Template for Federal Program Compliance Supplements
FLOOD MITIGATION ASSISTANCE PROGRAM
97.029 / FLOOD MITIGATION ASSISTANCE PROGRAMState Project/Program: / N.C. Mitigation
Federal Emergency Management Agency
Federal Authorization: / National Flood Insurance Reform Act of 1994Section 1366 and 1367 (42 U.S.C. 4101) and 44 CFR Parts 13 and 14
State Authorization: / Section 78.1(b), 78.3(b), and 78.4 (a and b) of the CFR
N.C. Department of Public Safety
Agency Contact Person – Program and FinancialNicholas M. Burk
Section Manager for HM Grants
Recovery Section
Division of Emergency Management
4105 Reedy Creek Rd
Raleigh, NC 27607
(919) 825-2301
/ Address Confirmation Letters To:
Jamelle White
NC Department of Public Safety
Controller’s Office
4220 Mail Service Center
Raleigh, NC 27699-4220
919.716.3613
The auditor should not consider the supplement to be “safe harbor” for identifying audit procedures to apply in a particular engagement, but the auditor should be prepared to justify departures from the suggested procedures. The auditor can consider the supplement a “safe harbor” for identification of compliance requirements to be tested if the auditor performs reasonable procedures to ensure that the requirements in the Supplement are current.
The grantor agency may elect to review audit working papers to determine that audit tests are adequate. Auditors may request documentation of monitoring visits by the State Agencies.
I. PROGRAM OBJECTIVES
The purpose of the Flood Mitigation Assistance Program (FMA) is to provide funding to assist states and communities in implementing measures that will permanently reduce or eliminate the long-term risk of flood damage to buildings, manufactured homes, and other structures insurable under the National Flood Insurance Program (NFIP).
II. PROGRAM PROCEDURES
The FMA Grant Program is a state-administered federal program to which states and local communities submit project applications on behalf of the affected citizens in their communities. In North Carolina, the Division of Emergency Management, within the Department Public Safety administers FMA.
The State solicits reviews, prioritizes and selects applications from the communities for funding and forwards the applications to FEMA for review. FEMA reviews each project application to ensure that projects meet regulations and minimum eligibility requirements. The amount of funding available for these projects is based on yearly FMA awards. Projects are funded on a 100%, 90%, or 75% Federal share depending on the structure’s loss history. The remaining non-federal share must be provided as a local match from non-federal sources by the applicant.
FEMA approves the State application and grants the award through an award transmittal letter and utilizes a Comprehensive Cooperative Agreement (CCA), which includes other FEMA grant awards.
III. COMPLIANCE REQUIREMENTS
A. Activities Allowed or Unallowed
Compliance Requirement
Only relevant and necessary measures taken to eliminate future losses from natural hazards and included in the State/local grant agreement are allowed.
The test of eligibility of a given activity will be whether it contributes to a State or Community’s capability to reduce losses to disasters. It is incumbent upon each to develop, with the assistance of the FEMA Regional Mitigation Divisions, Cooperative Agreements that effectively utilize the Flood Mitigation Assistance funds for this purpose.
There are three types of FMA grants, (1) Planning Grants and (2) Project Grants and (3) Technical Assistance. Planning Grants may be used for the development of an all-hazards mitigation plan that meets the Division’s established minimum criteria for local hazard mitigation plans. Project Grants may be used for the acquisition or elevation of repetitive loss structures, which are defined under FMA guidelines as “any insured structure with at least two flood insurance losses, each of at least $1,000, in any 10-year period.
In order to qualify for a Project Grant, an applicant must have an adopted mitigation plan that addresses repetitive loss properties and has been approved by the Division and FEMA for purposes of the FMA Program. In addition, the project must:
· Benefit a repetitive loss structure(s);
· Be cost-effective;
· Be technically feasible;
· Conform with the adopted Local Mitigation Plan;
· Conform with applicable Federal and State regulations; and
· Be physically located in an eligible community, or benefit such a community directly.
Suggested Audit Procedures
1. Review Comprehensive Cooperative Agreement and/or State/local grant agreement with related budget.
2. Test expenditures and related records for adherence to approved budget activity.
B. Allowable Costs/Cost Principles
Compliance Requirement
Only relevant and necessary costs as authorized by the FEMA-State Agreement and contained in the State/local grant agreement and costs in 2 CFR for local governments and A-122 for private non-profit organizations are allowed.
