U.S. DEPARTMENT OF COMMERCE 

Office of Inspector General 

National Telecommunications and 

Information Administration 

Arkansas Public Safety Interoperable 

Communications Grant Award No. 

2007-GS-H7-0012 

Final Audit Report No. DEN-19430 

March 2010 

Denver Regional Office of Audits 
UNITEC STATES CEPARTMENT OF COMMERCE 

Office of Inspector General 

Wasl,lngcon 0 C 20230 

March 22 2010 

MEMORANDUM FOR: Lawrence E. Strickling 

Assistant Secretary for 

Communications and Information 

National Telecommunications and 

Information Administration 

FROM:
 

SUBJECT:	 Final Audit Report No. DEN-19430 

Auditee: Arkansas Department of 

Emergency Management 

PSIC Award No. 2007-GS-H7-0012 

Attached is a copy of our final audit report on the Arkansas Public Safety Interoperable 

Communications (PSIC) award. Since there are no recommendations in the audit report, no 

further action is needed and an agency Audit Resolution Proposal is not required. A copy of the 

report will be posted on OIG's Web site pursuant to section 8L of the Inspector General Act of 

1978, as amended. 

If you have any questions regarding thjs report please call John S. Bunting, our Denver regional 

inspector general for audits, at (303) 312-7650 and reference the final audit report number above 

in any related correspondence. 

Attachment 

cc:	 Milton Brown, NTIA audit liaison 

Kathy Smith, NTIA chief counsel 

Laura Pettus, PSIC program manager 
UNITED STATES DEPARTMENT OF COMMERCE 

Office of Inspector General 

Washln on 0 C 20230 

arh22,2010 

Mr. David Maxwell 

Dir ctor 

rkan a Departm nt of Emergenc Manag ment 

Building #9501 

Camp]o ph T. Robinson 

orth Little Rock AR 72199-9600 

D ar r. axv 11: 

nclo d is a cop of final audit r port numb r D -19430 prepared b our D n r R gionaJ 

Offic . Th r port concerns th Publi afl t Interop rable Communication grant 

awarded to your agency (award numb r 2007-G -H7-0012) by the ational 

Telecommunications and Information Admini tration (NTlA). 

ince there are no recommendations in lh final. report, no further action is ne d d. 

We appr ciate the cooperation and courtesi extended by you and your taff during th audit. 

Th r port will be po ted on oro W bite pursuant to section 8L of the In p ctor General Act 

of 1978 as amended. 

Enclo ill" 

cc: Laura M. Pettus	 TIA P] program manag r 

arol n P. Dunn DHS/FEMA Orant Program Directorate 

hart F. Fi er rkansas Deput L gi lati uditor 
n ral r udit 

UNITED STATES DEPARTMENT OF COMMERCE 

Office of Inspector General 

ash.n on 0 C 20230 

arch 22, 2010 

M . Trace Trautman 

Deputy s i tant Admini trator 

Grant Program Directorate 

FEMA 

500 C tr t W 

Washington D 20472-3615 

Dear Ms.Trautman: 

Enclosed is our final audit I' p 11 DE -194.)0) r garding Publi aft tint r p rabl 

ommunication grant numb r 2007-0 -H7-0012. hich wa award d b th ational 

T lecommunication and In~ rmation dministration to th rkan a D partm nt of Emergency 

Managem nt. 

A copy of the report wi II be p t d on 01G' Web site pursuant t s cti n 8L of th 111 pector 

General Act of 1978, as am nded. 

If you have any que tion regarding thi report pleas call J hn . Bunting, ur 0 nver regional 

in pector g n ral for audit at (303 312-7650 and r fI renc the final audit r p rt number above 

in any relat d corr ponden . 

Enclosur 

in p ctor oen ral 

Grant Program Dir ctorat 

audit liai on 

Directorate audit liai n 

anag m nt 
 

Report In Brief

U.S. Department of Commerce Office of Inspector General 

March 2010 

Why We Did this Review 

Background 

The Digital Television and Public 

Safety Act of 2005 authorized NTIA, 

in consultation with the DHS, to 

implement the PSIC program—a 

$1 billion one-time, formula-based 

matching grant program intended 

to enable public safety agencies to 

establish interoperable emergency 

communications systems using reallocated radio spectrum. 

