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Tracking Expenditures for Emergency Preparedness and Response

Tracking expenditures related to emergency response is complex and daunting. When an agency accepts public grant funds from the Federal Emergency Management Agency (FEMA), that agency also accepts the legal responsibility for the stewardship of those funds. Many rural counties have accounting and administrative staff responsible for budgeting and tracking; however, they may not have the experience, personnel, financial management capacity, or accounting systems to track and manage large pots of public funds from state and federal sources.

To make matters more complicated, mistakes made today can cause problems that arise years later. The Department of Homeland Security Office of Inspector General's report, Summary of Key Findings of Fiscal Year 2017 FEMA Disaster Grants and Program Audits, examined funding allocated between 2004-2015 and recommended that over $14.4 million be disallowed and returned to the federal government by 8 local agencies, as well as recommending disallowing over $2 billion in funding that had been approved but not yet awarded to jurisdictions. The report also states that audits over the past 9 fiscal years recommended the recapture of $6.55 billion in grant awards. An audit decision to return funds that have been deployed could be catastrophic for budgets in rural communities and counties. Some of the consequences from mistakes can range from not being able to reimburse all costs; leaving money on the table that could have been used for recovery; returning funds to the government that have already been spent; needing to raise local tax rates to cover penalties, returns, and loss of budgeted monies; and felony fraud charges and jail time.

To plan for expenditure tracking after an emergency or disaster, begin as soon as possible, preferably in the preparedness phase. Agencies should contact the appropriate State Administrative Agency (SAA) and regional planning agencies to ask about suggested best practices, tools, software, training, and/or approved contractors to assist with effective grants accounting and grants management in the case of an emergency.

The Robert T. Stafford Disaster Relief and Emergency Assistance Act details the definitions, policies, programs, and requirements for the use of federal emergency assistance funds. Funding may be used to reimburse eligible expenses that are considered reasonable and cost-effective and that are designed to reduce injuries; loss of life; and damage or destruction of property, including damage to critical services and facilities under the jurisdiction of states and local governments.

It is important to keep in mind that expenditure tracking needs to start at the very beginning of an emergency response, since purchases made prior to an emergency declaration may or may not be considered allowable uses of state and federal funding. FEMA public assistance programs generally cover 75% of approved project costs, with the responsibility for the remaining 25% falling to the state and local agencies and affected residents.

The United States Office of Management and Budget (OMB) accounts for all federal expenditures using a system of object classes, which represent categories of items and services purchased by the federal government. Some examples of common object class categories used in grants, cooperative agreements, and contracts include:

  • Personnel
  • Fringe benefits
  • Travel
  • Equipment
  • Supplies
  • Contractual
  • Construction
  • Other direct costs
  • Indirect costs

FEMA uses slightly different object class categories with “Force Account” in the name of the object class category. Force Account categories include labor and other program expenses incurred by non-contracted forces. See FEMA's Example: Force Account versus Contract Costs for examples of the two labor cost types.

Common object class categories used by FEMA include:

  • Force Account Labor
  • Force Account Equipment
  • Force Account Materials
  • Contractual

Below is a list of expenditures that should be tracked in detail, and other considerations that need to be included based on a rural community's unique situation:

