Disaster Relief: Governmentwide Framework Needed to Collect and  
Consolidate Information to Report on Billions in Federal Funding 
for the 2005 Gulf Coast Hurricanes (06-SEP-06, GAO-06-834).	 
                                                                 
Hurricane Katrina devastated the Gulf Coast region of the United 
States and caused billions of dollars in damage. Hurricanes Rita 
and Wilma further exacerbated damage to the region. The Federal  
Emergency Management Agency (FEMA), within the Department of	 
Homeland Security (DHS), was tasked with the primary role of	 
managing the federal relief and recovery efforts. This review was
performed under the Comptroller General's authority because of	 
widespread congressional interest in the response to this	 
disaster. GAO examined whether the federal government was	 
adequately tracking and reporting on the use of the funding	 
provided in the four emergency supplemental appropriations acts  
enacted as of June 2006. GAO analyzed the emergency supplemental 
appropriations acts and conference reports, reviewed FEMA's	 
required weekly reports, and interviewed federal agency 	 
officials.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-834 					        
    ACCNO:   A60335						        
  TITLE:     Disaster Relief: Governmentwide Framework Needed to      
Collect and Consolidate Information to Report on Billions in	 
Federal Funding for the 2005 Gulf Coast Hurricanes		 
     DATE:   09/06/2006 
  SUBJECT:   Accountability					 
	     Budget obligations 				 
	     Budget outlays					 
	     Disaster recovery					 
	     Disaster relief aid				 
	     Federal funds					 
	     Fund audits					 
	     Hurricane Katrina					 
	     Hurricane Rita					 
	     Hurricanes 					 
	     Interagency relations				 
	     Natural disasters					 
	     Reporting requirements				 
	     Supplemental appropriation acts			 
	     Supplemental appropriations			 
	     Timeliness 					 
	     Transparency					 
	     FEMA Disaster Relief Fund				 
	     Gulf Coast 					 

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GAO-06-834

     

     * Results in Brief
     * Background
          * Funding Provided for the Hurricane Relief Effort
          * FEMA Uses Federal Agencies to Provide Assistance on Its Beha
     * The Government Does Not Have a Framework in Place to Collect
          * FEMA's Required Reports Do Not Provide Adequate Information
               * FEMA Needs to Clarify Reported Obligations for Work Performe
               * FEMA's Reports Do Not Provide Adequate Information on Actual
          * Lack of Framework to Collect and Consolidate Agency Data and
     * Conclusions
     * Recommendations for Executive Action
     * Agency Comments and Our Evaluation
     * Appendix I: Scope and Methodology
     * Appendix II: Reporting Requirements Included in the Four Em
     * Appendix III: Comments from the Department of Homeland Secu
     * Appendix IV: Comments from the Office of Management and Budg
     * Appendix V: GAO Contact and Staff Acknowledgments
          * GAO Contact
          * Staff Acknowledgments
               * Order by Mail or Phone

Report to Congressional Committees

United States Government Accountability Office

GAO

September 2006

DISASTER RELIEF

Governmentwide Framework Needed to Collect and Consolidate Information to
Report on Billions in Federal Funding for the 2005 Gulf Coast Hurricanes

GAO-06-834

Contents

Letter 1

Results in Brief 4
Background 6
The Government Does Not Have a Framework in Place to Collect and
Consolidate Information to Report on Hurricane-Related Funding 11
Conclusions 20
Recommendations for Executive Action 21
Agency Comments and Our Evaluation 21
Appendix I Scope and Methodology 24
Appendix II Reporting Requirements Included in the Four Emergency
Supplemental Appropriations Acts 26
Appendix III Comments from the Department of Homeland Security 29
Appendix IV Comments from the Office of Management and Budget 31
Appendix V GAO Contact and Staff Acknowledgments 32

Tables

Table 1: Emergency Supplemental Funding Received by Federal Agencies in
the Four Emergency Supplemental Appropriations Acts as of June 2006
Related to Gulf Coast Hurricanes 7
Table 2: Mission Assignment Obligations and Expenditures Reported by FEMA
for Hurricanes Katrina, Rita, and Wilma, as of March 29, 2006 12

Figure

Figure 1: Funding and Reimbursement Process Related to FEMA Issuing
Mission Assignments to Performing Agencies 10

Abbreviations

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COE Army Corps of Engineers

DHS Department of Homeland Security

DOD Department of Defense

FEMA Federal Emergency Management Agency

HUD Department of Housing and Urban Development

IPAC Intra-Governmental Payment and Collection

NRP National Response Plan

OMB Office of Management and Budget

United States Government Accountability Office

Washington, DC 20548

September 6, 2006

Congressional Committees

Hurricane Katrina struck the Gulf Coast of the United States on August 29,
2005. It devastated the region and caused billions of dollars in damage.
The hurricane affected about 1.5 million people located within
approximately 90,000 square miles spanning Louisiana, Mississippi, and
Alabama, and was the worst natural disaster in our nation's history in
geographic scope, extent and severity of destruction and damage, and the
number of persons displaced from their homes. Shortly after Hurricane
Katrina made landfall, Hurricanes Rita and Wilma followed, further
exacerbating damage to the Gulf Coast region. In response to these events,
the Congress has provided nearly $88 billion for relief and recovery
through four emergency supplemental appropriations acts through the end of
June 2006.1

As part of its mission under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (Stafford Act),2 as reflected in the National
Response Plan (NRP),3 the Federal Emergency Management Agency (FEMA),
within the Department of Homeland Security (DHS), was tasked with the
primary role of managing the federal relief and recovery efforts within
the affected region. The first emergency supplemental appropriation act
was enacted 4 days after Hurricane Katrina struck the Gulf Coast and
provided over $10 billion. The second emergency supplemental appropriation
act was enacted 6 days after the first emergency supplemental
appropriation act and provided significantly more funding-$50 billion-to
FEMA for its Disaster Relief Fund and required the Secretary of Homeland
Security to provide weekly reports4 to the Committees on Appropriations
detailing the allocation and obligation of these amounts. The Congress
later called for FEMA to also report on expenditures over $50 million,
among other information.

1Pub. L. No. 109-61, 119 Stat. 1988 (Sept. 2, 2005); Pub. L. No. 109-62,
119 Stat. 1990 (Sept. 8, 2005); Pub. L. No. 109-148, div. B, 119 Stat.
2680, 2745 (Dec. 30, 2005); and Pub. L. No. 109-234, title II, 120 Stat.
443, 474 (June 15, 2006). Other funding has been provided, but it was not
included in the emergency supplemental appropriations.

242 U.S.C. S:S: 5121-5206. The Stafford Act authorizes federal agencies to
take actions such as disaster response, recovery, and mitigation
assistance to supplement state and local efforts once the President has
issued a major disaster declaration. The Federal Emergency Management
Agency (FEMA), within the Department of Homeland Security (DHS), is
responsible for administering the major provisions of the Stafford Act.

3The NRP is intended to be an all-discipline, all-hazards plan that
establishes a single, comprehensive framework for the management of
domestic incidents. It provides the structure and mechanisms for the
coordination of federal support to state, local, and tribal incident
managers and for exercising direct federal authorities and
responsibilities.

In creating these reporting requirements, the Congress sent a clear
message that it wanted to know how these funds were being spent and have
updated information on a weekly basis. These reports are publicly
available and at the time of this report were being posted to the House
Committee on Appropriations website.5 In December 2005, when the Congress
rescinded $23.4 billion from FEMA's Disaster Relief Fund, FEMA had
obligated about $25 billion, or 42 percent, of the $60 billion it received
in the first two emergency supplemental appropriations. With this
rescission, the Congress distributed the funds as direct appropriations to
other federal agencies. As of June 2006, approximately $88 billion has
been provided to 23 federal agencies6 for the relief work through four
emergency supplemental appropriations acts.

