APRIL 2014
97.082
State Project/Program:
EARTHQUAKE CONSOTRIUM GRANTS
NC MITIGATION
Federal Authorization:
State Authorization:
Federal Emergency Management Agency
As authorized by the
(P.L.
95-124) and as required by the
(P.L. 108-360)
Sections 362.2 and 362.3 of the 44CFR
N.C. Department of Public Safety
Agency Contact Person – Program and
Financial
Chris Crew
State Hazard Mitigation Officer
Hazard Mitigation Branch
Division of Emergency Management
4105 Reedy Creek Rd
Raleigh, NC 27607
(919) 825-2305
John.Crew@ncdps.gov
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
Jamelle.White@ncdps.gov
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
It is the mission of the Federal Emergency Management Agency (FEMA) National Earthquake
Hazards Reduction Program (NEHRP) "to reduce the risks to life and property from future earthquakes in the United States through the establishment and maintenance of an effective earthquake risk reduction program." In support of this mission, P.L. 108-360 directed FEMA to operate a program of direct assistance to States to accomplish various eligible earthquake safety and mitigation activities.
II. PROGRAM PROCEDURES
The Earthquake Consortium 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 the EQ Grant.
The State solicits reviews, prioritizes and selects applications from the communities for funding and forwards the applications to FEMA for review. FEMA reviews each project application through regular program reporting to ensure that projects meet regulations and minimum eligibility requirements.
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EARTHQUAKE CONSOTRIA GRANTS
III. COMPLIANCE REQUIREMENTS
A. Activities Allowed or Unallowed
Compliance Requirement
Only relevant and necessary measures taken to eliminate future losses from earthquake hazards included in the State/local Memorandum of Agreement are allowed.
In order to qualify for a Project Grant, an applicant must have a project Scope of Work that demonstrates the effective mitigation of earthquake hazards and:

Be technically feasible;

Conform with applicable Federal and State regulations; and.
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.
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.
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EARTHQUAKE CONSOTRIA GRANTS
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G. Matching, Level of Effort, Earmarking
Compliance Requirement
There is no matching requirement for the FY11 iteration of the program. The FY12 program requires a 50% non-federal match.
.
H. Period of Availability of Federal Funds
Compliance Requirement
Program funds are to be spent within the Period of Performance per the FEMA award. Project completion deadlines for sub-grantees are specifically stated in the grant agreement on a projectby-project basis.
Suggested Audit Procedures
Verify that the funds were encumbered within the period of performance as stated by the grant agreement (MOA) and FEMA Award Letter.
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 subrecipients 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.
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.
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EARTHQUAKE CONSOTRIA GRANTS
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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