  1. Labor or Force Account Labor – Labor can include project management and oversight as well as on-the-ground labor by full-time, part-time, temporary, and volunteer workers. Labor costs should be tracked and documented with:
    1. Time sheets that separate disaster-related work from regular work duties.
    2. Logs for disaster-related activities each day describing the activity, all laborers included in the activities, and the total time investment in labor.
    3. Accounting reports showing labor costs separated by paid and volunteer labor. Volunteer labor could potentially be used as part of the 25% cost share.
  2. Equipment or Force Account Equipment – Track the usage of equipment in the disaster response. Keep daily activity logs that show the run time of each piece of equipment. Logs should detail the make and model of the equipment, the purpose of using it, and the amount of time it was used. Run time logs for equipment should match the time sheets for the equipment operators. Account for donated use of equipment in the same manner since it may be allowable within the contract as part of the 25% cost share.
  3. Materials and Supplies or Force Account Materials – When purchasing and using materials and supplies, maintain the following documentation:
    1. Purchase orders
    2. Invoices
    3. Receipts
    4. Check stubs, canceled checks, and/or accounting reports showing payment
    5. Purpose of the purchases and documentation of deployment
    6. Documentation that demonstrates historical costs of stock items
    7. Lists and values of donated materials and supplies
  4. Large Purchases and Contracted Services – These purchases will fall under different FEMA budget categories depending on the purpose and type of expenditure. Large purchase procurement is where most failures in the proper use of federal funding occur. FEMA's Contracting with Federal Funds for Goods and Services provides links to rules, resources, tools, and training opportunities to navigate the procurement process. It is important to use an approved local, state, or federal procurement policy and document each step in the process. Tracking documentation may include:
    1. Requests for proposals (RFPs)
    2. Demonstration of the process for publicly advertising RFPs and inviting disadvantaged businesses to apply
    3. Bid documents that have been received
    4. Documentation of bid comparisons, specifically including the criteria listed in the RFP, such as experience, operational capacity, and costs
    5. Sign-in sheets and minutes from public bid opening meetings
    6. Due diligence to ensure winning bids are not disbarred from receiving public funds
    7. Executed contracts
    8. Invoices
    9. Accounting summaries
    10. Check stubs, canceled checks, and/or documentation showing payment

FEMA maintains a page with links to multiple public assistance project templates and forms for calculating and tracking projects and expenses that are searchable by keyword or public assistance program. The North Dakota Department of Homeland Security has used the information and forms provided by FEMA to develop a multi-tab worksheet for tracking labor, equipment, materials, contracts, and benefit calculations that could be useful for local agencies. For additional guidance on expenditure tracking practices and tools, local agencies should contact their State Administrative Agency (SAA).

Resources to Learn More

Audit Tips for Managing Disaster-Related Project Costs
Document
Offers information and guidance for recipients of FEMA grants related to tracking costs; maximizing recovery efforts; and preventing fraud, waste, and abuse of public funds.
Organization(s): Department of Homeland Security Office of Inspector General (OIG)
Date: 9/2017

Disaster Financial Management Guide: Guidance for State, Local, Tribal & Territorial Partners
Document
Provides guidance to assist government jurisdictions in establishing financially sound management practices to calculate, track, and justify the costs of emergency recovery projects.
Organization(s): Federal Emergency Management Agency (FEMA)
Date: 4/2020

FEMA's Public Assistance Program: A Primer and Considerations for Congress
Document
Summarizes the Public Assistance (PA) Program administered by FEMA to assist government entities and specific nonprofits. Shares information on requesting assistance, eligibility, and funding requirements. Also covers considerations for trends, oversight challenges, and promoting resilience.
Author(s): Lee, E.A.
Citation: CRS Report 46749
Organization(s): Congressional Research Service
Date: 4/2021

Local Government Purchasing Officers Best Practices: Documenting Disaster Expenses
Document
Lists best practices suggested by government purchasing officers to use when documenting disaster expenses for reimbursement from FEMA's Public Assistance Program.
Organization(s): University of North Carolina School of Government
Date: 4/2020

Resource Library: Purchasing Under a FEMA Award
Website
Offers guidance documents, infographics, and fact sheets to assist agencies when purchasing and contracting under a FEMA award for general operations and emergency circumstances.
Organization(s): Federal Emergency Management Agency (FEMA)

Roadmap to Federal Resources for Disaster Recovery
Website
An interactive resource developed through a partnership of federal agencies — Recovery Support Function Leadership Group (RSFLG) — to help state, local, tribal, and territorial organizations manage common challenges associated with post-disaster funding. Resource is searchable by challenge type.
Organization(s): Federal Emergency Management Agency (FEMA)