We currently have a large body of ongoing work to address preparation,
response, recovery, and rebuilding efforts related to the hurricanes that
devastated the Gulf Coast region. Due to widespread congressional interest
in these subjects, our work is being completed under the Comptroller
General's authority to conduct evaluations on his own initiative. Topics
of reports already issued include (1) contract management; (2) accounting
for international assistance; (3) the adequacy of internal controls to
prevent fraud and abuse; and (4) the military's response to catastrophic
natural disasters.7 We are sending you this report on the tracking of
hurricane relief funding because of your interest in and responsibility
for oversight of matters related to the hurricane relief and recovery
efforts. Our work focused on the funds designated for hurricane relief and
recovery in the four emergency supplemental appropriations acts enacted as
of June 2006. Our objective was to determine whether the federal
government was adequately tracking and reporting on the use of this
funding. To accomplish this objective, we reviewed the four emergency
supplemental acts to determine which federal agencies were receiving
appropriations, how much each was receiving, what the funds were intended
for, and whether any reporting requirements were specified. Because the
second supplemental, which provided $50 billion to FEMA, required FEMA to
report to the Committees on Appropriations on a weekly basis on the use of
these funds,8 we reviewed FEMA's weekly reports to determine whether the
information provided was timely and useful. We limited our review of these
reports to certain aspects of them that have governmentwide implications.
Specifically, our review of FEMA's weekly reports focused on the
obligations and expenditures reported for mission assignments9 that were
issued to agencies performing disaster relief work related to the Gulf
Coast hurricanes on behalf of FEMA. The obligation and expenditure
information we present in this report was obtained from FEMA and certain
other federal agencies. To assess the reliability of the data, we
interviewed officials knowledgeable about the data included in the reports
and what the data represented, and determined that the data were
sufficiently reliable for the purposes of this report. Additional details
on our scope and methodology are presented in appendix I. We conducted our
work from October 2005 through June 2006 in accordance with generally
accepted government auditing standards.

4FEMA prepares these weekly reports and forwards them to DHS for
transmittal. For purposes of this report, we consider this to be a
reporting requirement for FEMA.

5FEMA's weekly reports were posted on the House Appropriations Committee's
website at http://appropriations.house.gov/_files/HurricaneKatrinaLink.htm
(downloaded May 25, 2006).

6For purposes of this report, we are considering the Department of
Agriculture and the U.S. Forest Service two separate agencies because the
Forest Service received a large portion of the mission assignments for the
Department of Agriculture. We are also considering the Department of
Defense (DOD) and the Army Corps of Engineers (COE) two separate agencies
because of the large portion of the total mission assignments they each
received as well as the fact that COE does not use the Intra-Governmental
Payment and Collection (IPAC) system. In addition, for purposes of this
report, we are considering FEMA's Disaster Relief Fund separate from other
DHS appropriations because of the specific function of the Disaster Relief
Fund for Stafford Act activities.

7See GAO, Agency Management of Contractors Responding to Hurricanes
Katrina and Rita, GAO-06-461R (Washington, D.C.: Mar. 16, 2006); GAO,
Hurricane Katrina: Comprehensive Policies and Procedures Are Needed to
Ensure Appropriate Use of and Accountability for International Assistance,
GAO-06-460 (Washington, D.C.: Apr. 6, 2006); GAO, Expedited Assistance for
Victims of Hurricanes Katrina and Rita: FEMA's Control Weaknesses Exposed
the Government to Significant Fraud and Abuse, GAO-06-655 (Washington,
D.C.: June 16, 2006); and GAO, Hurricane Katrina: Better Plans and
Exercises Needed to Guide the Military's Response to Catastrophic Natural
Disasters, GAO-06-643 (Washington, D.C.: May 15, 2006).

8Pub. L. No. 109-62, 119 Stat. 1990, 1991-1992 (Sept. 8, 2005). The act
required the Secretary of Homeland Security to provide, at a minimum, a
weekly report detailing the allocation and obligation of appropriations
made under the act.

9A mission assignment is a tasking issued by FEMA, directing other federal
agencies and components of DHS, or "performing agencies," to perform work
on its behalf to respond to a Stafford Act event under the NRP.

                                Results in Brief

The federal government is not adequately tracking and reporting, on a
governmentwide basis, on the use of the $88 billion in hurricane relief
and recovery funds provided thus far to 23 federal agencies in the four
emergency supplemental appropriations acts. FEMA, which initially received
$60 billion for hurricane relief, is required to report weekly to the
House and Senate Appropriations Committees on the use of funds it
received; however, these reports do not provide timely information from a
governmentwide perspective because FEMA does not have a mechanism in place
to report on the financial activity of the agencies performing work on its
behalf through mission assignments. Specifically, when FEMA tasks another
federal agency through a mission assignment, which is similar to an
interagency agreement to provide goods and services, FEMA records the
entire amount upfront as an obligation in its accounting system and
reports these amounts to the Congress; whereas the agency performing the
task for FEMA does not record an obligation until a later date, thereby
overstating reported governmentwide obligations. For example, FEMA
initially reported mission assignment obligations issued to the Department
of Defense (DOD) related to Hurricane Katrina in the amount of about $2.2
billion. While this amount was eventually reduced to about $1.1 billion,
DOD had only actually incurred about $481 million in obligations over the
same period of time. In addition, based on information provided by the
Coast Guard, FEMA had recorded obligations of nearly $192 million as of
April 2006; however, at that time the Coast Guard had only actually
incurred about $85 million in obligations.

The opposite is true for expenditures. The performing agency expends the
funds, but then has to bill FEMA for reimbursement. This may happen months
after the actual payment is made by the performing agency. FEMA does not
include the expenditure in its reports to the Congress until it has
received the bill from the performing agency, reviewed it, and recorded
the expenditure in its accounting system, thereby understating reported
governmentwide expenditures. For example, the U.S. Forest Service had not
billed FEMA for any of its work done under mission assignments even though
the agency reported that it had made close to $170 million in expenditures
related to its Hurricane Katrina mission assignments as of January 31,
2006. Accordingly, FEMA reported no expenditures for this agency in its
weekly report since FEMA had not yet approved any billings. A user of
FEMA's report could incorrectly infer that a particular agency has
received tasks from FEMA but has not spent any of the funds, either
because the agency has not billed FEMA or because the bill has not been
reviewed and recorded by FEMA. As a result, while FEMA is reporting as
required, from a governmentwide perspective, FEMA's reported obligations
are overstated and expenditures are understated. Depending on the stage of
the process, the differences could be significant.

Further, from a governmentwide perspective, we found that there is no one
agency or central collection point that exists to compile and report on
how the approximately $88 billion provided through four emergency
supplemental appropriations acts are being spent. Although each federal
agency is responsible for tracking the funds it received, obligations
incurred, and funds expended through its own internal tracking systems, no
mechanisms are in place to consolidate and report on this information.
Without a framework and mechanisms in place to collect and consolidate
information from these agencies on a consistent, periodic basis, it will
be difficult for decision makers to determine how much federal funding has
been spent and by whom, whether more may be needed, or whether too much
has been provided. The ability to separately track and report on these
funds is important to help ensure better accountability and clearly
identify the status of funding provided in direct response to these
hurricanes at both the individual federal agency level as well as the
governmentwide level. Also, it is important to provide additional
transparency so that hurricane victims, affected states, as well as
American taxpayers, know how these funds are being spent. At the same
time, we recognize the substantial challenge in balancing the need to get
money out quickly to those who are actually in need and sustaining public
confidence in disaster programs by taking all possible steps to minimize
fraud and abuse.