The Implementing Recommendations

of the 9/11 Commission Act of 2007 

requires the Commerce Inspector 

General to conduct financial audits, 

over 4 years, of a representative sample of at least 25 states or territories 

receiving PSIC grants. The Arkansas 

grant program is among our first 

audits under this requirement. 

On September 30, 2007, the National 

Telecommunications and Information 

Administration (NTIA) awarded a 

$11,169,402 Public Safety Interoperable Communications (PSIC) grant 

to the State of Arkansas to enhance 

interoperable emergency communications. NTIA required a minimum 

20 percent matching share from 

nonfederal sources for the acquisition 

and deployment of communications 

equipment, and management and 

administration costs. 

The original award period ran from 

October 1, 2007, to September 

30, 2010. In November 2009, the 

President signed an act extending 

the award period to September 30, 

2011, by which time all funds must 

be expended. 

The governor of Arkansas designated the Arkansas Department of 

Emergency Management (ADEM) 

as Arkansas’s state administrative 

agency to apply for and administer 

PSIC funds.We audited costs claimed 

by ADEM to determine whether the 

recipient complied with NTIA PSIC 

grant guidelines and the Department 

of Homeland Security’s (DHS) award

terms and conditions. 

National Telecommunications and Information Administration 

Arkansas Public Safety Interoperable Communications 

Grant PSIC Award No. 2007-GS-H7-0012 (DEN-19430) 

What We Found 

Our audit covered the award period of October 1, 2007, through December 31, 2008, during 

which time Arkansas claimed total costs of $1,512,347. In general, we found ADEM to be in 

compliance with requirements and on track to complete the project on time. 

Specifically, ADEM has 

• prepared an investment justification describing how the grant funds would be used to improv

interoperable communications and ensure interoperability with other public safety agencies. 

It anticipates completing its five investments on schedule by the original September 30, 2010,

PSIC program deadline; 

• changed an unallowable portion of its matching share funds, thus meeting the minimum 20 

percent nonfederal matching share requirement for acquiring and deploying equipment, and 

managing and administering projects; 

• complied with grant terms and conditions by fulfilling financial reporting requirements, 

meeting the cash drawdown requirement of drawing down funds 30 days prior to expenditure

or a disbursement, and complying with the 80 percent pass-through requirement by passing 

through $9.7 million, about 87 percent, of the $11.2 million of PSIC federal funds to local 

applicants; 

• claimed matching share costs in accordance with grant terms and conditions and PSIC’s 

reporting requirements; and 

• claimed costs of $1,512,347 on their December 31, 2008, financial status report. We determined that the costs claimed were reasonable, allowable, and allocable according to PSIC 

grant regulations. 

e 

What We Recommended 

We made no formal recommendations in our report, but did suggest ways to enhance internal 

controls: 

• During our fieldwork, we pointed out that ADEM had planned to claim $2,648,043 as match 

for an unallowable servicing contract. ADEM changed this match to an allowable capital 

improvement project, thus putting the funds to better use. 

 
U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010
 

Contents 

Introduction......................................................................................................................................1
 

Findings and Recommendations ......................................................................................................3
 

I. ADEM Asserts Individual Investments Are on Schedule .....................................................3
 

II. ADEM Changed Its Unallowable Matching Share ...............................................................5
 

III. ADEM Complied with Grant Terms and Conditions ...........................................................6
 

A. ADEM Complied with Financial Status Reporting Requirement....................................6
 

B. ADEM Complied with Cash Drawdown Requirement ...................................................6
 

C. ADEM Complied with 80-Percent Pass-Through Requirement ......................................6
 

IV. Reasonable and Allowable Costs Were Claimed..................................................................7
 

V. Follow-Up Was Conducted on Prior Audit Recommendations ............................................7
 

Summary Results of Financial Audit ...............................................................................................8
 

Agency Response and OIG Comments ............................................................................................9
 

Appendix A: Objectives, Scope, and Methodology.......................................................................10
 

Appendix B: Summary of Source and Application of Funds ........................................................12
 

Appendix C: Summary of Financial/Compliance Audit ................................................................13
 
U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

Introduction 

On September 30, 2007, the National 

Telecommunications and Information 

Administration (NTIA) awarded an 

$11,169,402 Public Safety Interoperable 

Communications (PSIC) grant to the state of 

Arkansas to enhance interoperable emergency 

communications. The amount of the award 

subject to match is $10,907,902. NTIA 

required a minimum 20-percent matching 

share ($2,726,976) from nonfederal sources 

for acquisition and deployment of 

communications equipment, and management 

and administrative costs. Statewide planning, 

planning and coordination, and training costs 

do not require matching share. 

