecipient’s activities to ensure “compliance with Federal statutes, 

regulations, and the terms and conditions of the subaward.” Therefore, 

Wisconsin should provide additional technical assistance to and increase its 

monitoring of the Department to ensure it complies with Federal procurement 

standards. Doing so should provide FEMA reasonable assurance the 

Department will spend the remaining $3.17 million ($3,240,646 minus 

$72,235 improperly procured contract costs) in estimated damages for eligible 

disaster work according to Federal procurement standards. 

Recommendations 

We recommend that the Regional Administrator, FEMA Region V: 

Recommendation 1: Not fund $72,235 ($54,176 Federal share) of ineligible 

contract costs, unless FEMA grants an exception for all or part of the costs as 

2 CFR 200.102(b) allows and determines the costs as reasonable (finding A).4 

Recommendation 2: Direct Wisconsin to provide additional technical 

assistance and monitoring to the Department to ensure it complies with 

3 Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended (Stafford Act) 4 Because FEMA had not yet obligated these costs, we classify them as a cost avoidance. 

www.oig.dhs.gov 6 OIG-17-48-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Federal procurement regulations for awarding disaster-related contracts and to 

prevent the potential improper spending of approximately $3,168,411 

($2,376,308 Federal share) in estimated disaster work (finding B). 

Discussions with Management and Audit Follow-up 

We discussed the results of our audit with FEMA, Wisconsin, and Department 

officials during our audit. We considered their comments in developing our 

final report and incorporated their comments as appropriate. We also provided 

a draft report in advance to these officials and discussed it at exit conferences 

with FEMA officials on January 12, 2017, and with Wisconsin and Department 

officials on January 10, 2017, and January 11, 2017, respectively. FEMA, 

Wisconsin, and Department officials generally agreed with our findings and 

recommendations. 

FEMA Region V officials provided a written response to this report on 

February 10, 2017, and concurred with our findings and recommendations 

(see appendix C). FEMA officials stated their regional counsel is working 

directly with the applicant regarding procurement. However, FEMA did not 

provide action plans or target completion dates to address either 

recommendation. Therefore, we consider recommendations 1 and 2 open and 

unresolved. 

Within 90 days of the date of this memorandum, please provide our office with 

a written response that includes your corrective action plan, and target 

completion date for each recommendation. Also, please include the contact 

information for the responsible parties and any other supporting 

documentation necessary to inform us about the status of the 

recommendations. Please email a signed PDF copy of all responses and 

closeout requests to Paige.Hamrick@oig.dhs.gov. Until we receive and evaluate 

your response, we will consider the recommendations open and unresolved. 

The Office of Emergency Management Oversight major contributors to this 

report were Paige Hamrick, Director; David B. Fox, Audit Manager; 

Rodney Johnson, Auditor-in-Charge; and Jacqueline Lim, Auditor. 

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

Paige Hamrick, Director, Central Regional Office - North, at (214) 436-5200. 

www.oig.dhs.gov 7 OIG-17-48-D 
 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objective, Scope, and Methodology 

We audited the capability of Iron County Forestry and Parks Department, 

Wisconsin (Department), Public Assistance Identification Number 051-

UGWW8-00, to manage Federal Emergency Management Agency (FEMA) Public 

Assistance grant funds. Our audit objective was to determine whether the 

Department’s policies, procedures, and business practices are adequate to 

account for and expend FEMA grant funds according to Federal regulations 

and FEMA guidelines for FEMA Disaster Number 4276-DR-WI. As of October 

20, 2016, the cutoff date of our audit, FEMA had not yet obligated any funding 

or completed its development of project worksheets for damages resulting from 

severe storms and flooding during the period July 11–12, 2016. The award will 

provide FEMA funding for debris removal, emergency work, and permanent 

work for large and small projects.5 As of the audit cutoff date, Wisconsin had 

not paid the Department for any of its projects and the Department had not 

submitted any reimbursement requests for disaster-related costs. 

We interviewed FEMA, Wisconsin, and Department officials; assessed the 

adequacy of the policies, procedures, and business practices the Department 

uses and plans to use to account for and expend Federal grant funds and to 

procure and monitor contracts for disaster work; reviewed applicable Federal 

regulations and FEMA guidelines; and performed other procedures considered 

necessary to accomplish our objective. We did not perform a detailed 

assessment of the Department’s internal controls over its grant activities 

because it was not necessary to accomplish our audit objective. 

We conducted this performance audit between October 2016 and January 

2017, 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 objective. We believe the evidence obtained 

provides a reasonable basis for our findings and conclusions based upon our 

audit objective. In conducting this audit, we applied the statutes, regulations, 

and FEMA policies and guidelines in effect at the time of the disaster. 

5 Federal regulations in effect at the time of the disaster set the large project threshold at 

greater than $121,800 [Notice of Adjustment of Disaster Grant Amounts, Vol. 80, No. 198, Fed. 

Reg. 61,836 (Oct. 14, 2015)]. 

www.oig.dhs.gov 8 OIG-17-48-D 
 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

Potential Monetary Benefits 

Table 2: Cost Avoidance 

Description of Work and 

Project Description 

Estimated Cost 

to Repair 

Cost Avoidance* 

(Finding A) 

Debris Removal and Design 

and Engineering Services $ 72,235 $ 72,235 

Saxon Harbor 3,168,411 3,168,411 

Totals $3,240,646 $3,240,646 

Source: OIG analysis 

* FEMA has not obligated the estimated $3,240,646 of damages to the projects 

on which the Department expects to expend disaster-related costs; therefore, we 

classify these costs as a cost avoidance. 

Table 3: Summary of Potential Monetary Benefits 

Type of Potential Monetary Benefit Amount Federal Share 

Questioned Costs – Ineligible $ 0 $ 0 

Questioned Costs – Unsupported 0 0 

Funds Put to Better Use (Cost Avoidance) 3,240,646 2,430,485 

Totals $3,240,646 $2,430,485 

Source: OIG analysis of report findings 

www.oig.dhs.gov 9 OIG-17-48-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix C 

FEMA Region V Audit Response 

www.oig.dhs.gov 10 OIG-17-48-D 
 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix C (continued) 

www.oig.dhs.gov 11 OIG-17-48-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix D 

Report Distribution 

Department of Homeland Security 

Secretary 

Chief of Staff 

Chief Financial Officer 

Under Secretary for Management 

Chief Privacy Officer 

Audit Liaison, DHS 

Federal Emergency Management Agency 

Administrator 

Chief of Staff 

Chief Financial Officer 

Chief Counsel 

Chief Procurement Officer 

Director, Risk Management and Compliance 

Audit Liaison, FEMA Region V 

Audit Liaison, FEMA (Job Code G-16-065) 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

External 

Director, State of Wisconsin Emergency Management Agency 

Forest Administrator, Iron County Forestry and Parks Department 

State Auditor, Office of the Wisconsin State Auditor 

www.oig.dhs.gov 12 OIG-17-48-D 
 

 

 

 

 

 

 

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