While there are some reporting requirements included in the emergency
supplemental appropriations acts, overall reporting requirements differ
greatly. Further, the reporting requirements do not call for consolidating
information on obligations and expenditures on a governmentwide basis and,
therefore, do not facilitate governmentwide reporting on hurricane-related
spending.

We make four recommendations to FEMA to improve the information on the
status of hurricane relief funds from a governmentwide perspective
provided in FEMA's weekly reports to the Appropriations Committees. Given
the magnitude of the emergency supplemental federal funding provided thus
far-more than double DHS's annual discretionary budget authority-in
response to the Gulf Coast hurricanes and the need for additional
transparency and accountability, we are also recommending that the Office
of Management and Budget (OMB) establish a framework for governmentwide
reporting and either collect and consolidate information on the status of
the hurricane-related funding itself or designate another appropriate
agency, such as the Department of the Treasury, to do so and report to the
Appropriations Committees on a periodic basis.

We provided a draft of this report to DHS and OMB for comment. DHS and OMB
concurred with our recommendations, and their comments, along with our
evaluation, are discussed in the Agency Comments and Our Evaluation
section of this report. The comments are also reprinted in their entirety
in appendixes III and IV, respectively. We also provided excerpts of the
report to those agencies cited in examples for their review. They provided
technical comments, and we made revisions as appropriate.

                                   Background

On August 29, 2005, Hurricane Katrina devastated the Gulf Coast region,
causing human casualties and billions of dollars in damage. During major
disasters such as this, the Stafford Act authorizes the federal government
to assist in saving lives, reducing human suffering, mitigating the
effects of lost income, and helping repair or rebuild certain damaged
facilities. As of June 2006, nearly $88 billion was appropriated by the
Congress through four emergency supplemental appropriations for relief and
recovery efforts related to the recent Gulf Coast hurricanes. FEMA, the
DHS component statutorily charged with administering the provisions of the
Stafford Act,10 uses appropriations made to the Stafford Act's Disaster
Relief Fund to assist relief and recovery efforts.

Funding Provided for the Hurricane Relief Effort

Initially, in September 2005, the Congress appropriated $62.3 billion for
the response and recovery effort related to Hurricane Katrina in two
emergency supplemental appropriations acts.11 Of that amount, (1) FEMA
received $60 billion for the Disaster Relief Fund, (2) DOD received $1.9
billion, and (3) the Army Corps of Engineers (COE), a DOD agency, received
$400 million. As of late December 2005, FEMA reported that it had
obligated about $25 billion, or 42 percent, of the $60 billion it had
received. In December 2005, the Congress provided additional funds for the
recovery effort related to the 2005 Gulf Coast hurricanes through a third
emergency supplemental appropriation act.12 This legislation provided
approximately $29 billion to 20 federal agencies and also rescinded
approximately $23.4 billion from the $60 billion appropriated to FEMA's
Disaster Relief Fund in September 2005. The third emergency supplemental
appropriation resulted in a net increase of about $5.5 billion in total
direct federal funding for hurricane relief and recovery and the fourth
resulted in a net increase of approximately $20.1 billion. Table 1 shows
the agencies that received direct funding through the four emergency
supplemental appropriations acts.

106 U.S.C. S: 317(a)(1).

11Pub. L. No. 109-61, 119 Stat. 1988 (Sept. 2, 2005) and Pub. L. No.
109-62, 119 Stat. 1990 (Sept. 8, 2005). These two emergency supplemental
appropriations were to meet immediate needs arising from the consequences
of Hurricane Katrina for the fiscal year ending September 30, 2005.

Table 1: Emergency Supplemental Funding Received by Federal Agencies in
the Four Emergency Supplemental Appropriations Acts as of June 2006
Related to Gulf Coast Hurricanes

  Dollars in                                                          
  millions                                                            
                                                                      Percentage 
  Agency             First    Second        Third    Fourth     Total   of total 
  FEMA Disaster  $10,000.0 $50,000.0 $(23,409.3)a $5,962.0b $42,552.7      48.4% 
  Relief Fund                                                         
  DOD                500.0   1,400.0      5,753.8  1,487.7c   9,141.5       10.4 
  COE                    0     400.0      2,899.6  3,685.9d   6,985.5        8.0 
  Department of                                                                  
  Housing and                                                         
  Urban                                                               
  Development                                                         
  (HUD)                  0         0     11,890.3   5,200.0  17,090.3       19.4
  Department of          0         0      2,798.1    702.4e   3,500.5        4.0 
  Transportation                                                      
  Department of          0         0      1,600.0     285.0   1,885.0        2.1 
  Education                                                           
  Department of                                                                  
  Agriculture                                                         
  (excluding                                                          
  U.S. Forest                                                         
  Service)               0         0  1,038.1f, g     132.4   1,170.5        1.3
  Department of          0         0        640.0      12.0     652.0        0.7 
  Health and                                                          
  Human Services                                                      
  Department of          0         0        592.7    585.9h   1,178.6        1.3 
  Veterans                                                            
  Affairs                                                             
  Small Business         0         0        446.0     542.0     988.0        1.1 
  Administration                                                      
  DHS (excluding         0         0        285.1     662.0     947.1        1.1 
  FEMA Disaster                                                       
  Relief Fund)                                                        
  Department of          0         0        229.0       8.5     237.5        0.3 
  Justice                                                             
  Department of          0         0        125.0      16.0     141.0        0.2 
  Labor                                                               
  Armed Forces           0         0        20.8i    221.0i     241.8        0.3 
  Retirement                                                          
  Home                                                                
  U.S. Forest            0         0         57.0      20.0      77.0        0.1 
  Service                                                             
  General                0         0         38.0      37.0      75.0        0.1 
  Services                                                            
  Administration                                                      
  Environmental          0         0          8.0      13.0      21.0        0.0 
  Protection                                                          
  Agency                                                              
  Six other              0         0        492.7   527.0b,   1,019.7        1.2 
  agencies                                             f, j           
  Total          $10,500.0 $51,800.0     $5,504.9 $20,099.8 $87,904.7     100.0% 

12Pub. L. No. 109-148, div. B, 119 Stat. 2680, 2745 (Dec. 30, 2005). This
emergency supplemental appropriation was to address hurricanes in the Gulf
of Mexico for the fiscal year ending September 30, 2006.

Sources: GAO analysis of Pub. L. No. 109-61, Pub. L. No. 109-62, Pub. L.
No. 109-148, and Pub. L. No. 109-234.

aThe third emergency supplemental appropriation act rescinded
approximately $23.4 billion from the $60 billion appropriated to FEMA's
Disaster Relief Fund in the first two emergency supplemental
appropriations acts.

bThe fourth emergency supplemental appropriation act transferred to the
Social Security Administration $38 million of the $6 billion appropriated
to FEMA's Disaster Relief Fund in this act.

cThe amount of funding provided to DOD in the fourth emergency
supplemental appropriation act excludes $169.5 million that was rescinded
in this legislation.

dThe amount of funding provided to COE in the fourth emergency
supplemental appropriation act excludes $15 million that was rescinded in
this legislation.

eThe amount of funding provided to the Department of Transportation was
offset by a reduction to the Highway Trust Fund.

fThe amount of funding provided to the Department of Commerce in the
fourth emergency supplemental appropriation act includes $38 million
transferred from the amount provided to the Department of Agriculture in
the third emergency supplemental appropriation act. This amount is
excluded from the funding provided in the third emergency supplemental
appropriation act.

gThe total amount of funding provided to the Department of Agriculture in
the third emergency supplemental appropriation act includes $45 million
appropriated to the Department of Agriculture to subsidize loans in an
amount not to exceed the loan authority limit of $1.55 billion. Also, the
total includes $404 million of the funds for the Department of Agriculture
that were designated to be used from the funds of the Commodity Credit
Corporation, a federal corporation within the Department of Agriculture.

hThe amount of funding provided to the Department of Veterans Affairs in
the fourth emergency supplemental appropriation act excludes $198.3
million that was rescinded in this legislation.

iThe amount of funding provided to the Armed Forces Retirement Home in the
fourth emergency supplemental appropriation act includes $45 million
transferred from the amount provided to the agency in the third emergency
supplemental appropriation act. This amount is excluded from the funding
provided in the third emergency supplemental appropriation act.

jThe amount of funding provided to the Department of the Interior excludes
$9 million provided for drought emergency assistance.

