Completion, Inspection and Audit



...audits can occur during a project’s life, at the end of a single project, or after all projects are completed up to three years from closeout.

Planning for Scrutiny

Start planning for your project close and audits from day one. Bear in mind that these activities occur several years after an event, and in some cases due to normal attrition, those applicant staff members involved in the original disaster recovery process may no longer be available to defend the applicant’s actions.

Unfortunately, even if an applicant follows state/FEMA policy to the letter, a poorly prepared and pre- sented project file can lead to audit failure and de-obligation of project funds.

The best project file presents a crystal-clear picture of what hap- pened, what was done to remedy any issues, and how much the remedy cost—in fine detail.

Remember, auditors were not there the day after the disaster, nor were they privy to field determinations and negotiations between FEMA, the state and the applicant. They were also not on site during contractor procurement, safety inspections … and the list goes on.

All the time and effort spent on the Public Assistance grant applica- tion process can be undone by the inability to prove how the funds were spent. Therefore, it may be useful to keep in mind these tips throughout the process:

Tip #1: Document Everything

Keep a copy of all documents, emails, records of conversations, meeting minutes, etc., in the project files. Ensure that these files are backed up and otherwise preserved in the event of a second disaster.

Tip #2: Verify that Records are “FEMA-Complete”

Most agencies maintain original source documents within their central departments. For example, time cards are generally main- tained by the payroll department; purchase orders, invoices, and payment records by the accounts payable/disbursing department; and contracts by the purchasing/ procurement department.

Within these departments, source documents are filed on a basis that is best suited for the type of source document—e.g., time cards are filed by payroll period and employee, and purchase orders are filed by vendor and/or P.O. number. This type of filing sys- tem provides an effective way to trace eligible costs back from the accounting system to the original source documents.

However, there are additional fil- ing system requirements related to the Public Assistance program. It is useful to create project-specific files containing the following informa- tion and documents:

Lead Cost Summary (Sample 1)

PW No. 1234 Date prepared: 4/24/06 Prepared by: J. Smith

Line Item Total Eligible Costs Incurred to Date Total Eligible Costs per PW

Force Account $ 4,000 $ 5,500

Labor Materials $ 2,500 $ 3,000

Equipment $ 800 $ 900 Usage

Contract $50,000 $80,000