rEPETITVE fLOOD cLAIMS prOGRAM

97.092 / rEPETITVE fLOOD cLAIMS prOGRAM
State Project/Program: / NC Mitigation

Federal Emergency Management Agency

Federal Authorization: / National Flood Insurance Reform Act of 1994
Section 1323 and 44 CFR Parts 13 and 14
State Authorization: / Section 201.2 of the CFR

N.C. Department of Public Safety

Agency Contact Person – Program and Financial
Nicholas 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 Repetitive Flood Claims (RFC) program is to with the goal of reducing flood damages to individual properties for which one or more claim payments for losses have been made under flood insurance coverage and that will result in the greatest savings to the National Flood Insurance Fund (NFIF) in the shortest period of time.

II. PROGRAM PROCEDURES

The RFC 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 of Public Safety administers RFC. Projects are funded on a 100% Federal share. As of FFY13, this program has been discontinued at FEMA. NCEM continues to administrate legacy projects associated with this funding stream.

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 Repetitive Flood Claims funds for this purpose.

In order to qualify for a Project Grant, project must:

·  Benefit a repetitive loss structure(s);

·  Be cost-effective;

·  Be technically feasible;

·  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 funds up to 100% of the eligible costs of each project. There are no further matching funds. The amount of funding for the program is based on yearly RFC grant appropriations.

Suggested Audit Procedures

1.  Review FEMA-State Agreement and/or State-local agreement.

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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