FEMA Uses Federal Agencies to Provide Assistance on Its Behalf

FEMA has authority under the Stafford Act to issue an order, called a
mission assignment, to other federal agencies. A mission assignment is a
tasking issued by FEMA that directs other federal agencies and components
of DHS, or "performing agencies," to support overall federal operations
pursuant to, or in anticipation of, a Stafford Act declaration. Once the
mission assignment is issued and approved, the mission assignment document
is FEMA's basis for obligating the portion of FEMA's funds allocated to
the assigned relief and recovery effort. From a federal agency standpoint,
the mission assignment provides the recipient agency reimbursable
budgetary authority, not the actual transfer of funds, to perform the
agreed upon work. Among other things, mission assignments include a
description of work, an estimate of the dollar amount of work to be
performed, completion date for the work, and authorizing signatures.
Mission assignments may be issued for a variety of tasks, such as search
and rescue missions or debris removal, depending on the performing
agencies' areas of expertise.

After the agencies perform work under a mission assignment (e.g., perform
directly or pay a contractor), the agencies bill FEMA, and FEMA reimburses
them for the work performed using the Intra-Governmental Payment and
Collection (IPAC) system.13 In the case of an IPAC payment to a performing
agency, the IPAC funds transfer occurs immediately upon request by the
agency seeking reimbursement. After the IPAC is made, FEMA requires that
performing agencies provide it documentation supporting the costs incurred
while performing the work under the mission assignment. FEMA can also
reverse or "charge-back" the payment if it believes the agency did not
provide sufficient supporting documentation. The funding and reimbursement
process related to mission assignments is shown in figure 1.

13The IPAC system, a collection system operated by the Department of the
Treasury, is one of the major components of the Government On-Line
Accounting Link System II. The IPAC application's primary purpose is to
provide a standardized interagency fund transfer mechanism. IPAC
facilitates the intragovernmental transfer of funds. Performing agencies,
except for COE, use the IPAC system.

Figure 1: Funding and Reimbursement Process Related to FEMA Issuing
Mission Assignments to Performing Agencies

aPerforming agencies other than COE use the IPAC system. COE must submit
supporting documentation prior to reimbursement.

  The Government Does Not Have a Framework in Place to Collect and Consolidate
               Information to Report on Hurricane-Related Funding

The federal government is not adequately tracking and reporting on the use
of the $88 billion in hurricane relief and recovery funds provided thus
far to 23 federal agencies in the four emergency supplemental
appropriations acts. First, FEMA does not have mechanisms in place to
collect and report on information from the other agencies that are
performing work on its behalf through mission assignments. As a result,
FEMA's required weekly reports to the Congress have limited usefulness
from a governmentwide perspective. Second, also from a governmentwide
perspective, the federal government does not currently have a framework or
mechanisms in place to collect and consolidate information from the 22
federal agencies in addition to FEMA that have directly received funding
thus far for hurricane relief efforts and report on this information.
Although each federal agency is responsible for tracking the funds it
received, obligations incurred, and funds expended through it own internal
tracking systems, no mechanisms are in place to consolidate this
information. Therefore, it will be difficult for decision makers to
determine how much federal funding has been spent and by whom, whether
more may be needed, or whether too much was provided.

FEMA's Required Reports Do Not Provide Adequate Information from a
Governmentwide Perspective

FEMA is required to report weekly to the Appropriations Committees on the
use of funds it received; however, these reports do not provide timely
information from a governmentwide perspective because FEMA does not have a
mechanism in place to collect and report on information from other
agencies which perform work on its behalf. Specifically, when FEMA tasks
another agency through a mission assignment, which is similar to an
interagency agreement for goods and services, FEMA records the entire
amount upfront as an obligation on its reports to the Congress. The agency
performing the task for FEMA does not record an obligation until a later
date when it has actually obligated funds to carry out its mission,
thereby overstating reported governmentwide obligations. The opposite is
true for expenditures. The agency expends the funds, but then has to bill
FEMA for reimbursement. This may happen months after the actual payment is
made. FEMA does not record the expenditure on its reports to the Congress
until it has received the bill from the performing agency, reviewed it,
and recorded the expenditure in its accounting system, thereby
understating reported governmentwide expenditures.

FEMA's weekly report as of March 29, 2006, shows that of the $36.6 billion
received as of that date, it had incurred obligations totaling $29.7
billion and had made expenditures of $15.9 billion related to Hurricanes
Katrina, Rita, and Wilma.14 Of the $29.7 billion in obligations, FEMA
issued mission assignments to federal agencies totaling $8.5 billion, or
28.6 percent. The other $21.2 billion includes, for example, obligations
that FEMA made for areas such as the individual and household program
($7.0 billion) and manufactured housing ($4.7 billion), which are being
reviewed in some respects by other auditors. As of March 29, 2006, FEMA
reported approximately $8.5 billion of obligations for mission assignments
and approximately $661 million of expenditures for Hurricanes Katrina,
Rita, and Wilma as shown in table 2.

Table 2: Mission Assignment Obligations and Expenditures Reported by FEMA
for Hurricanes Katrina, Rita, and Wilma, as of March 29, 2006

Dollars in millions                                  
                                   Obligations reported Expenditures reported 
Agency                                       by FEMA               by FEMA 
COE                                         $4,927.8                $351.6 
DOD                                          1,176.7                 210.0 
Department of Transportation                   506.8                  45.4 
DHS (excluding FEMA)                           552.6                   8.0 
Environmental Protection Agency                366.9                   6.9 
Department of Health and Human                 274.2                   0.0 
Services                                             
U.S. Forest Service                            365.0                   0.0 
General Services Administration                 78.7                   0.3 
HUD                                             83.0                  32.4 
Department of Justice                           55.2                   3.1 
Department of Labor                             21.6                   0.0 
Other agencies                                  89.0                   3.1 
Total                                       $8,497.5                $660.8 

Source: GAO analysis of FEMA Weekly Disaster Relief Finance Report to the
Appropriations Committees, dated March 29, 2006.

14Although FEMA's weekly report presents information on Hurricanes
Katrina, Rita, and Wilma, because the majority of FEMA's mission
assignment obligations related to Hurricane Katrina, we focused our review
at the performing agencies on the Hurricane Katrina mission assignments.

  FEMA Needs to Clarify Reported Obligations for Work Performed by Other Federal
  Agencies

While FEMA reports obligations based on the dollar amount of the mission
assignments it has placed with other federal agencies when they are
assigned, these obligation amounts do not represent the amount of funds
that the agencies have, in turn, actually obligated to perform disaster
relief work on behalf of FEMA. In some cases, the agencies have obligated
tens or hundreds of millions of dollars less than the amount reported by
FEMA.