The original award period runs from October 

1, 2007, to September 30, 2010.On November

6, 2009, the President signed Public Law 111-

96, which extended the allowable completion 

periods for all PSIC grants for one year, but 

not later than September 30, 2011, except as 

determined by NTIA. 

Public Safety Interoperable 

Communications Program 

The Digital Television Transition and Public 

Safety Act of 2005 authorized NTIA, in 

consultation with the Department of Homeland 

Security (DHS), to implement the PSIC program 

─ a $1 billion one-time, formula-based matching 

grant program intended to enable public safety 

agencies to establish interoperable emergency 

communications systems using reallocated radio 

spectrum. 

NTIA signed a memorandum of understanding 

with the Department of Homeland Security, 

under which DHS oversees and administers the 

PSIC program. 

The Implementing Recommendations of the 9/11

Commission Act of 2007 requires the Commerce 

Inspector General to conduct financial audits, 

over 4 years, of a representative sample of at 

least 25 states or territories receiving PSIC 

grants. The Arkansas grant program is among 

the first audits under this requirement. 

The governor of Arkansas designated the 

Arkansas Department of Emergency Management (ADEM) as Arkansas’s state administrative 

agency to apply for and administer PSIC funds.1 

In October 2008, we initiated an audit of costs claimed by ADEM to determine whether it had 

complied with NTIA PSIC grant guidelines and the Department of Homeland Security award 

terms and conditions. The audit covered the award period of October 1, 2007, through December 

31, 2008, during which time the recipient claimed total costs of $1,512,347. 

The objective of our audit was to determine whether ADEM was using its grant funds in 

accordance with federal requirements. In particular, we assessed whether ADEM (1) was on 

track to complete its interoperable communications investments by September 30, 2010; (2) met 

the minimum 20-percent match for acquiring and deploying interoperable communications 

equipment, and management and administrative costs; (3) claimed reasonable, allowable, and 

 

1

 The PSIC program requires the governor of each state and territory to designate a state administrative agency to 

apply and administer PSIC funds. Administrative agencies are required to pass through no less than 80 percent of the 

total award amount to local or tribal governments or authorized nongovernmental public safety agencies, unless the 

local entity opts, via written agreement, to have the state agency retain and spend the funds on its behalf. Grantees 

must meet a 20 percent nonfederal match for acquisition and deployment. 

1 
U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

allocable costs under the award; and (4) complied with grant terms and conditions. Appendix A 

outlines the objectives, scope, and methodology we used in the audit. 

ADEM asserts that all five investments are on schedule to be completed by September 30, 2010. 

(See pages 3 through 5.) 

ADEM has sufficient minimum budgeted matching share of $2,726,976. However, during our 

fieldwork we found that ADEM planned to claim $2,648,043 as match for an unallowable 

servicing contract. ADEM changed this match to an allowable capital improvement project. (See 

pages 5 and 6.) 

ADEM claimed costs of $1,512,347 on the December 31, 2008, financial status report. We 

determined that the costs claimed were reasonable, allowable, and allocable according to PSIC 

grant regulations. (See page 8 and appendix C). 

ADEM generally complied with grant terms and conditions. ADEM complied with requirements 

for financial status reporting, cash drawdowns, and 80-percent pass-through to local applicants. 

(See pages 6 and 7.) Outside of the unallowable matching share, which ADEM subsequently 

changed, we have no findings or recommendations. 

2 
 

 

U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

Findings and Recommendations 

I. ADEM Asserts Individual Investments Are on Schedule 

ADEM prepared an investment justification based on NTIA’s PSIC Investment Justification 

Reference Guide (dated September 2007) that detailed individual communications projects 

intended to (1) achieve meaningful and measurable improvements in interoperability, and (2) fill 

gaps identified in the statewide communications interoperability plan. The investment 

justification had a total of five investments (table 1) and was approved on May 22, 2008. ADEM 

asserts that all five investments are on schedule to be completed by September 30, 2010. 

