A report from the state’s auditor general says the Arizona Office of Homeland Security and the Department of Emergency Management did not have enough controls in place to ensure nearly $175 million in federal grants issued in response to the Sept. 11 attacks were awarded or spent properly.
The audit found that “documentation regarding project descriptions, changes to project award amounts, and reallocation of project monies were not available for over a third of the projects examined.”
One of the reasons for the lack of documentation, the report says, is that when local jurisdictions wanted to make changes to a project or add a new project, they often did so by contacting AOHS by phone. Because such requests were not done in writing, many times the changes were not documented once they received approval.
However, the report also found that, even though the documentation wasn’t always there, AOHS staff “were able to explain the reason for most of the missing or incomplete documentation, and could provide auditors with additional information.”
Additionally, the audit reports that AOHS didn’t always have complete documentation to support approval or rejection of projects, a significant oversight because “final approval of projects for some grant programs is the responsibility of” AOHS Director Frank Navarette. The lack of documentation could result in federal Department of Homeland Security questioning the monies allocated to the state.
The report also found that: AOHS was not verifying reimbursement requests for approved projects to ensure the grant monies were being used properly; there were discrepancies in accounting for how much money was spent on individual projects because there are two different systems in which expenditures are recorded; and there was a lack of coordination between AOHS and ADEM, especially when it came to documenting changes in projects.
4th report since January, all identified deficiencies
This auditor general’s report is the fourth report on AOHS and ADEM since the beginning of the year: the auditor general issues a report in April focused on compliance with federal rules during FY2005; in June, the Department of Transportation’s inspector general issued a report on the efficiency of the state’s grant program; and in July and August, the Department of Administration issued reports on grant fund disbursement controls.
The previous audits identified other deficiencies in the administration of the homeland security grants, including inadequate monitoring of local jurisdictions that received funding, failure to obligate monies to local jurisdictions in accordance with federal guidelines, and not obtaining memorandums of understanding from local jurisdictions when making purchases on their behalf.
Agency response: Flaws corrected
In his response, Mr. Navarette says the agency has already acted to correct the flaws identified in the audit.
He wrote that a “thorough and standardized filing system for the grant program has been established” and incorporates all documentation for current grant years. There is also new a policy in place to require any request to reallocate funding for an approved project be submitted in writing and reviewed and approved by a regional strategic planner.
Mr. Navarette also wrote that new guidelines establish a review process for reimbursement requests “to ensure compliance with grant guidelines and that monies are only expended for authorized purposes.”
Additionally, reconciling variations in the state’s accounting system, he said, are now performed weekly, instead of monthly, as recommended in the audit. Finally, he said that confining the entire grants process to the newly formed Arizona Department of Homeland Security – S1264 (Laws 2006, Chapter 317) transfers the agency from the Governor’s Office to legislative purview. Combining functions of AOHS and ADEM will make sure the state abides by federal regulations, he said.
House and Senate Republicans said the auditor general’s report is evidence of poor oversight, a shortcoming they attribute to Governor Napolitano.
Rep. Knaperek: State can’t provide basic information
“After four years and $175 million, the governor cannot get her Homeland Security affairs in order,” said Rep. Laura Knaperek, R-17, and the chairman of the Joint Legislative Audit Committee. “The state cannot provide even the most basic information about millions of dollars spent supposedly to protect us.”
The Joint Legislative Audit Committee called for the latest audit in May.
Senate Appropriations Chairman Robert Burns, R-9, said the mismanagement of the agency — and the federal funds — stems from the genesis of Arizona’s homeland security program.
“This agency was originally improperly created by a verbal executive order by Governor Janet Napolitano, bypassing the Legislature,” he said. “In addition, this critical agency under Napolitano’s watch has been unresponsive to the Legislature’s request for funding accountability as now documented by the auditor general.”
Governor’s Office: Timing is suspect
Mike Haner, a spokesman for Ms. Napolitano, said the latest audit didn’t turn up anything the governor didn’t already know from the inspector general’s audit and that the problems “are fixed or in the process of being fixed.”
He added that the timing of the audit’s release was suspicious and that it was done so on purpose by legislative Republicans “so that they could try to have an issue” to attack the governor on during her re-election campaign.
Mr. Haner also questioned Ms. Knaperek’s sincerity about wanting additional information, as he said the agency has reported quarterly to the Joint Legislative Budget Committee since its inception.
“Never once did Rep. Knaperek ask for additional information,” he said.