Department of Homeland Security 

Office of Inspector General 

The State of Tennessee’s Management of 
 

State Homeland Security Program and 
 

Urban Areas Security Initiative 
 

Grants Awarded During 
 

Fiscal Years 2006 through 2008 
 

OIG-11-29 January 2011 
Office ofInspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

Homeland 

Security 

JAN 13 2011 

Preface 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the Homeland Security Act of2002 (Public Law 107-296) by amendment 

to the Inspector General Act of1978. This is one of a series of audit, inspection, and 

special reports prepared as part of our oversight responsibilities to promote economy, 

efficiency, and effectiveness within the department. 

The attached report presents the results ofthe audit ofthe State of Tennessee's 

management of State Homeland Security Program and Urban Areas Security Initiative 

grants awarded during Fiscal Years 2006 through 2008. We contracted with the 

independent public accounting firm Foxx & Company to perform the audit. The contract 

required that Foxx & Company perform its audit according to generally accepted 

government auditing standards. Foxx & Company's report identifies one reportable 

condition where State management of the grant funds could be improved, resulting in one 

recommendation addressed to the Assistant Administrator, Grant Programs Directorate, 

Federal Emergency Management Agency. Foxx & Company is responsible for the 

attached auditor's report dated October 22,2010, and the conclusions expressed in the 

report. 

The recommendations herein have been developed to the best knowledge available to our 

office, and have been discussed in draft with those responsible for implementation. We 

trust this report will result in more effective, efficient, and economical operations. We 

express our appreciation to all of those who contributed to the preparation of this report. 

Anne 

~/~ L. Richards 

Assistant Inspector General for Audits 
October 22, 2010 

 

Ms. Anne L. Richards 

Assistant Inspector General for Audits 

Office of Inspector General 

U.S. Department of Homeland Security 

245 Murray Drive, S.W. Building 410 

Washington, D.C. 20528 

Dear Ms. Richards: 

Foxx & Company performed an audit of the State of Tennessee’s management of the 

Department of Homeland Security’s State Homeland Security Program and Urban Areas 

Security Initiative grants for Fiscal Years 2006 through 2008. The audit was performed 

according to our Task Order No. TPD-FIG-BPA-07-0007 dated September 29, 2009. 

This report presents the results of the audit and includes recommendations to help 

improve the State’s management of the State Homeland Security Program and Urban 

Areas Security Initiative grants. 

We conducted the audit according to applicable Government Auditing Standards, 2007 

revision. The audit was a performance audit as defined by Chapter 1 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 State, we did not perform a 

financial audit, the purpose of which would be to render an opinion on the State of 

Tennessee’s financial statements or the funds claimed in the Financial Status Reports 

submitted to the Department of Homeland Security. 

We appreciate the opportunity to have conducted this audit. Should you have any 

questions, or if we can be of any further assistance, please call me at (513) 639-8843. 

Sincerely, 

Foxx & Company 

Martin W. O’Neill 

Partner 
Table of Contents/Abbreviations 
 

Executive Summary .......................................................................................................... 1 
 

Background ....................................................................................................................... 2
 

Results of Audit ................................................................................................................ 5 
 

Compliance with Inventory Requirements ........................................................... 6 
 

Recommendation .................................................................................................. 8 
 

Management Comments and Auditors’ Analysis ................................................. 8 
 

Appendices 

Appendix A: Purpose, Scope, and Methodology ................................................ 9 
 

Appendix B: Organization Chart ...................................................................... 12 
 

Appendix C: Report Distribution ..................................................................... 13 
 

Abbreviations 

DHS Department of Homeland Security
 


FEMA Federal Emergency Management Agency 
 

FY Fiscal Year 
 

OIG Office of Inspector General 
 
OIG 
 Department of Homeland Security 

Office of Inspector General 

Executive Summary 

Foxx & Company completed an audit of the State of Tennessee’s 

Management of State Homeland Security Program and Urban 

Areas Security Initiative grants awarded during fiscal years 2006 

through 2008. The audit objective was to determine whether the 

State distributed and spent Homeland Security Grant Program 

funds strategically, effectively, and in compliance with laws, 

regulations, and guidance. The audit included a review of 

approximately $40.9 million in State Homeland Security Program 

and Urban Areas Security Initiative grants awarded by the Federal 

Emergency Management Agency to the State of Tennessee. 