Our analysis of FEMA's reported mission assignments to other federal
agencies to perform work on behalf of FEMA in the amount of $8.5 billion
identified two types of reporting problems, both of which resulted in
FEMA's obligations being overstated from a governmentwide perspective.
First, some federal agencies recorded obligations in their internal
tracking systems that were much less than the amount of obligations
reported by FEMA. This occurred because FEMA's recorded obligations are
based on the dollar amount of the entire mission assignment. In contrast,
the amount of obligations recorded by federal agencies is the amount of
funds they actually obligated to perform disaster relief work. The
performing agency does not incur obligations until it actually performs or
contracts for the work. Four examples of this reporting problem follow:

           o  On September 28, 2005, FEMA's report showed that obligations on
           mission assignments issued to DOD related to Hurricane Katrina
           totaled about $2.2 billion. As of March 2006, this amount had been
           substantially reduced twice. On November 3, 2005, FEMA amended the
           mission assignment and reduced the amount to about $1.7 billion,
           and it reduced the amount again on March 15, 2006, to about $1.1
           billion. While FEMA was reporting obligations as high as $2.2
           billion during this 6-month period, DOD's reports15 show that it
           incurred only $481 million of actual obligations as of April 5,
           2006-hundreds of millions of dollars less than what FEMA reported
           over the same 6-month period. According to a DOD official, it is
           currently reviewing the mission assignments and will be returning
           obligational authority that was not used to FEMA.
           o  On September 28, 2005, FEMA's report showed that obligations on
           mission assignments issued to COE related to Hurricane Katrina
           were about $3.3 billion. Since then, this amount has increased. On
           October 20, 2005, FEMA amended and increased the mission
           assignment amounts to about $3.7 billion and on April 5, 2006, to
           about $4 billion. However, according to COE's internal records as
           of April 7, 2006, it had actually obligated about $3 billion for
           Hurricane Katrina work, a difference of over $1 billion.
           o  Based on information provided by the Coast Guard, FEMA had
           recorded mission assignment obligations related to Hurricanes
           Katrina and Rita in the amount of nearly $192 million as of April
           2006. However, at that time, the Coast Guard had only actually
           incurred about $85 million in obligations. Thus, the difference
           between what FEMA reported to the Congress and what Coast Guard
           information showed it had actually obligated is approximately $107
           million.
           o  Based on information provided by the Department of Housing and
           Urban Development (HUD), at the end of March 2006, FEMA had
           obligated and reported approximately $83 million for HUD mission
           assignments related to Hurricane Katrina. However, HUD had only
           incurred about $47 million in obligations for work to be done
           under mission assignments. While HUD may eventually utilize the
           full amount obligated by FEMA, at that time, there was an
           approximately $36 million difference between the amounts FEMA
           reported as obligated for HUD and what HUD had actually obligated.
           HUD expects final reconciliation to be completed by December 2006.

15DOD's report showed that it had obligated a total of $638 million as of
April 5, 2006. However, $157 million of the $638 million was for
FEMA-requested work not formally ordered through a mission assignment.

Second, at least three federal agencies we interviewed did not have
mission assignments recorded in their internal tracking systems that were
recorded in FEMA's system. According to the officials from certain federal
agencies, this occurred because the agency's financial management office
was not informed of the mission assignments. FEMA officials informed us
that this problem likely occurred because, while the agencies' program
offices appropriately received mission assignment information from FEMA,
those agencies' program offices did not properly provide the information
to their agencies' financial management offices. Two examples of this
reporting problem follow:

           o  At the Department of Health and Human Services, we noted $90
           million in mission assignment obligations related to Hurricane
           Katrina or amendments to those obligations that were reported by
           FEMA as of January 18, 2006, but not recorded by the department's
           financial management office as of February 24, 2006. The
           department told us that these mission assignments or amendments
           had been issued by FEMA, but had not been received by the
           department's program or financial management offices. After we
           pointed out the discrepancies, the two agencies reconciled the
           differences.

           o  In another case, the Environmental Protection Agency had a
           similar situation involving $11.5 million in mission assignments
           and amendments related to Hurricane Katrina for which it did not
           record obligations as of March 2006 because the financial
           management office was unaware the mission assignments had been
           made by FEMA. According to the Environmental Protection Agency,
           for $10 million of the $11.5 million in mission assignments, not
           only was the financial management office unaware but the agency
           had never been informed that the mission assignment had been
           issued by FEMA.

  FEMA's Reports Do Not Provide Adequate Information on Actual Expenditures Made
  by Other Federal Agencies

A different set of issues arises with regard to expenditure data. Because
of the nature and timing of payments FEMA makes to performing agencies,
FEMA's reported expenditures from the Disaster Relief Fund do not present
an accurate status of federal spending for hurricane relief and recovery
from a governmentwide perspective. This is explained in part by problems
with the timeliness and adequacy of billings to FEMA by other agencies. As
previously explained, FEMA reimburses performing agencies for work they
perform on behalf of FEMA in accordance with the mission assignment
agreements. FEMA requires that performing agencies (1) bill it within 90
days after completion or upon termination of a mission assignment, and (2)
provide a certain level of documentation for its review in order for the
billings to be approved. FEMA does not recognize reimbursements to other
agencies as expenditures in its accounting system (and therefore in its
reports to the Congress) until this approval has occurred. From a
governmentwide perspective, this process results in FEMA's expenditures
being understated.

As of March 29, 2006, FEMA reported about $661 million of expenditures to
agencies performing mission assignments for Hurricanes Katrina, Rita, and
Wilma (see table 2). However, performing agencies' internal tracking
systems showed a significantly higher level of expenditures on their
mission assignments. The process FEMA uses for reimbursing performing
agencies creates timing differences between FEMA's and the performing
agencies' records. As a result, FEMA's reported expenditures are less than
actual expenditures performing agencies have made in support of FEMA's
hurricane relief and recovery efforts. In the case of a mission
assignment, a performing agency would recognize an expenditure when that
agency pays costs (liquidates obligations) to employees, contractors, or
other outside entities for work performed. However, FEMA does not
recognize the reimbursement of these costs as an expenditure until it has
reviewed and approved a bill from the performing agency. With the
exception of COE, reimbursements to the performing agencies are made using
the IPAC system. While the IPAC funds transfer occurs immediately upon
request by the agency seeking reimbursement, in FEMA's accounting records
the IPAC transaction would be reflected as a suspense account transaction
until FEMA has received and approved the supporting documentation for the
IPAC billing. Therefore, by virtue of the timing delays, FEMA's reported
expenditures would be less than expenditures made and reported by
performing agencies and a user of FEMA's report could incorrectly infer
that a particular agency has received tasks from FEMA but has not spent
any of the funds. Thus, the cost of actual work performed is better
reflected by the performing agencies. Two examples follow:

           o  FEMA's report as of March 29, 2006, showed that approved
           mission assignment expenditures (cash reimbursements) related to
           Hurricane Katrina were about $210 million for DOD. However, DOD's
           report as of April 5, 2006, showed that it had already received
           $324 million in reimbursement from FEMA for mission assignments
           related to Hurricane Katrina.16

           o  The U.S. Forest Service had not billed FEMA for any of its work
           done under mission assignments even though the agency reported
           that it had made close to $170 million in expenditures related to
           its Hurricane Katrina mission assignments as of January 31, 2006.
           Accordingly, FEMA reported no expenditures for this agency in its
           weekly report since FEMA had not yet approved any billings. FEMA's
           billing instructions state that reimbursement requests can be
           forwarded to FEMA monthly, regardless of the amount. Also,
           agencies should submit the final bill no later than 90 days after
           completion or upon termination of the mission assignment. The
           Forest Service, however, was not doing this, and as a result, FEMA
           did not report any expenditures for mission assignment work
           performed by the Forest Service as of March 29, 2006, even though
           the Forest Service had spent about $170 million. The Forest
           Service explained that it billed FEMA in March and June 2006 and
           planned to issue additional bills in August and September 2006. We
           noted that there had been some billing activity reported by FEMA
           subsequent to March 29, 2006.

