Institutional Federal Compliance Report 2021

Schedule of Findings and Responses

2019-001

Finding: Insufficient level of precision in the State’s review of the year-end Emergency Management accrual calculation

Severity of Control Deficiency: Material Weakness (Unremediated as of March 31, 2019)

Background

New York State’s Division of Homeland Security and Emergency Services (DHSES) routinely provides disaster recovery assistance to state and local government entities through a variety of emergency management programs that are eligible for both state and federal funding. The Federal Emergency Management Agency (FEMA) provides assistance via the Public Assistance (PA) Program after a disaster is federally declared. FEMA will approve and obligate Project Worksheets (PW) written to a State or local government entity, Indian Tribes and certain types of nonprofit organizations. Each PW will include the applicant’s name, a detailed scope of work and an estimated value of the project. Applicants will track project-related expenditures as they are incurred. For open large projects only, the applicant will submit requests for reimbursement to DHSES. Additionally, for six projects related to Superstorm Sandy recovery, DHSES has advanced payments to those applicants in order to accelerate initial recovery efforts. DHSES will review the applicants’ claims for reimbursement and/or advancement and, once approved, will process a payment and then draw funds from the federal government. The federal share of assistance for the PA program will not be less than 75 percent of the eligible cost for emergency measures and permanent restoration; for all Superstorm Sandy-related projects, the federal share is 90%. For the State’s fiscal year ended March 31, 2019, DHSES reported to the New York State Office of the State Comptroller (OSC) a liability for emergency management services representing the cumulative amount of expenditures that applicants have reported as incurred on approved open large projects and for which they have not yet been reimbursed, limited to the amount eligible for Federal and state funding. Further, at the State’s fiscal year-end, DHSES reported the total advanced payments for which expenditures have not yet been incurred as prepayments for financial reporting purposes. To quantify the State’s payable to local governments as of March 31, 2019, DHSES utilized FEMA’s quarterly report consisting of open large projects for all disasters, by project number, that tracked the applicants’ cumulative expenditures incurred to date as compared to the amounts drawn down by DHSES on behalf of the applicants as either prepayments or reimbursements. Management’s analysis takes into account the applicant expenditures incurred to date for each open large project, which are reported to DHSES by the applicants through Quarterly Progress Reports (QPRs) and subsequently forwarded to FEMA. Small projects, which are generally those that are eligible for less than a particular threshold that varies by disaster are excluded from the scope of management’s analysis. Management’s analysis utilizes DHSES’s record of cash drawdowns reported on the QPR for the FEMA-approved open large projects; however, this does not represent all actual disbursements to applicants. Actual disbursements to applicants are recognized within the State’s Statewide Financial System (SFS), and this historical data is determined to be readily available. Observations