Generally, the State did an efficient and effective job of 

administering program requirements in accordance with grant 

guidance and regulations. The State used reasonable 

methodologies for assessing threat, vulnerability, capability, and 

prioritized needs, and developed measurable goals and objectives 

based upon risk assessments. The State’s funding allocations were 

linked to all-hazard capabilities. Also, the State’s procurement 

methodology and practices were in conformance with federal 

requirements. The State effectively monitored the grant programs. 

However, the State needed to improve its compliance with 

inventory requirements for equipment purchased with grant funds. 

Our one recommendation calls for the Federal Emergency 

Management Agency to initiate improvements which, if 

implemented, should help strengthen program management, 

performance, and oversight. 

Federal Emergency Management Agency and State officials 

verbally concurred with our finding and recommendation, and 

elected not to provide written comments. 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

Page 1
 

 

Background 

The Homeland Security Grant Program is a federal assistance grant 

program administered by the U.S. Department of Homeland 

Security (DHS), Grant Programs Directorate within the Federal 

Emergency Management Agency (FEMA). The current Grant 

Programs Directorate, hereafter referred to as FEMA, began with 

the Office of Domestic Preparedness, which was transferred from 

the Department of Justice to DHS in March 2003. The Office of 

Domestic Preparedness was subsequently consolidated into the 

Office of State and Local Government Coordination and 

Preparedness which, in part, became the Office of Grants and 

Training, and which subsequently became part of FEMA. 

Although the grant program was transferred to DHS, applicable 

Department of Justice grant regulations and legacy systems still 

were used as needed to administer the program. For example, 

through Fiscal Year (FY) 2008 the Office of Justice Programs’ 

Grants Management System was used to receive grantee 

applications and to administer the award and reporting processes. 

Also, prior to the transfer, the State Administrative Agency entered 

payment data into the Office of Justice Programs’ Phone Activated 

Paperless Request System, which was a drawdown payment 

system for grant funds. That payment system was replaced in 

April 2007 by FEMA’s Payment and Reporting System. This 

system allows grantees to make payment requests and complete 

and transmit their quarterly Financial Status Reports online. 

Homeland Security Grant Program 

The Homeland Security Grant Program provides federal funding to 

help state and local agencies enhance their capabilities to prevent, 

deter, respond to, and recover from terrorist attacks, major 

disasters, and other emergencies. The Homeland Security Grant 

Program encompasses several interrelated federal grant programs 

that together fund a range of preparedness activities, including 

planning, organization, equipment purchase, training, and 

exercises, as well as management and administration costs. 

Depending on the fiscal year, the program included some or all of 

the programs: 

•	 State Homeland Security Program supports the 

implementation of State Homeland Security Strategies to 

address the identified planning, organization, equipment, 

training, and exercise needs to prevent, protect against, respond 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

Page 2
 

to, and recover from acts of terrorism and other catastrophic 

events. 

•	 Urban Areas Security Initiative Program funds address the 

unique planning, organization, equipment, training, and 

exercise needs of high-threat, high-density Urban Areas, and 

assists the areas in building an enhanced and sustainable 

capacity to prevent, protect against, respond to, and recover 

from acts of terrorism. 

•	 Law Enforcement Terrorism Prevention Program provides 

resources to law enforcement and public safety communities 

(working with their private partners) to support critical 

terrorism prevention activities, including: establishing / 

enhancing fusion centers and collaborating with non-law 

enforcement partners, other government agencies, and the 

private sector. 

•	 Citizen Corps Program mission is to bring community and 

government leaders together to coordinate the involvement of 

community members in emergency preparedness, planning, 

mitigation, response, and recovery. 

•	 Metropolitan Medical Response System Program supports 

the integration of emergency management, health, and medical 

systems into a coordinated response to mass casualty incidents 

caused by any hazard. Successful MMRS grantees reduce the 

consequences of a mass casualty incident during the initial 

period of a response by having augmented existing local 

operational response systems before an incident occurs. 