Table 1. Investment Justification and Funding 

PSIC Funds NonPSIC Investment Justification Awarded Federal Total 

Match 

1. Satellite Back-up System $ 4,357,034 $1,089,258 $ 5,446,292 

2. Network Interconnect Equipment 3,000,000 750,000 3,750,000 

3. Capacity/Infrastructure 2,035,000 508,750 2,543,750 

4. Site on Wheels 865,054 216,264 1,081,318 

5. Sebastian County AWIN Expansion Project 315,732 78,933 394,665 

Statewide Plan 261,500 261,500 

Management and Administration 335,082 83,771 418,853 

Total $11,169,402 $2,726,976 $13,896,378 

Source: ADEM Investment Justification 

States were required to include a strategic technology reserve in their justifications, designed to 

pre-position interoperable communications or secure them in advance for immediate deployment 

in an emergency situation or major disaster. Arkansas’s strategic technology reserve is 

investment 4. 

Arkansas’s FY 2007 PSIC investment justification describes the state’s projects as follows. 

Investment 1: Satellite Back-up System 

The Arkansas Wireless Information Network (AWIN) provides wireless radio communications 

for public safety first responders in the state of Arkansas. Many public safety users rely on 

AWIN as their primary means of communication. This investment will allow Arkansas to 

provide a baseline number of satellite phones to each jurisdiction in the state and to cabinet-level 

state agencies. ADEM asserts investment 1 is on schedule to be completed by September 30, 

2010. 

Investment 2: Network Interconnect Equipment 

This investment will allow for the provisioning of network interconnectivity equipment across 

the state, based on the equipment already in place and the needs of the users in the region. 

3 
U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

Satellite phone systems may be connected to the AWIN system via these network 

interconnectivity tools. This solution will enable local public safety entities to communicate with 

neighboring cities, counties, and the state in the event of an emergency that involves multiple 

jurisdictions and organizations. ADEM asserts investment 2 is on schedule to be completed by 

September 30, 2010. 

Investment 3: Capacity/Infrastructure 

Geographically, the AWIN system covers 53,179 square miles and serves more than 2.8 million 

citizens. As the population of the state grows and as more public safety entities move to using 

AWIN as their primary communications system, the system capacity must be maintained at a 

high level of availability. This investment will allow for the implementation of additional 

infrastructure equipment across the state, based on areas of greatest need. ADEM asserts 

investment 3 is on schedule to be completed by September 30, 2010. 

Investment 4: Site on Wheels 

For this project, the state proposes to procure a “site on wheels,” purchase a cache of 40-50 spare 

radios, and develop a team that will be trained to deploy and manage the equipment. This 

equipment would be used not only to restore communications at sites that are unavailable, but 

would also augment communications during emergencies, or large events. This equipment will 

be available to public safety organizations statewide. ADEM asserts investment 4 is on schedule 

to be completed by September 30, 2010. 

Figure 1. Site on Wheels 

4 
 

 

U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

Investment 5: Sebastian County AWIN Expansion Project 

Sebastian County currently uses five radio systems. Each agency in the county can communicate 

only with its own agency and not with responders from other counties or the state. All of the 

county’s radio systems are antiquated and suffer frequent failures. Sebastian County has large 

noncoverage areas within the county. 

Project 25 (P25) is a set of 

Sebastian County plans to become completely integrated with the national standards for 

manufacturing P25 800-MHz trunked radio AWIN system, which provides interoperable, digital, two- coverage across the entire state. The county plans to purchase way wireless infrastructure equipment that exactly matches and integrates with communications products. 

the AWIN system. This will increase capacity and coverage to the Radio equipment that meets 

P25 standards can large number of users the county plans to place on the statewide communicate with any system. ADEM asserts investment 5 is on schedule to be other P25 system, completed by September 30, 2010. regardless of vendor, 

enabling users of different 

II. ADEM Changed Its Unallowable Matching Share systems to talk via direct 

radio contact. 

