	Overview of Testimony

In our testimony, we stated that our audit and investigative work on FEMA  disaster relief payments associated with hurricanes Katrina and Rita  identified additional indications of fraud, waste, and abuse. Specifically,  we found that FEMA made nearly $17 million in potentially improper  and/or fraudulent rental assistance payments to individuals after they had  moved into FEMA trailers. We also found that nearly $20 million in potentially improper and/or  fraudulent payments went to individuals who, using the same property,  registered for assistance for both hurricanes Katrina and Rita. For example, FEMA improperly paid at least $3 million in IHP  assistance to more than 500 ineligible foreign students at four universities. FEMA made these  payments despite having copies of the work visas for several individuals,  which should have alerted FEMA that the temporary workers were not  eligible for financial assistance. Because we did not obtain information from all universities in  the Gulf region and because of unavailability of detailed data on other  nonqualified legal aliens, we were not able to determine the magnitude of  improper and/or fraudulent payments in this area. We previously reported that  inadequate preventive controls related to the IHP application process  resulted in an estimated $1 billion of potentially improper and/or  fraudulent payments through February 2006. In contrast, as of November  2006, FEMA had detected through its own processes about $290 million in  overpayments. With respect to findings regarding the DHS purchase card program, we  found weaknesses and breakdowns in accountability for property items  bought for hurricanes Katrina and Rita relief efforts using government  purchase cards. The additional examples of  potentially fraudulent and improper payments, totaling tens of millions of  dollars, that we highlighted in our December 2006 testimony further show  that our estimate of $1 billion in potentially improper and/or fraudulent  payments through February is likely understated. To prevent rental assistance payments from being provided at the same  time that FEMA provides free housing (including trailers, mobile homes,  and apartments), FEMA should    develop processes for comparing IHP registrant data with FEMA direct  housing assistance data to prevent IHP registrants from receiving  payments for rental assistance covering the time they are living in  FEMA-provided housing and    provide clear guidance to IHP registrants, including rental assistance  registrants, indicating how the payments are to be used. We are sending copies of this report to the Secretary of Homeland  Security, and the Director of the Federal Emergency Management Agency. Ie case, FEMA rovded free housing to 10 inua in  apartme in Plano, Texas, whle t the same tme t theinua$46,000 to cover ot-of-ocket housingxpnss. FEMA rovded oteiall roer and/or fraulet IHP assisance to other ineligible  -U.S. reside, despite hing docme ining theineligibiy. GAO’s revus work o the DHS purchase crd howed signianrolemth roert ccounabiy.
Why GAO Did This Study

The Federal Emergency Management Agency (FEMA) continues to respond to hurricanes Katrina and Rita. GAO's previous work identified suspected fraud, waste, and abuse resulting from control weaknesses associated with FEMA's Individuals and Households Program (IHP) and the Department of Homeland Security's (DHS) purchase card program. Congress asked GAO to follow up on this previous work to determine whether potentially improper and/or fraudulent payments continued to be made. GAO testified on the results of our audit and investigative efforts on December 6, 2006. This report summarizes the results of our follow-up work.

What GAO Found

In our December 6, 2006, testimony, GAO stated that FEMA made tens of millions of dollars of potentially improper and/or fraudulent payments associated with both hurricanes Katrina and Rita. These payments include $17 million in rental assistance paid to individuals to whom FEMA had already provided free housing through trailers or apartments. In one case, FEMA provided free housing to 10 individuals in apartments in Plano, Texas, while at the same time it sent these individuals $46,000 to cover out-of-pocket housing expenses. In addition, several of these individuals certified to FEMA that they needed rental assistance. FEMA made nearly $20 million in duplicate payments to thousands of individuals who claimed damages to the same property from both hurricanes Katrina and Rita. FEMA also made millions in potentially improper and/or fraudulent payments to nonqualified aliens who were not eligible for IHP. For example, FEMA paid at least $3 million to more than 500 ineligible foreign students at four universities in the affected areas. This amount likely understates the total payments to ineligible foreign students because it does not cover all colleges and universities in the area. FEMA also provided potentially improper and/or fraudulent IHP assistance to other ineligible non-U.S. residents, despite having documentation indicating their ineligibility. Finally, FEMA's difficulties in identifying and collecting improper payments further emphasized the importance of implementing an effective fraud, waste, and abuse prevention system. For example, GAO previously estimated improper and potentially fraudulent payments related to the IHP application process to be $1 billion through February 2006. As of November 2006, FEMA identified about $290 million in overpayments and collected about $7 million. Finally, GAO's work on DHS purchase cards showed continuing problems with property accountability, including items GAO investigated that could not be located 1 year after they were purchased.