Audit 408003

2025-001 – Internal Controls over Allowable Cost – Disaster Assistance Grants U.S. Federal Emergency Management Agency 97.036 - Public Assistance Grant Year Finding Originated: 2025 Condition: The Parish did not maintain adequate internal controls over the review and approval of FEMA Public Assistance (PA) Force Account expenditures submitted through reimbursement requests prepared by its outsourced grant consultant. Specifically, the Parish did not perform a documented review to verify the accuracy, proper classification (e.g., labor, equipment, materials), and allowability of Force Account costs in accordance with FEMA PA requirements prior to submission for reimbursement. During our testing of Force Account costs, we selected a sample of 41 reimbursement requests. Of these, 29 samples contained exceptions where (1) evidence of supervisory review and approval was not documented, and/or (2) costs were not adequately supported or demonstrated to be properly classified and allowable under FEMA Public Assistance Force Account requirements. The frequency and nature of the exceptions identified indicate that the Parish’s internal controls over the review of Force Account expenditures were not operating effectively. Criteria: Management is responsible for establishing and maintaining effective internal control over compliance with federal program requirements, including ensuring that all expenditures charged to FEMA Public Assistance Program. Reimbursement request should be reviewed to ensure the following: • Costs are allowable, reasonable, and properly classified in accordance with 2 CFR Part 200 cost principles, and • Costs are supported and subject to documented management review and approval prior to submission for reimbursement. Additionally, if a governmental entity utilizes an outsourced consultant to administer grant activity, management retains responsibility for ensuring the accuracy and completeness of information submitted and must implement compensating controls over the consultant’s work. Cause: The Parish relies on an outsourced FEMA grant consultant to prepare reimbursement requests and current controls were not designed suitably to ensure proper classification of cost amongst FEMA categories. Effect: The Parish submitted reimbursement requests containing misclassified costs, including overtime and equipment charges recorded under incorrect categories. As a result, the Parish may be noncompliant with federal cost principles Questioned Cost: $61,700 (estimated)