ADEM is required to have a 20-percent matching share in place 

from nonfederal sources for acquisition and deployment of communications equipment, and 

management and administrative costs. The match is required by the Digital Television Transition 

and Public Safety Act of 2005, Public Law 109-171, Section 3006, the PSIC Grant Program 

Guidance and Application Kit, and the special award conditions. The match can be identified and 

allocated at either the investment level or at the total PSIC (i.e., overall funding) level; therefore, 

individual investments can be undermatched or overmatched according to the needs of the 

applicant. NTIA’s PSIC Grant Program Guidance and Application Kit, Section VI, Part B, 

requires the match be expended at the same rate as the federal share. As of December 31, 2008, 

ADEM claimed matching share costs of $314,754, which is beyond the amount required to keep 

pace with federal outlays. 

ADEM’s approved investment justification has budgeted matching share of $2,726,976. 

Sebastian County was budgeted to provide $78,933 of matching share. The remaining 

$2,648,043 of matching share was originally to be provided from a Motorola servicing contract. 

However, we questioned the Motorola servicing contract being used as match because the 

contract was in place before the PSIC grant was awarded to Arkansas. The contract was dated 

June 22, 2007, and covered the period July 1, 2007, through June 30, 2009. The PSIC grant was 

awarded to Arkansas on September 30, 2007. Nothing in the servicing contract has been added 

as a result of the PSIC award. There is no “new” match funding as a result of the PSIC award. 

After our site visit and because using the Motorola servicing contract as match was questioned, 

ADEM identified a capital improvement project as matching share covering investments 1 

through 4. The project is a microwave addition, and is entirely funded by state general revenue. 

One of the three main priorities of the investment justification is increasing capacity, which is 

needed for additional radios, phones, and other systems. We accept this match. 

5 
Days Reporting Period Date Report Filed Report Due Date Late 

10/1/2007 – 12/31/2007 1/31/2008 1/30/2008 1 

1/1/2008 – 3/31/2008 4/30/2008 4/30/2008 0 

4/1/2008 – 6/30/2008 7/28/2008 7/30/2008 0 

7/1/2008 – 9/30/2008 10/31/2008 10/30/2008 1 

10/1/2008 – 12/31/2008 1/26/2009 1/30/2009 0 

 Source: ADEM Financial Status Reports 

U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

ADEM’s change of $2,648,043 of budgeted match from the servicing contract to a capital 

improvement project will put $2,648,043 of funds to better use. 

III.ADEM Complied with Grant Terms and Conditions 

A. ADEM Complied with Financial Status Reporting Requirement 

We reviewed the financial status reports (Standard Form 269) filed by ADEM for the period of 

October 2007 through December 2008. We found that ADEM submitted all its financial status 

reports in a timely manner, although two of the five financial reports were submitted one day late 

(see table 2). The PSIC Grant Program Guidance and Application Kit states that these reports 

must be filed within 30 days of the end of each calendar quarter for every quarter the award is 

active, including partial calendar quarters and periods during which no grant activity occurs. 

Table 2. Financial Status Report Submissions 

B. ADEM Complied with Cash Drawdown Requirement 

The PSIC Grant Program Guidance and Application Kit, Section VI (B), states that grantees 

should draw down funds as close to expenditure as possible, up to 30 days prior to 

expenditure/reimbursement, to avoid accruing interest. Funds received by grantees must be 

placed in an interest-bearing account, and if not expended in 30 days any interest earned must be 

remitted to the U. S. Treasury. We reviewed ADEM’s PSIC cash drawdowns as of December 31, 

2008, which totaled $1,197,593, and found them in compliance. 

The PSIC Grant Program Guidance and Application Kit allowed states to draw down funds up 

to 5 percent of their PSIC allocations prior to receiving their full grant amounts to ensure that 

PSIC requirements are addressed in their statewide communications interoperability plan. On 

April 24, 2008, ADEM drew down $253,330 for statewide planning funds to update their 

statewide communications interoperability plan. 

