Federal Reports

The Surprise Branch has 13 city routes and 51 rural routes delivered by 97 carriers (22 city and 75 rural). We used geolocation data to identify units with stop-the-clock (STC) scans that occurred at the delivery unit instead of the intended delivery address. The unit had 8,524 STC scans at the delivery unit between February and April 2019. The scans occurred on multiple routes and were intended for multiple delivery addresses throughout the timeframe. Our objective was to evaluate the delivery scanning process on select routes at the Surprise Branch in Surprise AZ.

Account Identifier Code (AIC) 589, Customer Service Meetings, is used to record expenses associated with payment authorized for refreshments served at official business meetings, employee recognition gatherings, group appreciation events, and customer appreciation meetings. OIG data analytics identified districts with unusually high amounts of local purchases and payments recorded to AIC 589 paid by cash or money order. Our objective was to determine whether customer service meeting expenses at Freedom Station were valid and properly supported and processed.

This report assesses how effectively the Engineering department maintains accountability for the company’s maintenance-of-way (MOW) and rolling stock equipment. Company policy requires the department to maintain accountability for this equipment throughout its lifecycle—from its acquisition, during its use, and through its disposal or sale.We identified a number of weaknesses the company faces in accounting for its MOW and rolling stock equipment. This is primarily due to its lack of effective procedures that would ensure managers record key information on equipment receipt, use, and disposal in the company’s asset management system. The Engineering department has also set a $50,000 purchase price as its threshold for inspections, meaning equipment costing less than the threshold amount is not consistently inspected or accounted for. Furthermore, the department did not consistently comply with federal requirements to account for equipment purchased with grant funds.We recommended that the company develop and implement procedures to ensure that it records this key information in its asset management system throughout the life of the equipment, inspects it as required, and consistently accounts for it. This includes procedures to ensure that the department complies with federal requirements governing equipment purchased with grant funds.

The Federal Emergency Management Agency (FEMA) did not properly oversee the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Louisiana or State) to ensure it complied with Federal regulations and FEMA guidelines. Louisiana and the Office of Community Development (OCD), in turn, did not always properly account for and expend Federal grant funds. Specifically, Louisiana did not provide adequate documentation to support costs, as required by Federal regulations, and FEMA is not requiring the State to provide mandatory documentation to close out the $706.6 million Hazard Mitigation Grant Program (HMGP) grant. Louisiana also has not provided FEMA with required documentation showing that homeowners paid $79.7 million in promissory notes for state-funded mitigation work on their homes. Finally, Louisiana drew down funds exceeding project obligations by $50.4 million due to a lack of FEMA controls. These issues arose primarily because FEMA did not ensure Louisiana exercised proper oversight of the HMGP grant and the State did not comply with Federal regulations. As a result, Federal funds are at risk of fraud, waste, and abuse. We provided five recommendations to FEMA to postpone project closeout until Louisiana provides adequate documentation that supports $706.6 million in costs and that FEMA ensures compliance with Federal regulations and FEMA guidelines. FEMA’s responses were sufficient to close all but one recommendation, which we consider open and unresolved.