Aside from the timing issues discussed above, some performing agencies
have not provided billing documentation that meets FEMA's requirements to
support their reimbursements for work performed on mission assignments.
Although performing agencies using the IPAC system receive funds
immediately upon requesting reimbursement, if upon review of supporting
reimbursement documents, FEMA officials determine that some amounts are
incorrect or unsupported, FEMA may retrieve or "charge back" the monies
from these agencies through the IPAC system. For example, travel charges
should be supported by a breakdown by object class with names, period of
performance dates, and amounts. Failure to submit this documentation may
result in FEMA charging back the agency for the related mission assignment
billing. FEMA's records as of May 15, 2006, showed that FEMA had "charged
back" about $267 million from performing agencies for costs billed to FEMA
for mission assignments related to Hurricanes Katrina, Rita, and Wilma.
About $260 million, or over 97 percent, of these charge-backs involved
five agencies: the Department of Transportation ($102 million), DOD ($57
million), the Environmental Protection Agency ($45 million), the Federal
Protective Service within DHS ($32 million), and the Department of Health
and Human Services ($24 million). Consistent with its practice of only
reporting approved expenditures, these amounts were not recognized as
expenditures by FEMA, even though the performing agencies claim they have
expended those amounts. In addition, until FEMA requested the
charge-backs, the billings would have been in a FEMA suspense account, and
would have temporarily depleted monies from the Disaster Relief Fund since
the agencies had already received reimbursement through the IPAC system.
At least one agency, DOD, has indicated that it is trying to gather
additional supporting documentation for the $57 million that FEMA charged
back. Therefore, at least part of these charged back funds may be reported
as expenditures by FEMA at some point in the future. If the agency cannot
provide FEMA the needed supporting documentation, the agency may not be
reimbursed and thus will be required to use its own appropriations.

16DOD's report showed that it received a total of about $481 million from
FEMA as of April 5, 2006. However, $157 million of the $481 million was
for FEMA requested work not formally ordered through a mission assignment.

FEMA is also experiencing billing problems with COE, which does not use
the IPAC system. According to FEMA personnel, COE had billing and
documentation problems in the past and was not permitted to use the IPAC
system for transactions with DHS. While COE was working on gaining access
to using the IPAC system prior to Hurricane Katrina, this process was put
on hold, and instead COE must manually submit supporting documentation
before FEMA reimburses its mission assignment costs. This allows for a
thorough review by FEMA, but has also led to payment delays. As of
February 6, 2006, COE's internal accounts receivable report showed that it
had not received reimbursement for about $1.2 billion of bills submitted
to FEMA for Hurricane Katrina mission assignments even though COE
officials stated that they had sent documentation supporting the majority
of the bills. Of that amount, about $610 million, or over half of the
total, was over 60 days old. According to FEMA officials, as of April 7,
2006, it had not received documentation supporting about $800 million of
the $1.2 billion of outstanding accounts receivable on COE's records. None
of the $1.2 billion has been reported as expenditures by FEMA, although
COE reports these amounts as expenditures.

Lack of Framework to Collect and Consolidate Agency Data and Report on This
Information Limits Ability to Assess Status of Hurricane Funding

From a governmentwide perspective, since Hurricane Katrina made landfall,
about $88 billion through four emergency supplemental appropriations has
been appropriated to 23 federal agencies. We found that no one agency or
central collection point exists to compile and report on how these funds
are being spent. Without a framework and mechanisms in place to collect
and consolidate information from these agencies and report on a periodic
basis, decision makers will not have complete and consistent information
on the uses of the funding that has been provided thus far. Information on
the amount of obligations and expenditures17 made on the actual relief and
recovery effort would provide decision makers information they can use to
determine, for example, if (1) additional funds should be provided for the
relief and recovery work, (2) the funds already provided could be deemed
excess and used for other disaster relief and recovery work, (3) funds
should be rescinded, or (4) duplicate programs are providing similar
assistance. As a result, in order to have governmentwide information on
actual obligations incurred and expenditures made on the relief and
recovery effort, the agencies would have to use their own internal
tracking systems to extract this information and provide the information
to a central point, where the data could be consolidated and reported. The
ability to separately track and report on these funds is important to help
ensure better accountability and clearly identify the status of funding
provided in direct response to these hurricanes at both the individual
federal agency level as well as the governmentwide level and to provide
additional transparency so that hurricane victims, affected states, as
well as American taxpayers, know how the government is spending these
funds. At the same time, we recognize the substantial challenge in
balancing the need to get money out quickly to those who are actually in
need and sustaining public confidence in disaster programs by taking all
possible steps to minimize fraud and abuse.

17An expenditure is an outlay. Generally, an outlay is the issuance of
checks, disbursement of cash, or electronic transfer of funds made to
liquidate a federal obligation.

Although each federal agency is responsible for tracking the funds it
received, obligations incurred, and funds expended through its own
internal tracking systems, no mechanisms are in place to consolidate and
report on this information. Of the approximately $88 billion provided as
of June 2006, FEMA received about $42.6 billion ($66 billion appropriated
less the $23.4 billion rescinded) for the Disaster Relief Fund and 22
other agencies received the remaining $45.4 billion. Once these funds are
appropriated, they are merged into, and commingled with existing
appropriation accounts.18 OMB Circular No. A-1119 requires agencies to
report obligations and outlays on a quarterly basis at the appropriation
level; however, those reports on budget execution and budgetary resources
do not call for separately identifying amounts on a programmatic basis,
such as hurricane relief and recovery efforts. Thus, reporting under this
Circular will not provide the information needed to monitor the status of
hurricane-related funding. Although FEMA was required to provide weekly
reports to the Congress on obligation and expenditure information on the
$42.6 billion it received (although with limited usefulness as discussed
previously), most of the other 22 agencies that received over $45 billion
would only be responsible for tracking this information internally.

While there are some reporting requirements included in the emergency
supplemental appropriation acts, overall reporting requirements differ
greatly. Also, the reporting requirements do not call for consolidating
information on obligations and expenditures on a governmentwide basis and,
therefore, do not facilitate governmentwide reporting on hurricane-related
spending. The reporting requirements that were included for the various
agencies ranged from very detailed reporting to no reporting at all. For
example, while FEMA was required to report obligations and expenditures,
16 other federal agencies did not have any reporting requirements. See
appendix II for more information on the reporting requirements included in
the first four emergency supplemental appropriations acts.

18Unless otherwise specified by law, emergency supplemental appropriations
are merged into, and commingled with existing appropriation accounts. This
was the case for the four emergency supplemental appropriations acts
enacted thus far.

19OMB Circular No. A-11, Preparation, Submission, and Execution of the
Budget (revised June 2006).

Given that consolidated governmentwide reporting will require that
financial information be compiled from 23 different agencies, an entity
that regularly collects and compiles information from different agencies,
such as OMB or the Department of the Treasury, would likely be in the best
position for requesting this information and preparing consolidated
governmentwide reporting on hurricane-related funding. Other options would
be for either FEMA or the Office of the Federal Coordinator for Gulf Coast
Rebuilding20 to compile this information.

                                  Conclusions

Success in the rebuilding efforts of the Gulf Coast area is critical. The
federal government has already invested billions of dollars for this
effort with more likely to come. Although FEMA is required to report on
obligations and expenditures, these reports do not provide timely
information from a governmentwide perspective. In addition, there is no
framework or mechanisms in place to collect and consolidate information,
and to report on the $88 billion in hurricane relief and recovery funds
provided thus far to 23 federal agencies in the four emergency
supplemental appropriations acts on a governmentwide basis. The
government's progress in the rebuilding efforts will be difficult to
measure if decision makers do not know how much has been spent, what for,
how much has been obligated but not yet spent, and how much more is still
available. Without consistent, reliable, and timely governmentwide
information on the use of this funding, the agencies and the Congress
could lose visibility over these funds and not know the extent to which
they are being used to support hurricane relief and recovery efforts. With
rebuilding efforts likely to take many years, it is important that the
federal government fulfill its role as steward of taxpayer funds and
provide transparency to the affected states and victims, and account for
and report on all funds received for the hurricane-related efforts.