C. ADEM Complied with 80-Percent Pass-Through Requirement 

ADEM passed through $9.7 million (87 percent) of the $11.2 million in PSIC federal funds, 

exceeding the 80-percent pass-through requirement stated in the PSIC Grant Program Guidance 

and Application Kit. States are also required to pass through PSIC funds to local or tribal 

6 
Funds 

Passed 

Through to 

Locals 

Pass Through 

Funds 

Retained by 

State Via 

MOUs 

Total 

Funding 

Passed 

Through to 

Locals 

PSIC 

Funds 

Retained 

by the State 

Total Federal 

Funds 

Investment 1 $ 0 $4,357,034 $4,357,034 $ 0 $ 4,357,034 

Investment 2 0 3,000,000 3,000,000 0 3,000,000 

Investment 3 0 2,035,000 2,035,000 0 2,035,000 

Investment 4 0 0 0 865,054 865,054 

Investment 5 315,732 0 315,732 0 315,732 

Statewide 0 0 0 261,500 261,500

Planning 

M&A Costs 0 0 0 335,082 335,082

Total $315,732 $9,392,034 $9,707,766 $1,461,636 $11,169,402 

Percent 3 84 87 13 100

U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

applicants within 60 days after approval of the investment justification. ADEM complied with 

this requirement as well (see table 3). 

Table 3. Pass-Through of PSIC Funds 

Source: ADEM Documents 

ADEM retained $0.9 million in funding for strategic technology reserve, $0.3 million for 

management and administration costs, and $0.3 million for statewide planning. 

IV. Reasonable and Allowable Costs Were Claimed 

ADEM claimed costs of $1,512,347 on the December 31, 2008, financial status report. We 

determined that the costs claimed were reasonable, allowable, and allocable according to PSIC 

grant regulations (see appendix C). 

V. Follow-Up Was Conducted on Prior Audit Recommendations 

We met with the Arkansas deputy legislative auditor to discuss our audit of the PSIC grant at 

ADEM. We reviewed the state’s Office of Management and Budget (OMB) Circular No. A-133 

audit report for the year ended June 30, 2007. Although the PSIC program was not part of the 

audit, we reviewed the report for issues that could have a direct and material effect on the 

program and identified one item: 

1.	 Overpayments to Counties. The legislative auditor found that ADEM made overpayments 

to three counties relating to disaster assistance, and that ADEM made a disaster 

assistance payment without the appropriate supporting documentation. We reviewed all 

of ADEM’s payments for the PSIC grant and found that no overpayments were made. 

We also determined that the payments ADEM made contained appropriate supporting 

documentation. 

 

7 
 

 

 

U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

Summary Results of Financial Audit 

The results of our interim cost audit for the period of October 1, 2007, through December 31, 

2008 (detailed in appendix C) are summarized as follows: 

 Federal Funds Disbursed $1,197,593 

 Costs Incurred $1,512,347 

Less Questioned Costs 0 

 Costs Accepted $1,512,347 

Less Matching Share 314,754

 Federal Funds Earned $1,197,593 

Refund Due the Government $ 0 

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U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

Agency Response and OIG Comments 

A response to our draft audit report was due from ADEM on February 12, 2010, but the agency 

did not provide one. When contacted, ADEM stated it had no official response. 

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U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

Appendix A: Objectives, Scope, and Methodology 

The objective of our audit was to determine whether ADEM was using its grant funds in 

accordance with federal requirements. In particular, we assessed whether ADEM (1) is on track 

to complete its interoperable communications investments by September 30, 2010; (2) met the 

minimum 20-percent match for acquiring and deploying interoperable communications 

equipment, and management and administrative costs; (3) claimed reasonable, allowable, and 

allocable costs under the award; and (4) complied with grant terms and conditions. 

The audit scope included a review of costs claimed during the award period of October 1, 2007, 

through December 31, 2008. We conducted our fieldwork in October 2008 at the ADEM office 

in North Little Rock, Arkansas. 

To meet our objectives we did the following: 

•	 reviewed investment documentation and discussed each investment with officials from 

ADEM 

•	 analyzed source documents related to the minimum 20-percent match for acquiring and 

deploying interoperable communications equipment 

•	 traced costs claimed to source documentation 

•	 interviewed ADEM officials, including the Arkansas deputy legislative auditor, and 

reviewed the state's OMB Circular No. A-133 audit report for the year ending June 30, 

2007 

•	 reviewed pertinent laws, regulations, and guidance (listed below) against ADEM's PSIC 

activities and internal controls 

We evaluated ADEM’s compliance with federal laws and regulations applicable to the PSIC 

grant project and found them to be generally in compliance with the following: 

•	 Section 3006 of the Digital Television Transition and Public Safety Act of 2005, Public 

