In order to follow up on FEMA’s corrective actions to address our prior  year recommendations, as well as determine whether FEMA properly  reported claim payment information to the Congress, we reviewed  OCGFC’s reconciliations of claimed amounts that were approved by  OCGFC for payment from its payment approval system and the actual  claim payments made by FEMA’s Disaster Finance Center (DFC) and  reported in FEMA’s accounting system. Policies and Procedures for Claim Processing Were Followed

Based on the results of our statistical testing, FEMA processed, approved,  and paid its claims in accordance with its guidelines that were established  and in place at the time the claims were reviewed and processed. For the period from  August 29, 2002, through June 30, 2003, FEMA approved claims in the  amount of $40 million for payment, including the partial payment of  approved subrogation claims filed by insurance companies. FEMA  reconciled the total amounts approved for payment to the amounts actually  paid as of June 30, 2003, which was the cutoff date for its annual report,  and as of August 31, 2003. In our prior report, we noted that FEMA improperly reported unreconciled  amounts that were approved for payment in its prior annual reports to the  Congress as amounts actually paid. In its 2003 annual report to the  Congress, FEMA continued to include claimed amounts approved for  payment in a detailed schedule of claim information, but it properly  identified the amounts as such instead of as paid or expended amounts. In addition, FEMA did not include any  information on claims paid as is required under CGFAA. Without this  information, FEMA’s annual report is less useful to the Congress and other  stakeholders. Agency Comments

FEMA, in a letter from the Director of the Recovery Division of the  Department of Homeland Security’s Emergency Preparedness and  Response Directorate, agreed with our recommendation to include  summary-level claim information on amounts claimed, approved, and paid  and remaining estimated program liabilities, if any, in its next annual report  to the Congress.
Why GAO Did This Study

The Cerro Grande Fire Assistance Act (CGFAA) mandated that GAO annually audit all claim payments made to compensate the victims of the Cerro Grande Fire in northern New Mexico. For this third report on this topic, GAO determined whether the Federal Emergency Management Agency (FEMA), which is now a part of the Emergency Preparedness and Response Directorate of the Department of Homeland Security, (1) paid fire claims in accordance with applicable guidance and (2) implemented corrective actions to address prior GAO recommendations, including determining if FEMA properly reported claim payments to the Congress.

What GAO Found

FEMA processed and paid its claims in accordance with its policies and procedures that were established and in place at the time the claims were reviewed and processed. For the period from August 29, 2002, to June 30, 2003, FEMA approved $40 million in claims for payment, including the initial payment of most of the subrogation claims made by insurance companies. In response to GAO's May 2003 report, FEMA established processes to address GAO's recommendations related to reconciling claimed amounts approved with actual amounts paid. These processes included comparing the individual amounts approved for payment to the amounts actually paid from inception through June 30, 2003, by claim, as well as performing complete reconciliations of total amounts that were approved and paid for the same period and as of August 31, 2003. In addition, in our prior report, we noted that FEMA improperly reported unreconciled claim amounts approved for payment as amounts actually paid. In its 2003 annual report, FEMA properly identified claimed amounts as approved amounts for payment rather than actual amounts paid in a schedule that was included in its annual report to the Congress. However, FEMA no longer provided summary information on amounts claimed, amounts approved, and its remaining estimated liabilities in its report to the Congress and did not include any information on claims paid as is required by CGFAA. Without this information, the report is less useful to the Congress and other stakeholders.