The Office of Inspector General (OIG) has found that the Federal Emergency Management Agency (FEMA) did not manage Puerto Rico Disaster Case Management Program (PR-DCMP) funds in accordance with Federal regulations and FEMA program requirements.
According to Federal regulations, non-Federal entities must support accumulation of costs and provide adequate documentation to support costs charged to a Federal award. However, OIG found that FEMA did not require six DCMP nonprofit organizations (Providers) to provide supporting documentation for actual costs. Instead, FEMA made advance payments totaling $6.4 million to six Providers based on estimates, rather than reconciling the payments with actual costs.
Additionally, OIG determined that FEMA lacked supporting documentation for Providers totaling $10.7 million. This occurred because FEMA did not have adequate internal controls for separation of duties, written policies and procedures for oversight when the state is not the recipient, or records management. OIG said that FEMA consequently has no assurance that $17.1 million paid to eight Providers was DCMP-related and necessary to perform DCMP activities. The watchdog added that FEMA cannot ensure the remaining $47.9 million in costs is adequately supported, thereby increasing the risk of fraud, waste, and abuse of funds.
FEMA did not agree with any of the three recommendations OIG made as a result of its audit. These included a call to establish internal controls to ensure proper separation of duties related to the review, approval, and disbursement of DCMP funds to prevent potential fraud, waste, and abuse. FEMA said it believes there are already effective internal control activities in place that mitigate risks for potential fraud, waste, and abuse. OIG argued that the approval process cannot be controlled by one individual, yet FEMA gave one individual the authority to verify and monitor DCMP activities and approve and process payments on reimbursement requests. OIG said this individual’s name appeared on 15 requests with payment approvals totaling $2.9 million.
OIG’s report focused on DCMP services provided to assist residents of Puerto Rico recover from the effects of Hurricane Maria. The OIG will conduct additional work in FY 2023 on FEMA’s continuing public assistance provided to Puerto Rico in response to Hurricane Maria and will also evaluate how Puerto Rico used Federal public assistance funds to prepare for future weather-related events.
Hurricane Fiona struck the southwest coast of Puerto Rico on September 18, 2022, five years after Hurricane Maria devastated the Island. The President approved a major disaster declaration on September 21. Hurricane Fiona resulted in an island-wide power outage and boil water advisory. As of October 4, the full extent of the impact is unknown but thousands are still without power.