Milwaukie, Oregon, Has 

Adequate Policies, 

Procedures, and Business 

Practices to Manage Its 

FEMA Grant Funding 

June 6, 2017 

OIG-17-66-D
 
 

 

 

DHS OIG HIGHLIGHTS 

Milwaukie, Oregon, Has Adequate 

Policies, Procedures, and Business Practices to 

Manage Its FEMA Grant Funding 

June 6, 2017 

Why We Did 

This Audit 

The severe winter storms, 

straight-line winds, flooding, 

landslides, and mudslides 

during December 6–23, 

2015, caused severe damage 

to the City of Milwaukie, 

Oregon (City). City officials 

estimate that disasterrelated costs may exceed 

$2.2 million. We conducted 

this audit early in the Public 

Assistance process to 

identify areas where the City 

may need additional 

technical assistance or 

monitoring to ensure 

compliance with Federal 

regulations and FEMA 

guidelines. 

What We 

Recommend 

The report contains no 

recommendations. 

For Further Information: 

Contact our Office of Public Affairs at 

(202) 254-4100, or email us at 

DHSOIG.OfficePublicAffairs@oig.dhs.gov 

What We Found 

The City has established adequate policies, 

procedures, and business practices to account for 

and expend FEMA Public Assistance grant funds 

according to Federal regulations and FEMA 

guidelines. For example, the City can account for 

disaster costs on a project-by-project basis and 

adequately support the costs. Additionally, the 

City’s procurement policies and procedures are 

consistent with Federal procurement standards. 

Therefore, if the City follows those policies, 

procedures, and business practices, FEMA has 

reasonable, but not absolute, assurance that the 

City will properly manage the FEMA Public 

Assistance grant funds according to Federal 

regulations. 

FEMA Response

Because the audit does not identify any issues 

requiring further action from FEMA Region X, we 

consider this audit closed.

www.oig.gov OIG-17-66-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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


June 6, 2017 


MEMORANDUM FOR: Sharon Loper 

Acting Regional Administrator, Region X 

Federal Emergency Management Agency 

FROM: 

/d--C:?--7£ 

John E. McCoy II 

Acting Assistant Inspector General 

Office of Emergency Management Oversight 

SUBJECT: Milwaukie, Oregon, Has Adequate Policies, 

Procedures, and Business Practices to Manage Its 

FEMA Grant Funding 

Audit Report Number OIG-17-66-D 

We audited Federal Emergency Management Agency (FEMA) Public Assistance 

grant funds awarded to the City of Milwaukie, Oregon (City). We conducted this 

audit early in the Public Assistance process to identify areas where the City 

may need additional technical assistance or monitoring to ensure compliance 

with Federal regulations and FEMA guidelines. In addition, 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 too much time elapses. 

As of February 2 , 2017 (our audit cutoff date), the State of Oregon Office of 

Emergency Management (Oregon), a FEMA grant recipient, had awarded the 

City $575,254 for damages resulting from severe winter storms, straight-line 

winds, flooding, landslides, and mudslides during December 6-23, 2015. The 

award will provide 75 percent funding for emergency protective measures and 

permanent work. At the time of our audit, FEMA had not finalized all project 

worksheets. 

City officials estimate that disaster-related costs may exceed $2.2 million, and 

the City was in the process of accounting for those disaster costs. Therefore, 

our audit assessed the policies, procedures and business practices the City 

used to account for and expend $210,711 that we identified as disaster-related 

costs the City incurred at the time of our audit. 

www.oig.dhs.gov 1 OIG-17-66-D 
 

x

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Background 

The City of Milwaukie, located about 7 miles from Portland, Oregon, is home to 

several of the state’s largest employers. During the period December 6–23, 

2015, widespread flooding, mud, land, and debris slides, as well as high winds, 

occurred in certain areas of the state. These events caused damages to the 

City’s Riverside Park and Kellogg Creek Bridge. The President signed a major 

disaster declaration (DR-4258-OR) on February 17, 2016, to provide Oregon 

and local governments, assistance with recovery efforts.1 The declaration 

authorized Federal Public Assistance in the designated areas and Hazard 

Mitigation throughout Oregon.2 

Results of Audit 

The City has established adequate policies, procedures, and business practices 

to account for and expend Federal Emergency Management Agency (FEMA) 

Public Assistance grant funds according to Federal regulations and FEMA 

guidelines. For example, the City can account for disaster costs on a projectby-project basis and adequately support the costs. Additionally, the City’s 

procurement policies and procedures are consistent with Federal procurement 

standards. Therefore, if the City follows those policies, procedures, and 

business practices, FEMA has reasonable, but not absolute, assurance that the 

City will properly manage the FEMA Public Assistance grant funds according to 

Federal regulations. 

Accounting Policies and Procedures 

The City has an effective system in place to ensure it accounts for disasterrelated costs on a project-by-project basis and can support the costs as the 

following Federal regulations and FEMA guidelines require: 

Recipients must account for large project expenditures on a project-byproject basis (44 Code of Federal Regulations (CFR) 206.205(b)). FEMA 

requires subrecipients to keep records for all projects on a project-byproject basis (Public Assistance Program and Policy Guide, 

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

1 Federal Register, Oregon; Major Disaster and Related Determinations, 81 Fed. Reg. 14873 

(March 18, 2016). 