20The Office of the Federal Coordinator for Gulf Coast Rebuilding is
responsible for developing a long-term rebuilding plan for the region in
the aftermath of Hurricanes Katrina, Rita, and Wilma; coordinating the
federal efforts; and helping state and local officials reach consensus on
their vision for the region.

                      Recommendations for Executive Action

To improve the information on the status of hurricane relief and recovery
funds provided in FEMA's weekly reports to the Appropriations Committees
from a governmentwide perspective, we recommend that the Secretary of
Homeland Security direct the Director of FEMA to take the following four
actions:

           o  Explain in the weekly reports how FEMA's reported obligations
           and expenditures for mission assignments do not reflect the status
           from a governmentwide perspective.
           o  On an established basis (e.g., monthly or quarterly), request
           and include actual obligation and expenditure data from agencies
           performing mission assignments.
           o  Include in the weekly report amounts reimbursed to other
           agencies that are in suspense because FEMA has not yet reviewed
           and approved the documentation supporting the expenditures.
           o  Reiterate to agencies performing mission assignments its
           policies on (1) the detailed information required in supporting
           documentation for reimbursements, and (2) the timeliness of agency
           billings.

To help ensure better accountability, provide additional transparency, and
clearly identify the status of the hurricane-related funding provided by
emergency supplemental appropriations at both the individual federal
agency level as well as the governmentwide level, we recommend that the
Director, Office of Management and Budget, establish a framework for
governmentwide reporting on the status of the hurricane-related funding.
OMB could either collect and consolidate this information itself or
designate another appropriate agency, such as the Department of the
Treasury, to do so and report to the Appropriations Committees on a
periodic basis.

                       Agency Comments and Our Evaluation

We requested comments on a draft of this report from the Secretary of
Homeland Security and the Director of OMB. These comments are reprinted in
appendixes III and IV, respectively. While DHS concurred with our
recommendations, it also stated that it believes our recommendation to
periodically request and include actual obligation and expenditure data
from agencies performing mission assignments is subsumed by our
recommendation to OMB to establish a framework for governmentwide
reporting on the status of hurricane-related funding. We believe our
recommendation is still valid for FEMA since, as stated in the agency's
response, its mission assignments are a significant component in the
establishment of a framework for governmentwide reporting on the status of
hurricane-related funding. However, as the intent of our recommendation is
to help ensure the Congress is receiving complete, timely, useful, and
reliable reports, we agree that other alternatives could be considered to
achieve the same objectives. OMB agreed that there should be clear
accountability and transparency on the spending of emergency funds for
hurricane relief and indicated it will fully consider our recommendation
to establish a new framework for governmentwide reporting on the status of
disaster-related funding.

We also provided excerpts of the report to those agencies cited in
examples for their review. They provided technical comments, and we made
revisions as appropriate.

We are sending copies of this report to other interested congressional
committees and to affected federal agencies. Copies will be made available
to others upon request. In addition, this report will also be available at
no charge on GAO's home page at http://www.gao.gov .

If you or your staff have any questions regarding this report, please
contact me at (202) 512-9095 or at [email protected]. Contact points for
our Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made contributions to this
report are listed in appendix V.

McCoy Williams Director, Financial Management and Assurance

List of Committees

The Honorable Susan M. Collins Chairman The Honorable Joseph I. Lieberman
Ranking Minority Member Committee on Homeland Security and Governmental
Affairs United States Senate

The Honorable Tom Coburn Chairman The Honorable Thomas R. Carper Ranking
Minority Member Subcommittee on Federal Financial Management, Government
Information, and International Security Committee on Homeland Security and
Governmental Affairs United States Senate

The Honorable Peter T. King Chairman The Honorable Bennie G. Thompson
Ranking Minority Member Committee on Homeland Security House of
Representatives

The Honorable Tom Davis Chairman The Honorable Henry A. Waxman Ranking
Minority Member Committee on Government Reform House of Representatives

The Honorable Martin Olav Sabo Ranking Minority Member Subcommittee on
Homeland Security Committee on Appropriations House of Representatives

Appendix I: Scope and Methodology

To determine whether the federal government was tracking and reporting on
the use of funding provided in the four emergency supplemental
appropriations acts, we obtained and analyzed the four emergency
supplemental appropriation documents and conference reports. We also
obtained the reports prepared by the Federal Emergency Management Agency
(FEMA) and the Army Corps of Engineers (COE) in response to the second
emergency supplemental appropriation act. We did not obtain the reports
required by the third or fourth emergency supplemental appropriations acts
since this was a new requirement for the federal agencies. In addition, we
obtained and analyzed guidance on reporting of estimates of
hurricane-related funding budget authority, outlays, and receipts, issued
by the Office of Management and Budget (OMB) in 2005 and discussed this
guidance with officials from OMB.

To determine whether FEMA's reports to the Appropriations Committees
required by the second emergency supplemental appropriation act provided
timely and useful information, we obtained and analyzed the weekly reports
prepared by FEMA, specifically focusing on the obligations and
expenditures reported for mission assignments to agencies performing
disaster relief work related to Hurricane Katrina on behalf of FEMA
because they have governmentwide implications. We met with FEMA officials
to discuss (1) the definitions of the terms obligations and expenditures
used in the report, (2) the process of FEMA issuing mission assignments to
agencies and the obligation of FEMA's funds related to the mission
assignments, and (3) the process of agencies seeking reimbursement for
goods and services provided in response to the disaster relief work
including FEMA's billing procedures. We also obtained and analyzed certain
federal agencies' reports that provide information on mission assignments,
obligations incurred and expenditures made in performing disaster relief
work on behalf of FEMA, amount of bills submitted to FEMA, and amount of
bills paid by FEMA. Because the majority of FEMA's mission assignment
obligations related to Hurricane Katrina, we focused our review at the
agencies on the Hurricane Katrina mission assignments. We met with
officials from certain federal agencies to discuss the information
contained in these reports.

In performing our work, we obtained information from the

           o  OMB,
           o  Department of the Treasury,
           o  FEMA,
           o  Department of Defense,
           o  COE,
           o  Department of Transportation,
           o  Environmental Protection Agency,
           o  Department of Health and Human Services,
           o  U.S. Forest Service,
           o  General Services Administration, and
           o  Department of Housing and Urban Development.

To assess the reliability of the data, we interviewed officials
knowledgeable about the data and determined that the data were
sufficiently reliable for the purposes of this report. We conducted our
work from October 2005 through June 2006 in accordance with generally
accepted government auditing standards.

We provided a draft of this report to the Department of Homeland Security
(DHS) and OMB for comment. DHS and OMB provided written comments, which
are presented in the Agency Comments and Our Evaluation section of this
report and are reprinted in appendixes III and IV, respectively. We also
provided excerpts of the report to those agencies cited in examples for
their review. They provided technical comments, and we made revisions as
appropriate.

Appendix II: Reporting Requirements Included in the Four Emergency
Supplemental Appropriations Acts

The four emergency supplemental appropriations acts enacted as of June
2006 provided funds to 23 federal agencies1 for the hurricane relief and
recovery effort and included different reporting requirements. In
addition, of the 23 agencies receiving appropriations in the four
emergency supplemental appropriations acts, 16 agencies did not have any
reporting requirements.

