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DHS OIG AUDIT ISSUES & ACKNOWLEDGEMENT The Department of Homeland Security (DHS) Office of Inspector General (OIG) was tasked by Congress to audit all FEMA projects for fiscal year 2014. A synopsis of those findings are listed below: There have been 32 separate instances where Grantees/Recipients or Subgrantees/Subrecipients did not follow the prescribed rules to the point that the OIG believed the below listed violations could have nullified the FEMA/State agreement. 1. Non Competitive contracting practices. 2. Failure to include required contract provisions. 3. Failure to employ the required procedures to ensure that small, minority, and women's owned firms were all given fair consideration. 4. Improper "cost -plus -a -percentage -of -cost" contracting practices. The following information comes directly from DHS's OIG Audit Tips for Managing Disaster Related Project Costs; Report Number OIG -16-109-D dated July 1, 2016. The following may be reasons for the disallowance or total de - obligation of funding given under the FEMA/State agreement: 1. Use of improper contracting practices. 2. Unsupported costs. 3. Poor project accounting. 4. Duplication of benefits. 5. Excessive equipment charges (applicability may vary with hazard mitigation projects). 6. Excessive labor and fringe benefit charges. 7. Unrelated project costs. 8. Direct Administrative Costs. 9. Failure to meet the requirement to obtain and maintain insurance. Key Points that must be followed when Administering FEMA Grants: • Designate one person to coordinate the accumulation of records. • Establish a separate and distinct account for recording revenue and expenditures, and a separate identifier for each specific FEMA project. • Ensure that the final claim for each project is supported by amounts recorded in the accounting system. • Ensure that each expenditure is recorded in the accounting books and references supporting sources of documentation (checks, invoices, etc.) that can be readily retrieved. • Research insurance coverage and seek reimbursement for -the maximum amount. Credit the appropriate FEMA project with that amount. • Check with your Federal Grant Program Coordinator about availability of funding under other Federal programs (Federal Highways, Housing and Urban Development, etc.) and ensure that the final project claim does not include costs that another Federal agency funded or could have funded. • Ensure that materials taken from existing inventories for use on FEMA projects are documented by inventory withdrawal and usage records. • Ensure that expenditures claimed under the FEMA project are reasonable, necessary, directly benefit the project, and are authorized under the "Scope of Work." I acknowledge that I have received a copy of, and have been briefed on, the above DHS OIG Audit Issues. FOR Joseph E. Flescher, Chairman BY Subgrantee/Subrecipient Date Attachment "E" Signature Printed Name and Title P86