Agencies Reminded on Managing Disaster Funds

The CFO Council has sent out a “controller alert” to remind agencies of their responsibilities for managing payments in disaster situations.

The message follows a special appropriation of more than $15 billion in aid for victims of the recent hurricanes and for the local communities. “Because relief funding of this magnitude often carries additional risk of misallocation due to fraud, waste or abuse, agencies must ensure that the funds appropriated are used for their intended purposes and are appropriately accounted for,” it says.

It points to OMB Circular A-123, under which agencies must use a risk-based approach to design and implement financial and administrative control activities to mitigate identified fraud risks.

“Risk tolerance reflects a federal manager’s willingness to accept a higher level of fraud risks and may vary depending on the circumstances of the program. When determining risk tolerances in disaster situations, managers must weigh the program’s operational objectives of expeditiously providing assistance against the objective of lowering the likelihood of fraud as activities to lower fraud risks may cause delays in service,” it says.

Also, agencies must reassess the program’s risk susceptibility during the next annual cycle, even if it is less than three years from the last risk assessment. “Additional funding received after a natural disaster could create a significant increase in funding level and require agencies to reassess the program’s risk,” it says.

It said OMB will work with the CFO community to track expenses.