Finding 2024-054- Matching, Level of Effort, and Earmarking (Personnel Cost Limitation) Auditor's Summary of the Finding The auditors concluded that DEM did not maintain sufficient internal controls to track, accumulate, and monitor personnel and personnel-related expenditures to demonstrate complia...
Finding 2024-054- Matching, Level of Effort, and Earmarking (Personnel Cost Limitation) Auditor's Summary of the Finding The auditors concluded that DEM did not maintain sufficient internal controls to track, accumulate, and monitor personnel and personnel-related expenditures to demonstrate compliance with the statutory limitation that no more than 50 percent of Homeland Security Grant Program funds may be used for personnel activities. The auditors recommended that DEM strengthen internal controls to monitor compliance with the personnel cost limitation. DEM Response DEM respectfully disagrees with the conclusion that it lacked internal controls over compliance with the Homeland Security Grant Program personnel cost limitation. The FY 2023 FEMA Preparedness Grants Manual establishes that recipients and subrecipients may not use more than 50 percent of their awards for personnel activities unless a waiver is approved by FEMA and refers recipients to Information Bulletin 421b for additional guidance. The Manual, however, does not prescribe a specific methodology requiring recipients to maintain a cumulative statewide calculation or continuously monitor personnel expenditures in the manner described by the audit recommendation. Rather, FEMA reviews applications, proposed investments, and budgets for compliance with the applicable Notice of Funding Opportunity (NOFO) before issuing an award. DEM maintains an established system of internal controls over HSGP expenditures. All HSGP applications are reviewed by DEM staff for compliance with the annual NOFO, applicable federal statutes, FEMA guidance, and program eligibility requirements before submission to FEMA. Proposed investments and budgets are subsequently reviewed through Nevada's public governance process by the Nevada Resilience Advisory Committee (NRAC), the Urban Area Working Group (UAWG), the Nevada Homeland Security Finance Committee, and the Nevada Homeland Security Commission (NHSC), with participation from all applicants. Following award, DEM reviews every quarterly financial report submitted by HSGP subrecipients prior to reimbursement. Professional-level grant management staff review all reported expenditures for compliance with the FEMA-approved budget, grant award conditions, and applicable federal requirements. Each reimbursement request is subsequently reviewed and approved by supervisory staff before payment is authorized. This multi-level review process provides ongoing assurance that personnel expenditures remain consistent with FEMA-approved grant awards and subawards throughout the period of performance. Accordingly, DEM believes these preventive and detective controls provided reasonable assurance of compliance with the statutory personnel cost limitation throughout the audit period. Corrective Action Planned Although DEM believes its existing internal controls are effective, DEM recognizes the benefit of further documenting those controls. DEM has revised its Internal Control Manual to formally document grant administration responsibilities, supervisory review requirements, and financial oversight procedures. The revised manual incorporates existing procedures governing quarterly financial report reviews, supervisory approvals, reimbursement reviews, grant monitoring activities, and periodic evaluations of internal controls. These enhancements better document the controls already in place and provide additional evidence supporting DEM's compliance with FEMA-approved grant awards, subawards, and applicable federal requirements. Contact Person(s) Responsible for Corrective Action • Susan Coyote, Chief Grants Officer • Shealyne Slone, Preparedness Grants Supervisor Anticipated Completion Date Implementation completed through the FY 2026 Internal Control Manual. Procedures are currently in effect for all active and future Homeland Security Grant Program awards.