Conclusion

While the federal government has accepted responsibility for the Cerro Grande fire and enacted legislation to expeditiously compensate those injured by the fire, it is incumbent on FEMA as the administering agency to establish an effective system of internal control to safeguard the funds appropriated for the Cerro Grande program. The CGFAA lays a framework to establish such accountability by requiring FEMA to determine that victims’ injuries and losses occurred as a result of the fire and to determine the amount of allowed compensation. FEMA has established a process to review all claims submitted. However, this process as currently implemented does not provide adequate assurance that only valid claims were paid or that the amounts paid were reasonable because there is insufficient documentation of the steps taken to determine the validity and reasonableness of the claim amounts. In addition, certain OCGFC policies and procedures for paying claims have either not yet been developed or have not been formally and centrally documented. Appendix I: Comments From the Federal Emergency Management Agency
What GAO Found

While the federal government has accepted responsibility for the Cerro Grande fire and enacted the Cerro Grande Fire Assistance Act (CGFAA) to expeditiously compensate those injured by the fire, it is incumbent on the Federal Emergency Management Agency (FEMA) as the administering agency to establish an effective system of internal control to safeguard the funds appropriated for the Cerro Grande program. The act lays a framework to establish such accountability by requiring FEMA to determine that victims' injuries and losses occurred as result of the fire and to determine the amount of allowed compensation. FEMA has established a process to review all claims submitted. However, this process as currently implemented does not provide adequate assurance that only valid claims were paid or that the amounts paid were reasonable because there is insufficient documentation of the steps taken to determine the validity and reasonableness of the claim amounts. In addition, policies and procedures for paying claims have either not yet been developed or have not been formally and centrally documented.