Suggested Audit Procedures
1. Review Comprehensive Cooperative Agreement and/or State/local grant agreement budget.
2. Test expenditures and related records for adherence to approved budget and to 2 CFR cost principles for local governments and A-122 cost principles for private non-profit organizations.
C. Cash Management
Compliance Requirement
Funds are submitted to all sub-grantees on a reimbursement basis. The only exception to this is when a relocation package is being closed and the contractor does not have sufficient funds on hand, a request is made for the exact amount of the closing amount to arrive on the day of the closing. Advances are made for acquisition and elevation projects as well.
Suggested Audit Procedures
No additional testing is required since funds are not advanced to sub-grantees.
D. Davis-Bacon Act
Compliance Requirement
All funds from this grant are disbursed to local units of government in accordance with their grant agreement. As a result, it becomes the responsibility of the local unit to ensure that construction contracts in excess of $2,000 are administered in compliance with the Davis-Bacon Act.
Suggested Audit Procedures
Test expenditures for payrolls for construction contracts in excess of $2,000 to ensure that the payroll was in compliance with the Davis-Bacon Act.
G. Matching, Level of Effort, Earmarking
Compliance Requirement
FEMA can fund up to 75% of the eligible costs of each project. The State or project applicant (sub-grantee) must provide a 25% match. The 25% non-federal share can be a combination of cash, 12.5% non-cash or in-kind services, and materials. The amount of funding for the program is based on yearly FMA grant appropriations.
Suggested Audit Procedures
1. Review FEMA-State Agreement and/or State-local agreement.
2. Test the expenditures and reports to ascertain total cost of project and verify that the non-federal matching requirements were met.
3. Verify the source of the non-federal match.
H. Period of Availability of Federal Funds
Compliance Requirement
Program funds are to be obligated within 2 years after the grant appropriation. Project completion deadlines for sub-grantees are specifically stated in the grant agreement on a project-by-project basis.
Suggested Audit Procedures
Verify that the funds were encumbered within the two-year timeframe after the grant appropriation.
I. Procurement and Suspension and Debarment
Compliance Requirement
According to OMB Circulars (A-102, A-110, A-21, 2 CFR and A-122) and as stated in the grant agreement; the grantee must comply with Federal Debarment and Suspension regulations by requiring completion of the “Certificate Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion-Lower Tier Covered Transactions” by sub-recipients prior to entering into a financial agreement with the sub-recipients for any transaction as outlined below:
Any procurement contract for goods and services, regardless of amount, under which the sub-recipients will have a critical influence on or substantive control over the transaction.
The grantee is responsible for monitoring the submission and maintaining the official document for review by the Hazard Mitigation Staff.
Suggested Audit Procedures
1. As stated in the grant agreement, verify that all contracts have received prior approval by the Hazard Mitigation staff prior to execution.
2. A certification is required regarding debarment and suspension from the contractor.
K. Real Property Acquisition and Relocation Assistance
Compliance Requirement
All applicants must comply with federally mandated negotiation, acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.
Suggested Audit Procedures
Verify applicant’s adherence to URA and RPAP Act.
L. Reporting
Compliance Requirement
Each quarter, the State completes and submits to FEMA a Financial Status Report that reveals outlays for all approved projects. Also, the State will submit to FEMA a quarterly performance report on the implementation schedule, any delays, project overruns, and any problems that may have been encountered.
Compliance Supplement
Sub-grantees submit “Cost Reports” to the State in order to be reimbursed for their expenditures that exceed $500. The “Cost Report” is a one-page document, which the grantee uses to report its expenditures according to the five major budget categories (personnel, contractual, travel, supplies, and equipment). Progress reports are required and are to be submitted to the State on a monthly basis.
Suggested Audit Procedures
1. Review State/local grant agreement with approved budget and reporting requirements.
2. Verify that expenditures are classified properly and within approved budget categories.
3. Test “Cost Reports” to agree the amounts reported to the State for reimbursement to the expenditures in the grantee’s accounting records.
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