The first two emergency supplemental appropriations acts2 provided funding
to the Federal Emergency Management Agency (FEMA), Department of Defense
(DOD), and Army Corps of Engineers (COE), and included the following
reporting requirements:

           o  The first emergency supplemental appropriation act did not
           contain any requirements for FEMA to report on the $10 billion it
           received. The second emergency supplemental appropriation act
           required the Secretary of Homeland Security to provide, at a
           minimum, a weekly report to the Appropriations Committees
           detailing the allocation and obligation of the $50 billion in
           appropriated funds it received for Hurricane Katrina in the second
           emergency supplemental appropriation act. The fiscal year 2006
           Department of Homeland Security Appropriations Act3 further
           explained that this weekly report was to include other information
           such as obligations, allocations, and expenditures, categorized by
           agency and state.

           o  COE was not provided any funding in the first emergency
           supplemental appropriation. The second emergency supplemental
           appropriation act required COE to provide a weekly report to the
           Appropriations Committees detailing the allocation and obligation
           of $400 million in appropriated funds it received under that act.
           o  There was no requirement for DOD to report on the $1.9 billion
           it received in the first and second emergency supplemental
           appropriations acts.

1For purposes of this report, we are considering the Department of
Agriculture and the U.S. Forest Service two separate agencies because the
Forest Service received a large portion of the mission assignments for the
Department of Agriculture. We are also considering the Department of
Defense (DOD) and the Army Corps of Engineers (COE) two separate agencies
because of the large portion of the total mission assignments they each
received as well as the fact that COE does not use the Intra-Governmental
Payment and Collection (IPAC) system. In addition, for purposes of this
report, we are considering FEMA's Disaster Relief Fund separate from other
Department of Homeland Security (DHS) appropriations because of the
specific function of the Disaster Relief Fund for Stafford Act activities.

2Pub. L. No. 109-61 and Pub. L. No. 109-62.

3Pub. L. No. 109-90, 119 Stat. 2090 (Oct. 18, 2005).

The third emergency supplemental appropriation act provided $29 billion
directly to 20 individual federal agencies and rescinded approximately
$23.4 billion from the amount initially appropriated to FEMA's Disaster
Relief Fund in September 2005. The third emergency supplemental
appropriation act included differing reporting requirements for each of
the 20 federal agencies ranging from none to very detailed. Illustrative
examples from the third emergency supplemental appropriation act and the
conference report4 accompanying this legislation include the following
specific reporting requirements:

           o  The third emergency supplemental appropriation act required
           each state receiving monies through the Community Development Fund
           from the Department of Housing and Urban Development (HUD) to
           report quarterly to the Appropriations Committees for all awards
           and uses of funds. The supplemental appropriation language also
           required some additional reporting from HUD, such as reporting
           quarterly to the Appropriations Committees with regard to all
           steps taken to prevent fraud and abuse of funds made available.
           o  The conference report accompanying the third emergency
           supplemental appropriation act directed the Secretary of Defense
           to submit quarterly reports to the congressional defense
           committees including, among other things, the expenditures of
           funds it received for hurricane relief and recovery operations.
           This did not include retroactive requirements for the first and
           second emergency supplemental appropriations. The conference
           report also directed the Secretary of Agriculture to provide
           quarterly reports including, among other things, the expenditures
           of funds received for hurricane relief. It also requested the
           Department of Education to submit a report by March 1, 2006, on
           the obligation and allocation of funds it received for hurricane
           relief and provided to assist college students under the Higher
           Education Act. The reporting requirements for some agencies were
           more detailed than others. Also, these reporting requirements do
           not cover funding authority of approximately $8.5 billion that
           agencies received through FEMA's mission assignment process for
           Hurricanes Katrina, Rita, and Wilma as of March 29, 2006.

4See H.R. Conf. Rep. No. 109-359, Div. B, at 488 (Dec. 18, 2005).

The fourth emergency supplemental appropriation act provided approximately
$20.1 billion directly to 22 individual federal agencies. This legislation
did not include any new reporting requirements for the agencies receiving
funding; however, the act contained reporting requirements for HUD that
were consistent with the requirements outlined in the third emergency
supplemental appropriation act.

Appendix III: Comments from the Department of Homeland Security

Appendix IV: Comments from the Office of Management and Budget

Appendix V: GAO Contact and Staff Acknowledgments

                                  GAO Contact

McCoy Williams, (202) 512-9095 or [email protected]

                             Staff Acknowledgments

In addition to the contact named above, the following individuals also
made significant contributions to this report: Christine Bonham, Richard
Cambosos, Thomas Dawson, Francine DelVecchio, Heather Dunahoo, Abe Dymond,
Gabrielle Fagan, Casey Keplinger, Stephen Lawrence, Greg Pugnetti, Lori
Ryza, and Natalie Schneider. Other contributions were made by Felicia
Brooks, Eric Essig, Lauren Fassler, Barry Grinnell, John Hong, James
Maziasz, Patrick McCray, Shalin Pathak, and Chanetta Reed.

(195073)

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Highlights of GAO-06-834 , a report to congressional committees

September 2006

DISASTER RELIEF

Governmentwide Framework Needed to Collect and Consolidate Information to
Report on Billions in Federal Funding for the 2005 Gulf Coast Hurricanes

Hurricane Katrina devastated the Gulf Coast region of the United States
and caused billions of dollars in damage. Hurricanes Rita and Wilma
further exacerbated damage to the region. The Federal Emergency Management
Agency (FEMA), within the Department of Homeland Security (DHS), was
tasked with the primary role of managing the federal relief and recovery
efforts. This review was performed under the Comptroller General's
authority because of widespread congressional interest in the response to
this disaster. GAO examined whether the federal government was adequately
tracking and reporting on the use of the funding provided in the four
emergency supplemental appropriations acts enacted as of June 2006. GAO
analyzed the emergency supplemental appropriations acts and conference
reports, reviewed FEMA's required weekly reports, and interviewed federal
agency officials.

What GAO Recommends

GAO makes four recommendations to DHS to improve the information on the
status of hurricane relief funds provided in FEMA's weekly reports. GAO
also recommends that the Office of Management and Budget (OMB) take action
to improve transparency and accountability regarding the status of
hurricane-related funding at the governmentwide level. DHS and OMB
concurred with the recommendations.

FEMA's required weekly reports to the Appropriations Committees on the use
of funds it received do not provide timely information from a
governmentwide perspective because FEMA does not have a mechanism to
report on the financial activity of the agencies performing work on its
behalf. Specifically, when FEMA tasks another federal agency through a
mission assignment, FEMA records the entire amount upfront as an
obligation, whereas the performing agency does not record an obligation
until a later date, thereby overstating reported governmentwide
obligations. The opposite is true for expenditures. The performing agency
expends the funds, but then bills FEMA for reimbursement. FEMA does not
record the expenditure until it has received the bill and reviewed it,
thereby understating reported governmentwide expenditures. As a result,
while FEMA is reporting as required, from a governmentwide perspective,
FEMA's reported obligations are overstated and expenditures are
understated.

The federal government also does not have a governmentwide framework or
mechanisms in place to collect and consolidate information from the
individual federal agencies that received emergency supplemental
appropriations for hurricane relief and recovery efforts and report on
this information. About $88 billion has been appropriated to 23 different
federal agencies through four emergency supplemental appropriations acts
(see figure below); however, no one agency or central collection point
exists to compile and report on how these funds are being spent. Decision
makers need this consolidated information to determine how much federal
funding has been spent and by whom, whether more may be needed, or whether
too much has been provided. The ability to separately track and report on
these funds is important to help ensure better accountability and clearly
identify the status of funding provided in direct response to these
hurricanes at both the individual federal agency level as well as the
governmentwide level. Also, it is important to provide additional
transparency so that hurricane victims, affected states, as well as
American taxpayers, know how these funds are being spent.

Funding Received by Federal Agencies in Emergency Supplemental
Appropriations Acts

(Dollars in billions)
*** End of document. ***