Summary of Significant OIG Activity

FINANCIAL MANAGEMENT

The OIG continued to place a high priority on improving FEMA's financial management. Extensive resources were devoted to helping managers solve financial problems. We emphasized a proactive approach and continually worked with program and financial staff to identify and fix small problems before they could become large. We provided advice and assistance to managers on financial issues, such as loan management and controls, billing users for the costs of providing services, and accounting for the costs associated with providing disaster relief services. We continued to work with the team implementing the new financial management system. This work gave our staff information about the difficulties in implementing the system and enabled us to offer advice on controls needed to ensure the integrity of financial data. We plan to continue our commitment to help improve FEMA's financial management in this era of tight budgets and having to do more with less.

REVIEW OF MANAGEMENT CONtrOLS OVER AMERICAN EXPRESS trAVEL PAYMENT PROGRAM

Our review focused on analyzing the delinquency rates for payment of American Express (AMX) statements by FEMA employees, and determining whether the AMX charge cards were being used for purposes other than official travel. For this review, cardholders were considered delinquent if their charge card statement were not paid within 60 days of billing.

AMX monthly reports showed that FEMA's delinquency rate for the over 60- and 90-day categories remained stable from February 1996 to June 1996 and were comparable to those of other Federal agencies. FEMA, however, had the highest overall delinquency rate among Federal agencies because of the large number of payments delinquent by 120 or more days. In June 1996, that rate was 23.9 percent.

To test for abuse, we sampled the charges of 283 employees. Of these, 27 employees, or 9.5 percent, were found to have abused the charge card.

Our review found a lack of consistency among AMX coordinators throughout FEMA in checking the monthly reports provided by AMX. In some cases, reports were reviewed but questionable items were not referred to supervisors for appropriate inquiry and action. In other cases, the coordinators initiated aggressive follow-up action. Employees, especially temporary employees who are on travel for extended periods of time, need to file vouchers more promptly. This is especially applicable to temporary employees who are on travel status for extended periods of time.

Training and better guidance for the coordinators are needed to ensure that reports provided by AMX are effectively used. We recommended that the Office of Financial Management develop formal, standardized procedures for the AMX card coordinators to follow

when reviewing monthly reports. Such procedures should require timely referrals to supervisors of potential problems in prompt payment or the use of the credit card.

VALUE-ENGINEERING PROGRAM

As required by OMB Circular A-131, we undertook a review of FEMA's value-engineering program. The Circular, which implements Public Law 104-106 (Act), requires FEMA to use value-engineering as a management tool to reduce program and acquisition costs. Value-engineering is an organized effort to analyze the functions of systems, equipment, facilities, services, and supplies so that essential functions are provided at the lowest life cycle cost- consistent with performance, reliability, quality, and safety requirements. Typically, value- engineering is applied during the acquisition process.

FEMA has not adopted a value-engineering program as required by the Act and OMB Circular. When the OMB Circular A-131 became effective on June 21, 1993, senior Acquisition Management officials believed that FEMA's procurements were inappropriate for value-engineering analysis. We discussed the application of value-engineering with acquisition officials who generally agreed that FEMA's procurements are no different than those of other Federal agencies and could benefit from value-engineering. We recommended that a value-engineering program be established no later than October 1, 1997.

ASSISTANCE ON WORKING CAPITAL FUND

The Fiscal Year 1997 Appropriation Act authorized FEMA to establish a working capital fund for providing administrative services. A fund was established to support the centralized services provided by the Mount Weather Emergency Assistance Center (MWEAC). The Office of Financial Management requested assistance in evaluating the proposed methodology for billing the costs of services that MWEAC provided to FEMA organizations and other Federal agencies.

We reviewed the proposed billing methodology and determined that it could be improved. The billing rate that would result from applying the methodology appeared to be low and might not allow the recovery of all MWEAC costs. This occurred because the methodology used prior-year obligations rather than anticipated costs, excluded certain costs, and included unreliable estimates of the space tenants occupied. Recommendations were made that would result in a billing rate that would allow the recovery of all MWEAC costs.

MISUSE OF RENTAL VEHICLE

The Office of Inspector General received information from a confidential source alleging that a locally hired special assistant to a Federal Coordinating Officer misused a rental vehicle even after being warned of the impropriety. We confirmed that the special assistant routinely used a rental vehicle to commute to and from his residence. After learning of the abuse, FEMA terminated the employee.

FALSIFIED trAVEL VOUCHER

The Office of Inspector General reviewed an allegation that a FEMA employee submitted several false travel vouchers in which she claimed reimbursement for lodging by using the address of another FEMA employee. We determined that the FEMA employee who owned the residence signed several receipts, and on some of the receipts made it appear that he was the manager of the rental management company. Both employees admitted to their involvement but continued to submit travel vouchers even after being warned that their actions violated Federal regulations. One of the employees entered into a pre-trial diversion agreement with the U.S. Department of Justice, which resulted in her being placed on probation for a period of six months and requiring her to make restitution in the amount of $3,040 for expenses she erroneously claimed on her travel vouchers.

FALSIFIED trAVEL VOUCHER

A temporary disaster assistance employee of the OIG was placed in the Pre-trial Diversion Program as a result of plea negotiation and released from employment. The employee submitted false travel vouchers claiming expenses not incurred during official travel. An examination of his travel vouchers disclosed that he left sooner than indicated on his voucher.

OTHER FINANCIAL MANAGEMENT ACTIVITIES

• Financial Management System
  FEMA's new financial management system became operational during Fiscal Year 1996. During the past six months, the system began to mature as unanticipated operational problems were addressed. We continued to offer advice on controls during weekly system status meetings and on an ad hoc basis when requested. During the next six months, we will work with the Office of Financial Management as the remaining system problems are resolved.
  
  
• Debts Due FEMA
  The Report on the Supplemental Appropriations and Rescissions Bill of 1980, issued by the Senate Committee on Appropriations, requires the Inspector General to summarize amounts owed FEMA and debts that were written off. The Office of Financial Management (OFM), which is responsible for debt collection, provided the following information on loans and accounts receivable. Data as of March 31, 1997, were not available at publication time.

OFM reported that debts of $10 million were written off during the six-month period ending December 31, 1996.