2 FEMA’s Public Assistance program awards grants to State, local, and federally recognized 

tribal governments and certain private non-profit entities to assist them with the response to 

and recovery from federally declared disasters. Hazard mitigation is any action taken to reduce 

or eliminate long-term risk to people and property from natural hazards. 

www.oig.dhs.gov 2 OIG-17-66-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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 CFR 200.302(b)(3)). 

At the time of our audit, the City was in the process of accounting for disaster 

costs. We reviewed $210,711 in disaster-related costs the City had incurred 

and determined that the City was adequately tracking the costs in its 

accounting system on a project-by-project basis and had maintained 

appropriate documentation to support the costs. Therefore, if the City 

continues to follow its procedures, FEMA and Oregon have reasonable, but not 

absolute, assurance that the City will account for disaster costs according to 

Federal regulations. 

Procurement Practices 

The City has adequate procurement practices in place to provide reasonable 

assurance that it will comply with Federal procurement requirements at 

2 CFR 200.317 through 326. To obtain an understanding of the City’s 

procurement practices, we reviewed its procurement policies, procedures, and 

contracting files. We also discussed these practices with the City’s contracting 

officials. Nevertheless, as of our audit cutoff date, the City had only awarded 

four small contracts totaling $210,711, and had not awarded any large 

contracts for disaster-related damages. The City’s procurement policies and 

procedures for large contracts require the City to — 

x	 award contracts under full and open competition; 

x	 include required provisions in its contracts; 

x	 conduct price or costs analysis; 

x	 maintain adequate documentation of procurement history; 

x	 monitor contracts; and 

x	 provide small or disadvantaged business enterprises such as minority 

firms, and women’s business enterprises, when possible, sufficient 

opportunities to bid on Federal work as Congress intended. 

Discussion with Management and Audit Follow-Up 

We discussed the results of our audit with FEMA, Oregon, and City officials 

during our audit. We also provided a draft report in advance to these officials 

and discussed it at exit conferences with FEMA on March 13, 2017 and with 

Oregon on March 16, 2017; the City did not request an exit conference. 

Because the audit did not identify any issues requiring further action from 

FEMA, we consider this audit closed. 

www.oig.dhs.gov 3	 OIG-17-66-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

The Office of Emergency Management Oversight major contributors to this 

report are Humberto Melara, Director; Louis Ochoa, Audit Manager; 

Renee Gradin, Auditor-in-charge; Arona Maiava, Auditor; Daniel Flores, 

Auditor; and Victor Du, Independent Referencer. 

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

Paul Wood, Acting Deputy Assistant Inspector General or Humberto Melara, 

Director, Western Regional Office, at (510) 637-1463. 

www.oig.dhs.gov 4 OIG-17-66-D 
 

 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objective, Scope, and Methodology 

We audited the capability of the City (Public Assistance Identification Number 

005-48650-00) to manage FEMA Public Assistance grant funds. Our audit 

objective was to determine whether the City’s policies, procedures, and 

business practices are adequate to account for and expend FEMA Public 

Assistance Program grant funds according to Federal regulations and FEMA 

guidelines for FEMA Disaster Number 4258-DR-OR. 

The City expects to receive a Public Assistance grant award of $2,255,073 from 

Oregon, the grant recipient. The award will provide 75 percent FEMA funding 

for one large project and two small projects (see table 1).3 Our audit covered 

the period of December 6, 2015, the first day of the incident period, through 

February 2, 2017, our audit cutoff date. At the time of our fieldwork, the City 

had received a cost reimbursement for one small project. We assessed the 

policies and procedures the City used to account for and expend FEMA funds, 

and audited $210,711 the City had expended on disaster-related expenditures 

by the time of our audit cutoff date. 

To accomplish our objectives, we interviewed FEMA, Oregon, and City officials; 

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

City 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 limited our review of the City’s internal 

controls to what was necessary to accomplish our audit objectives. 

We conducted this performance audit between November 2016 and 

February 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 that 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. 

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

greater than $121,800 [Federal Register, Notice of Adjustment of Disaster Grant Amounts, 80 FR 

61836; October 14, 2015]. 

www.oig.dhs.gov 5 OIG-17-66-D 
 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A (Continued) 

Table 1: City Projects and Anticipated Award Amounts 

Project 

Number 

Category 

of Work4 

Anticipated 

Award 

Amount 

68 C $2,130,350 

241* B 89,158 

296* G 35,565 

Total $2,255,073 

Source: Office of Inspector General and Department project listing 

* Small project 

4 FEMA identifies type of work by category: A for debris removal, B for emergency protective 

measures, and C–G for permanent work. 

www.oig.dhs.gov 6 OIG-17-66-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

Report Distribution 

Department of Homeland Security 

Secretary 

Chief of Staff 

Chief Financial Officer 

Under Secretary of Management 

Executive Secretary 

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 X 

Audit Liaison, FEMA (Job Code G-16-058) 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

External 

Director, Infrastructure Branch, Oregon Emergency Coordination Center 

Public Works Director, City of Milwaukie, Milwaukie, Oregon 

City Engineer, City of Milwaukie, Milwaukie, Oregon 

Principal Financial Analyst, City of Milwaukie, Milwaukie, Oregon 

www.oig.dhs.gov 7 OIG-17-66-D 
 

 

 

 

 

 

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