As of September 2021, the Federal Emergency Management Agency (FEMA) had received approximately $98 billion to assist the United States in addressing the challenges of the pandemic. As part of Phase 1 of the Pandemic Response Accountability Committee’s (PRAC) study, the Office of Inspector General (OIG) has conducted a review to determine the sources and intended purpose of Federal pandemic response program funds provided to six geographic locations.
FEMA provided approximately $49.3 million of COVID-19 pandemic relief funds to Springfield, MA; Coeur D’Alene, ID; Sheridan County, NE; Marion County, GA; White Earth Nation in Minnesota; and Jicarilla Apache Nation in New Mexico. Local entities and individuals in these locations received this assistance through the following funding initiatives and for the indicated amounts:
- Lost Wages Assistance program ($40.1 million)
- Public Assistance program ($7.6 million)
- COVID-19 Funeral Assistance program ($1.2 million)
- Assistance to Firefighters Grants ($208,000)
- Emergency Food and Shelter Program ($182,000)
OIG’s review found that although FEMA provided information for each of its funding initiatives, in some instances, the agency could not provide detailed data and/or supporting documentation in the time allotted. The watchdog determined that this was because FEMA’s inconsistent data collection process and management practices presented the agency with challenges when responding to OIG requests. For instance, OIG said FEMA does not always maintain data at the local level, some FEMA systems cannot provide program data as of a specific date, and FEMA did not follow a standardized process to obtain and generate program data.
OIG maintained that these weaknesses prevented it from effectively comparing program data across geographic locations and limited its ability to validate the accuracy of FEMA’s systems during Phase 1 of the PRAC’s study.
OIG is currently beginning Phase 2 of the PRAC’s study. During Phase 2, the watchdog will also review FEMA’s oversight of recipient and subrecipient compliance with Federal reporting requirements.
Meanwhile an OIG audit has found that FEMA did not implement controls that may have prevented the 21 state workforce agencies (SWA) in its review from distributing more than $3.7 billion in improper payments through the Lost Wages Assistance (LWA) program. These 21 SWAs distributed more than 80 percent of the $36.5 billion of LWA — approximately $30 billion in total — and later detected $3.3 billion in potentially fraudulent payments. In addition, OIG identified $21.6 million in overpayments and $403 million in payments made without obtaining claimants’ required self-certifications of eligibility for LWA.
OIG said this occurred because FEMA launched the LWA program in 11 days, in response to the unprecedented pandemic, without developing and implementing clear guidance for the program or verifying and monitoring the SWAs’ controls to ensure they prevented and mitigated improper payments. Instead, FEMA integrated LWA into SWAs’ unemployment insurance (UI) program.
OIG found that many SWAs did not have sufficient controls to prevent fraudulent activities or overpayments, and they relied on self-certifications. Despite repeated warnings from the Department of Labor and OIG that self-certifications are not reliably accurate and may lead to improper payments, FEMA did not require controls to mitigate the unreliability of self-certifications to determine claimants’ eligibility.
The audit determined that by relying on the states’ UI programs (which are susceptible to fraud) to determine claimants’ eligibility and distribute LWA, FEMA lost an opportunity to safeguard $36.5 billion in disbursed LWA, directly affecting its ability to respond to future emergencies and disasters.
As a result, OIG has questioned the more than $3.7 billion in improper payments distributed by the 21 SWAs that it reviewed. The watchdog has also made seven recommendations to FEMA to help the agency improve the management of its Federal assistance programs and recover LWA improper payments. These included a call to develop and implement a standard risk assessment process before initiating new Federal grant programs.
