Audit report: ASDHS failed to aggressively manage funds
The U.S. Department of Homeland Security’s Office of Inspector General says American Samoa didn’t aggressively manage and expand the federal State Homeland Security Program (SHSP) grant funds, and this problem could result in the territory losing out on this funding.
This was among the many issues cited in the USDHS-OIG performance audit report covering fiscal years 2009 through 2011 on SHSP grant awarded to the American Samoa Department of Homeland Security (ASDHS).
The performance audit was conducted by an independent auditing firm and the grants were awarded through USDHS Federal Emergency Management Agency (FEMA).
“ASDHS did not aggressively manage its SHSP grant funds, did not obligate and expend grant funds in a timely manner, and did not demonstrate to FEMA that the Territory’s projects had been sufficiently planned with clearly defined project descriptions, milestones, and funding allocations by solution area,” the audit report says.
For example, as of Jan. 31, 2013, ASDHS had only obligated and expended $102,000 of the $1.43 million in FY 2009 funding; $102,000 of the $1.46 million in FY 2010; and $0 (zero) of the $1.15 million in FY 2011.
With the slow pace in obligations and funding activities, it “could result in the territory losing SHSP funding due to the expiration of grant fund periods of performance”, according to the report, which added that if this occurs, American Samoa “will lose the opportunity to acquire needed capabilities or fill capability gaps to adequately prepare for, prevent, respond to, and recover from threats to public safety.”
The audit report points to a document, “February 2012 FEMA Guidance to State Administrative Agencies to Expedite the Expenditure of Certain DHS/FEMA Grant Funding” that was available to ASDHS to manage and expand its SHSP funding. This document, it says recognized the benefits of federal investment in preparedness capabilities, and also provided a process for re-prioritizing and modifying current investment projects to ensure that funds were made available for use "quickly and efficiently”.
Instead, the report says, ASDHS officials attributed the delay in obligating and expending grant funds to a freeze on Homeland Security Grant Program (HSGP) funding imposed by FEMA in January 2007, following a USDHS-OIG audit of FYs 2002 through 2004 HSGP awards, and that local Homeland Security officials said they looked for ways to use unspent grant funds, but often experienced difficulties due to FEMA’s rigid pre-approval process prior to initiating projects; restrictive periods of performance; and restrictive cash drawdown procedures.
But, the report notes, while FEMA had placed a hold on the Territory’s SHSP grant funding, the FYs 2009 through 2011 Initial Strategy Implementation Plans submitted by ASDHS and approved by FEMA gave the Territory “the authority to begin its projects once the project details had been firmly established and approved by FEMA.”
According to the auditors, “ASDHS did not initiate projects because it failed to work out specific project details and obtain FEMA’s approval to begin,” and pointed to ASDHS’ concerns regarding its inability to initiate projects with FEMA officials on Feb. 6, 2013.
In response, FEMA officials said there was nothing keeping ASDHS from initiating projects if FEMA’s pre-approval procedures were followed.
Additionally, American Samoa is different from states and other territories in that funds classified by FEMA as on hold (or frozen) would only be made available for obligation and expenditure when ASDHS assured FEMA that advance project planning had adequately identified project requirements and ASDHS was prepared to initiate and monitor the project, FEMA officials say.
FEMA also says that:
• funding on open grants should be expended prior to opening additional grants. However, additional grant programs could be opened for warranted projects on a case-by-case basis if the Territory identified a requirement for additional grant funding to complete those projects.
• until ASDHS demonstrated that it could manage multiple projects with multiple years funding, the administrative hold on funds would remain in place.
Auditors say that because of the freeze on HSGP funds in 2007, “ASDHS erroneously believed that projects submitted by ASDHS as part of its grant application and approved by FEMA could not be initiated until FEMA released the grant funds.”
The auditors explained that in the prior audit of HSGP funds, USG-OIG recommended that FEMA make greater use of existing authorities, up to and including designating the Territorial Office of Homeland Security (now ASDHS) as a "high risk" grantee due to the nature of the findings reported.
However, __in lieu of a high risk designation, FEMA froze all grant funding in January 2007 pending a full review of financial activity related to the grant programs; and when outstanding issues in the USDHS-OIG report were adequately addressed in September 2009, the freeze on older HSGP grant funds was lifted, but restricted cash drawdown procedures were put in place.
The FEMA restriction required ASDHS to provide supporting documentation, and obtain approval from FEMA, in advance of drawing down the grant funds.
The report says FEMA continued an administrative hold on FY 2010 through 2012 grants “but did not prohibit ASDHS from initiating projects if FEMA’s pre-approval procedures were followed.”
“With improved leadership and accountability, mitigation of political influences, advance project planning, and a process to achieve consistency in achieving preparedness capabilities, the Territory can acquire needed capabilities or fill capability gaps to adequately prepare for, prevent, respond to, and recover from threats to public safety,” it says.
The auditors recommend that ASDHS seek FEMA’s approval to initiate projects in a timely manner after a grant award based on documentation that assures FEMA that the projects have been sufficiently planned with appropriately defined project descriptions, funding allocations by solution area, and project milestones.
FEMA agrees and said it will work with ASDHS as it implements policies and practices that promote earlier and more timely communication with FEMA on allowable project activity under the current program hold conditions.
ASDHS also concurred with the recommendation, but said that it does not need to wait for FEMA approval to initiate projects as the conditions imposed by FEMA are financial in nature, the auditors said.
The report says, “ASDHS correctly pointed out that current program-hold conditions are financial in nature and projects could be initiated without additional FEMA project approval” — however, the auditors state, “FEMA will only release SHSP funds when it has assurance” as it has described for projects.
The audit report says, “Therefore, the earlier these activities are accomplished, the earlier ASDHS can seek reimbursement for actual project costs.”