State Administrative Agency 

The governor of each state appoints a State Administrative Agency 

to administer the Homeland Security Grant Programs. The State 

Administrative Agency is responsible for managing these grant 

programs according to established federal guidelines. It is also 

responsible for allocating funds to local, regional, and other state 

government agencies. 

In 2003, Tennessee’s Governor designated the State of 

Tennessee’s Department of Military to be the State Administrative 

Agency for the Homeland Security Grant Programs. The 

Department of Military administered all of the Homeland Security 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

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Grant Programs grants included in our audit. The State’s 

homeland security organizational chart is included in Appendix B. 

The State of Tennessee is divided into 3 Regions and 11 State 

Homeland Security Districts, including 2 Urban Areas Security 

Initiative areas: Nashville and Memphis. District Councils 

comprised of local government officials within the State Homeland 

Security Districts determine grant funding priorities within the 

Districts. The Department of Military and the Office of Homeland 

Security work closely with the State Homeland Security Districts 

and Urban Areas Security Initiative areas to support their needs, 

synchronize strategies, and establish consistent priorities across 

Tennessee. 

Grant Funding 

The State of Tennessee received approximately $54.5 million from 

the Homeland Security Grant Program during FYs 2006 through 

2008. As part of this program, the State received $40.9 million in 

State Homeland Security Program and Urban Areas Security 

Initiative grants. The State Administrative Agency awarded 

subgrants to counties, state agencies, and two Urban Areas 

Security Initiative areas. The counties and urban areas purchased 

equipment and distributed it to local governments and first 

responders. These entities also provided training and planned 

exercises. The State of Tennessee subawarded State Homeland 

Security Program and Urban Areas Security Initiative grants to the 

following: 

•	 2006: 64 subawards to 60 counties, 3 state agencies, and 

1 urban area; 

•	 2007: 82 subawards to 77 counties, 4 state agencies, and 

1 urban area; and 

•	 2008: 71 subawards to 65 counties, 4 state agencies, and 

2 urban areas. 

Table 1 displays a breakdown of the Homeland Security Grant 

Program awards to the State of Tennessee by year. 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

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Table 1 

Tennessee 

Homeland Security Grant Program Awards 

Fiscal Years 2006 through 2008 

(‘000s) 

Funded Activity FY 2006 FY 2007 FY 2008 Total 

State Homeland 

Security Program $ 4,780 $ 8,250 $12,880 $25,910 

Urban Areas 

Security Initiative $ 4,200 $ 4,590 $ 6,236 $15,026 

Law Enforcement 

Terrorism 

Prevention Program $ 3,480 $ 5,890 

Not 

Applicable $ 9,370 

Citizen Corps 

Program $ 373 $ 282 $ 287 $ 942 

Metropolitan 

Medical Response 

System Program $ 929 $ 1,033 $ 1,285 $ 3,247 

Total $13,762 $20,045 $20,688 $54,495 

Foxx & Company completed an audit of the State of Tennessee’s 

management of DHS’ State Homeland Security Program and 

Urban Areas Security Initiative grants awarded during FY 2006 

through FY 2008. The objective of the audit was to determine 

whether the State distributed and spent Homeland Security Grant 

Program funds strategically, effectively, and in compliance with 

laws, regulations, and guidance. Nine researchable questions 

provided by the DHS OIG established the framework for the audit. 

The researchable questions were related to the State Administrative 

Agency’s planning, management, and evaluations of grant 

activities. Appendix A provides additional details on the purpose, 

scope, and methodology of this audit, including the nine 

researchable questions. 

Results of Audit 

State Grants Management Practices Were Generally Effective, 

But Require Some Improvements in Inventory Compliance 

Generally, the State did an efficient and effective job of administering 

program requirements in accordance with grant guidance and regulations. 

The State used reasonable methodologies for assessing threat, 

vulnerability, capability, and prioritized needs, and developed measurable 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

Page 5
 

goals and objectives based upon risk assessments. The State’s funding 

allocations were linked to all-hazard capabilities. Also, the State’s 

procurement methodology and practices were in conformance with federal 

requirements. The State effectively monitored the grant programs. 

However, the State needed to improve its compliance with inventory 

requirements for equipment purchased with Homeland Security grant 

funds. 

