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The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Carl Gabrini
February 16, 2016
Emergency management at the state and federal level poses significant challenges to the ablest of public managers. Those taking on leadership of these organizations must appreciate the difficulties in managing risk because emergency management involves responding to and mitigating risks. As a former auditor, I designed audit tests based on a risk assessment of the client’s internal environment. This process focused on reducing the risk of missing weaknesses in the internal control system.
Public managers in emergency management organizations must create and maintain an internal environment that embraces internal controls and ethical behavior to ensure the organization operates in a way that is both accountable and transparent to those it serves. This essay examines a nonrepresentative selection of audit reports on emergency management organizations at the state and federal levels to determine whether common governance problems may be identified.
To start, I examined audit reports from three state-level auditors. The first was issued by the Oregon Secretary of State on their Office of Emergency Management (Report 2014-03). The second was published by the State of Florida Auditor General on the Division of Emergency Management’s expenditures in response to the BP oil spill in the Gulf of Mexico (Report 2012-099). Finally, the third report was issued by the California State Auditor on California Emergency Management Agency’s handling of funds from the Recovery and Reinvestment Act of 2009 for the Edward Byrne Memorial Justice Assistance Grant Program (Letter Report 2009-119.4). My examination indicated that state level emergency management agencies face similar governance challenges.
Common challenges identified among the three reports focused on issues related to the control environment and “tone at the top” created and supported by senior management. Problems were identified in each of the reports involving the policies and procedures within each organization. The audit reports indicated that operational processes were not well-defined, documented and monitored. Accountability about funds awarded to subrecipients affected by disasters was also noted as a weakness in all three reports.
The Oregon report is a more comprehensive review of agency operations. The auditor pointed out the absence of a strategic plan, the need to adopt more relevant performance measures and weaknesses in workforce management resulting in high turnover and low morale. To explore this further, I read two additional reports: an internal audit report issued by the Canadian Department of Public Safety and Emergency Preparedness (issued January 2014) and an Office of Inspector General Report issued by The U.S. Department of Homeland Security on the internal controls over FEMA’s disaster acquisition process (Report OIG-09-32).
The challenges identified in each of these internal audit reports focused on many of the same issues. Both reports discussed internal control weaknesses that included the failure to perform periodic internal control reviews, a lack of strategic planning, the absence of sufficient and appropriate oversight of operating activities and resource management, and inadequate documentation of the subrecipient award process including the closeout of the grant files. In all five reports, the auditing agency noted the importance of senior leadership setting the course and acting as the example. The fact that each of the audit recipients are organizations charged with responding to emergencies within their jurisdiction does not excuse them from establishing and maintaining appropriate control environments. The belief in a need to observe an appropriate and sufficient control environment while responding to emergencies dates back more than 100 years.
The U.S. Marine Corps “System of Accountability and Regulations Pertaining to the Quartermaster’s Department” notes that quartermasters carrying out their duties to procure needed equipment and supplies during times of emergency or exigency must attempt to observe proper procurement controls. Administrative actions occurring during an emergency by the quartermaster must be fully and properly documented at the earliest convenience to ensure an appropriate audit trail and accountability. Even in the face of exigent circumstances, officers are supposed to perform some basic procedures to ensure they are paying reasonable prices for supplies.
In the 1869 decision in Veazie Bank v. Fenno, The United States Supreme Court defined exigency as an “immediate pressing necessity and one requiring resort to unusual power and effort.” In both the Marine Corps manual and the U.S. Supreme Court decision, it was made clear that administrative actions taken using emergency procedures should be the exception rather than the rule and should be taken with due care and be properly documented. Emergencies do not excuse accountability.
Establishing an effective control environment including an appropriate “tone at the top” are important responsibilities of senior management, particularly in organizations faced with responding to emergencies affecting public safety and health. Examined audit reports of state and federal level emergency management agencies indicate these organizations are challenged with common risks to their governance systems. This calls for an assessment of strategies to deal with them and ensure maintenance of an appropriate control environment. The political nature of public organizations may be partly responsible for these types of findings but further research into this would be useful in developing our understanding of these common challenges.
Author: Dr. Gabrini currently teaches accounting at Columbus State University. He holds a Ph.D. in Public Administration from Florida State University, a Master’s degree in taxation from the University of Central Florida and an active CPA license issued by the State of Florida. He held various professional positions throughout 25 years before entering academia. Email: [email protected].