Law 109-171 

•	 Call Home Act of 2006, Public Law 109-459 

•	 Implementing Recommendations of the 9/11 Commission Act of 2007, Public Law 110-

53 

•	 Public Safety Interoperable Communications Grants, Public Law 111-96 

•	 PSIC Grant Program Guidance and Application Kit, August 16, 2007 

•	 NTIA PSIC Grant Program Allowable Cost Matrix 

•	 NTIA PSIC Grant Program Frequently Asked Questions 

•	 OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments 

•	 OMB Circular A-133, Compliance Supplement, CFDA 11.555 

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U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

• Special Award Conditions 

• Department of Commerce Financial Assistance Standard Terms and Conditions 

• DHS, Office of Grant Operations, Financial Management Guide 

We obtained an understanding of the management controls of ADEM by interviewing ADEM 

officials, examining policies and procedures, reviewing written assertions of ADEM officials, 

and examining the state of Arkansas’s most recent single audit report. We did not rely on the 

accounting firm’s internal control reviews but instead determined that we could better meet our 

audit objectives through testing of PSIC transactions. 

We verified the validity and reliability of computer-processed data supplied by ADEM by 

directly testing data against supporting documentation. Based on our tests, we concluded the 

computerized data was reliable for use in meeting our objectives. 

We conducted this performance audit in accordance with 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 on our audit objectives. We believe that the evidence obtained provides a reasonable basis 

for our findings and conclusions based on our audit objectives. 

We performed this audit under authority of the Implementing Recommendations of the 9/11 

Commission Act of 2007, the Inspector General Act of 1978, as amended, and Department 

Organization Order 10-13, August 31, 2006. 

11 
 

 

 

 

 

U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

Appendix B: Summary of Source and Application of Funds 

ARKANSAS DEPARTMENT OF EMERGENCY MANAGEMENT 

PUBLIC SAFETY INTEROPERABLE COMMUNICATIONS
 

GRANT NO. 2007-GS-H7-0012 

OCTOBER 1, 2007, THROUGH DECEMBER 31, 2008 

Approved Receipts & 

Budget Expenses

 (a) (b) 

SOURCE OF FUNDS: 

Federal $11,169,402 $1,197,593 

Nonfederal 2,726,976 314,754
 

Total $13,896,378 $1,512,347 

APPLICATION OF FUNDS: 

Investment 1 

Investment 2 

Investment 3 

Investment 4 

Investment 5 

Statewide Planning 

M&A Costs 

$5,446,292 

3,750,000 

2,543,750 

1,081,318 

394,665 

261,500 

418,853

$ 0 

0 

0 

634,698 

624,319 

253,330 

0 

Total $13,896,378 $1,512,347 

Notes: 

(a) Approved budgeted costs are for the period of October 1, 2007, 

through September 30, 2011 based on Arkansas's approved 

 investment justification. 

(b) Receipts and expenses are for the period of October 1, 2007 

through December 31, 2008. 

12 
 

U.S. Department of Commerce Final Report DEN-19430 

Office of Inspector General March 2010

Appendix C: Summary of Financial/Compliance Audit 

ARKANSAS DEPARTMENT OF EMERGENCY MANAGEMENT 

PUBLIC SAFETY INTEROPERABLE COMMUNICATIONS
 

GRANT NO. 2007-GS-H7-0012 

OCTOBER 1, 2007, THROUGH DECEMBER 31, 2008 

Results of Audit

Description

 Approved 

Budget

Costs 

 Claimed

Costs 

Questioned

Costs 

Accepted 

Investment 1 

Investment 2 

Investment 3 

Investment 4 

Investment 5 

Statewide Plan 

M&A Costs 

Total 

$5,446,292 

3,750,000 

2,543,750 

1,081,318 

394,665 

261,500 

418,853

$13,896,378

$ 0 

0 

0 

634,698 

624,319 

253,330 

0

 $1,512,347

$0 

0 

0 

0 

0 

0 

0

 $0

$ 0 

0 

0 

634,698 

624,319 

253,330 

0 

$1,512,347 

Federal Funds Disbursed 

Costs Incurred 

Less Questioned Costs 

Costs Accepted 

Less: Matching Share 

Federal Funds Earned 

$1,512,347 

0 

1,512,347 

314,754 

$1,197,593 

1,197,593 

Refund Due the Government $0 

13