Compliance with Inventory Requirements 

Three subgrantees visited during the audit were not performing the 

required physical inventories of assets procured with federal grant funds. 

As a result, the state did not have reasonable assurance that assets 

procured with Homeland Security grant funding were adequately 

safeguarded to prevent loss, damage, or theft of the property. 

A provision in FEMA regulations on administrative requirements for 

grants to state and local governments, found in Code of Federal 

Regulation Title 44 § 13.32(d) Management requirements, lists 

requirements for managing equipment, whether acquired in whole or in 

part with grant funds, until disposition takes place. It requires, at a 

minimum, the following: 

•	 Property records must be maintained that include a description of 

the property, a serial number or other identification number, the 

source of property, who holds title, the acquisition date, and cost of 

the property, percentage of Federal participation in the cost of the 

property, the location, use and condition of the property, and any 

ultimate disposition data including the date of disposal and sale 

price of the property. 

•	 A physical inventory of the property must be taken and the results 

reconciled with the property records at least once every two years. 

•	 A control system must be developed to ensure adequate safeguards 

to prevent loss, damage, or theft of the property. Any loss, 

damage, or theft shall be investigated. 

•	 Adequate maintenance procedures must be developed to keep the 

property in good condition. 

•	 If the grantee or subgrantee is authorized or required to sell the 

property, proper sales procedures must be established to ensure the 

highest possible return. 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

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In addition, the State of Tennessee’s contract with subgrantees requires the 

subgrantees to: 

•	 Be responsible for the accountability, maintenance, management, 

and inventory of all property purchased totally or in part with 

federal grant funds; 

•	 Maintain a perpetual inventory system for all equipment purchased 

with federal funds; 

•	 Conduct annual inventories, compare the results of the inventory 

with the subgrantees property records, and investigate any 

differences; and 

•	 Adjust the inventory control report to reflect the results of the 

physical inventory and subsequent investigation. 

The State was not enforcing the requirement under its grantee-subgrantee 

contracts to perform physical inventories of assets. The subgrantees 

visited, including the ones that were not complying with the physical 

inventory requirements, were maintaining appropriate property records. 

The property records being maintained complied with FEMA and state 

property management requirements and included a description of the 

property, a serial number or other identification number, the source of 

property, who holds title, the acquisition date, the cost of the property, and 

the percentage of Federal participation in the cost of the property. 

However, physical inventories provide visual assurances concerning the 

location, use, and condition of property. Without routine physical 

inventories, the state and subgrantees did not have reasonable assurance 

that the property was being adequately safeguarded to prevent loss, 

damage, or theft. 

Officials from the three non-compliant subgrantees said that, once the 

equipment was purchased and passed down to subrecipients, they believed 

that they no longer had responsibility for the equipment. One subgrantee 

official said that staff was not available to perform physical inventories of 

all the equipment purchased with Homeland Security grant funding. 

Nevertheless, the State and the subgrantees were responsible for ensuring 

that inventory requirements were enforced. After discussing our 

observation with State officials, all the subgrantees were notified to 

comply with the inventory requirements in the Tennessee granteesubgrantee contract. 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

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Recommendation 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Director, Tennessee Department of 

Military to: 

Recommendation #1: Enforce the requirement to conduct 

physical inventories of equipment purchased with federal funds 

and develop and implement procedures, as part of routine 

monitoring visits, to ensure that inventories are being conducted. 

Management Comments and Auditors’ Analysis 

FEMA and State officials verbally concurred with our finding and 

recommendation and elected not to provide written comments. 

The State provided us a copy of an email it sent to all grant 

subrecipients. The email reaffirmed physical inventory 

requirements and directed the subrecipients to submit copies of 

inventory control reports to the State. In addition, State officials 

said that, as a part of routine monitoring, they will ensure that 

grant-funded equipment is inventoried as required by federal 

regulations. These actions meet the intent of our recommendation. 

As a result, this recommendation is considered resolved and 

closed. 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

Page 8
 

Appendix A 

Purpose, Scope, and Methodology 

The purpose of the audit was to determine whether the State of 

Tennessee distributed and spent State Homeland Security Program 

and Urban Areas Security Initiative grant funds strategically, 

effectively, and in compliance with laws, regulations, and 

guidance. The goal of the audit was to identify problems and 

solutions that can help the State of Tennessee better prepare for 

and respond to threats acts of terrorism, and other hazards. The 

audit further enabled us to answer the following nine researchable 

questions: 

• Were measurable goals developed from plans? 

• Do funded plans link all-hazards capabilities to goals? 

• Were funds and resources distributed based on goals? 

• Does the State accurately measure risk? 

• Does the State measure response capabilities? 

• Can the State demonstrate improved performance? 

• Were grants administered compliantly? 

• Did the State monitor grant programs? 

• What innovative practices can be used by other states? 

The scope of the audit included the State Homeland Security 

Program and Urban Areas Security Initiative grant awards for 

Fiscal Years 2006, 2007, and 2008 as described in the Background 

section of this report. 

The audit methodology included work at FEMA Headquarters, 

state offices, and numerous local government and first responder 

locations. To achieve our audit objective, we analyzed data, 

reviewed documentation, and interviewed the key state and local 

officials directly involved in the management and administration of 

Tennessee’s Homeland Security Grant Program. As listed below, 

we conducted site visits and held discussions with officials from 

the Memphis and Nashville urban areas, six Homeland Security 

Districts, six counties, six state agencies, and ten first responder 

locations in order to determine if program grant funds were 

expended according to grant requirements and grant-funded 

property was safeguarded. 

Urban Areas 

• Memphis 

• Nashville 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

Page 9
 

Appendix A 

Purpose, Scope, and Methodology 

Districts and counties: 

• Homeland Security District 1, Washington County 

• Homeland Security District 2, Knox County 

• Homeland Security District 4, Putman County 

• Homeland Security District 5, Davidson County 

• Homeland Security District 5, Williamson County 

• Homeland Security District 7, Montgomery County 

• Homeland Security District 11, Shelby County 

Tennessee state agencies 

• Department of Agriculture 

• Department of Health 

• Department of Safety 

• Department of Transportation 

• Emergency Management Agency 

• Office of Homeland Security 

First Responder organizations 

• Knox County Fire Station 

• Knox County Sheriff’s Department Aviation Hanger 

• Memphis Police Department 

• Memphis Fire Engine Company No. 1 

• Memphis Fire Engine Company No. 3 

• Nashville Fire Department 

• Nashville Fire Station 

• Nashville Police Department 

• Washington County Bomb Squad 

• Washington County Hazmat Team 

At these locations, we interviewed responsible officials, reviewed 

documentation supporting State and subgrantee management of the 

grant funds, and physically inspected equipment procured with the 

grant funds. 

We conducted the audit between December 2009 and May 2010, 

according to Government Auditing Standards as prescribed by the 

Comptroller General of the United States (Yellow Book-2007 

Revision). 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. 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

Page 10
 
 

Appendix A 

Purpose, Scope, and Methodology 

Although this audit included a review of costs claimed, we did not 

perform a financial audit of those costs. This was a performance 

audit as defined by Chapter 1 of the Standards, and included a 

review and report of program activities with a compliance element. 

Foxx & Company was not engaged to and did not perform a 

financial statement audit, the objective of which would be to 

express an opinion on specified elements, accounts, or items. 

Accordingly, we were neither required to review, nor express an 

opinion on, the costs claimed for the grant programs included in 

the scope of the audit. Had we been required to perform additional 

procedures, or conducted an audit of the financial statements in 

accordance with generally accepted auditing standards, other 

matters might have come to our attention that would have been 

reported. This report relates only to the programs specified and 

does not extend to any financial statements of the State of 

Tennessee. 

While the audit was being performed and the report prepared under 

contract, the audit results are being reported by the DHS Office of 

Inspector General to appropriate FEMA and State of Tennessee 

officials. 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

Page 11
 

Appendix B 

Organization Chart 

State of Tennessee 
 

Homeland Security Offices
 


The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

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Appendix C 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy 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 

Federal Emergency Management Agency 

Administrator 

Assistant Administrator, Grant Programs Directorate 

Federal Emergency Management Agency Audit Liaison 

Grant Programs Directorate Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

The State of Tennessee’s Management of State Homeland Security Program and 
 

Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 
 

Page 13 
ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4100, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.