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entitled 'Hurricane Katrina: Policies and Procedures Are Needed to 
Ensure Appropriate Use of and Accountability for International 
Assistance' which was released on April 6, 2006. 

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Testimony: 

Before the Committee on Government Reform, House of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EDT: 

Thursday, April 6, 2006: 

Hurricane Katrina: 

Policies and Procedures Are Needed to Ensure Appropriate Use of and 
Accountability for International Assistance: 

Statement of Davi M. D'Agostino, Director: 

Defense Capabilities and Management: 

and: 

McCoy Williams, Director: 

Financial Management and Assurance: 

GAO-06-600T: 

GAO Highlights: 

Highlights of GAO-06-600T, a testimony before the Committee on 
Government Reform, House of Representatives: 

Why GAO Did This Study: 

In response to Hurricane Katrina, countries and organizations donated 
to the United States government cash and in-kind donations, including 
foreign military assistance. The National Response Plan establishes 
that the Department of State (DOS) is the coordinator of all offers of 
international assistance. The Federal Emergency Management Agency 
(FEMA) within the Department of Homeland Security (DHS) is responsible 
for accepting the assistance and coordinating its distribution. GAO’s 
testimony covers (1) the amount and use of internationally donated cash 
and (2) the extent to which federal agencies with responsibilities for 
international in-kind assistance offered to the United States had 
policies and procedures to ensure the appropriate accountability for 
the acceptance and distribution of that assistance. 

What GAO Found: 

Because the U.S. government had not received such substantial amounts 
of international disaster assistance before, ad hoc procedures were 
developed to accept, receive and distribute the cash and in-kind 
assistance. Understandably, not all procedures would be in place at the 
outset to provide a higher level of accountability. The Administration 
recognized the need for improvement in its recent report on lessons 
learned from Hurricane Katrina. 

GAO was able to track the cash donations received to designated U.S. 
Treasury accounts or disbursed. In the absence of policies, procedures, 
and plans, DOS developed an ad hoc process to manage $126 million in 
foreign cash donations to the U.S. government for Hurricane Katrina 
relief efforts. As cash donations arrived, a National Security Council 
(NSC)-led interagency working group was convened to make policy 
decisions about the use of the funds. FEMA officials told GAO they had 
identified and presented to the working group a number of items that 
the donated funds could be spent on. The NSC-led interagency working 
group determined that use of those donated funds, once accepted by FEMA 
under the Stafford Act, would be more limited than the wider range of 
possible uses available if the funds were held and then accepted under 
the gift authorities of other agencies. In October 2005, $66 million of 
the donated funds were spent on a FEMA case management grant, and as of 
March 16, 2006, $60 million remained undistributed in the DOS-
designated account at the Treasury that did not pay interest. Treasury 
may pay interest on funds accepted by FEMA under the Stafford Act. 
According to DOS, an additional $400 million in international cash 
donations could arrive. It is important that cash management policies 
and spending plan options are considered and in place to deal with the 
forthcoming donations so that the purchasing power of the donated cash 
is maintained for relief and reconstruction. 

FEMA and other agencies did not have policies and procedures in place 
to ensure the proper acceptance and distribution of in-kind assistance 
donated by foreign countries and militaries. In-kind donations included 
food and clothing. FEMA and other agencies established ad hoc 
procedures. However, in the distribution of the assistance to FEMA 
sites, GAO found that no agency tracked and confirmed that the 
assistance arrived at their destinations. Also, lack of procedures, 
inadequate information up front about the donations, and insufficient 
coordination resulted in the U.S. government agreeing to receive food 
and medical items that were unsuitable for use in the United States and 
storage costs of about $80,000. The procedures also allowed confusion 
about which agency was to accept and provide oversight of foreign 
military donations. DOD’s lack of internal guidance regarding the DOS 
coordinating process resulted in some foreign military donations that 
arrived without DOS, FEMA, or DOD oversight. 

What GAO Recommends: 

In its related report, (GAO-06-460) GAO made six recommendations 
designed to improve the policies, procedures, planning, and oversight 
of international cash and in-kind donations to the U.S. government in 
response to disasters. In comments on the draft report, DOD and DHS 
generally agreed with GAO’s recommendations and cited actions being 
taken to further refine processes and procedures for managing 
international disaster donations to the United States. 

www.gao.gov/cgi-bin/getrpt?GAO-06-600T. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Davi M. D'Agostino, (202) 
512-5431, or McCoy Williams, (202) 512-9095. 

[End of section] 

Mr. Chairman and Members of the Committee: 

We are pleased to be here today to discuss the results of GAO's work 
concerning the accountability for international assistance for 
Hurricane Katrina, which is based on the report that we issued 
today.[Footnote 1] Hurricane Katrina brought death, devastation, and 
destruction to the Gulf Coast states causing billions of dollars in 
damage and dislocating thousands of residents. In response to the 
disaster, many foreign countries and organizations offered cash and in- 
kind assistance, including foreign military donations, to the United 
States.[Footnote 2] 

In addition to relevant statutes, Executive Orders, and directives, the 
National Response Plan (NRP) is the framework for managing domestic 
events. According to the NRP, the Department of State (DOS) is the 
coordinator for all offers of international assistance.[Footnote 3] For 
Hurricane Katrina, DOS established a task force to coordinate the 
offers of foreign assistance and to provide the Federal Emergency 
Management Agency (FEMA) information regarding the offers.[Footnote 4] 
FEMA used the Stafford Act[Footnote 5] to accept some of the 
assistance, and after acceptance, it was then responsible for 
coordinating the distribution of the assistance and ensuring it was 
distributed as intended. To accomplish these tasks, FEMA requested 
support from the Office of Foreign Disaster Assistance (OFDA), an 
organization within the U.S. Agency for International Development 
(USAID), to manage all logistics/operations support to coordinate the 
international in-kind assistance for FEMA. DOD was involved in the 
receipt of disaster relief donations from foreign militaries. In 
addition to the agencies mentioned above, the National Security Council 
(NSC) also had a role to play in the federal response to the hurricane. 
The NRP section on principal organizational elements states that issues 
that require policy adjudication or that fall outside the Secretary of 
Homeland Security's areas of authority are elevated for resolution 
through the Homeland Security Council[Footnote 6] and the National 
Security Council system. 

The NRP also includes financial management guidance that states that 
federal agencies are to use proper federal financial principles, 
policies, regulations, and management controls to ensure proper 
accountability of funds. To safeguard assets, agencies can use the 
Comptroller General's Standards for Internal Controls in the Federal 
Government.[Footnote 7] These standards provide federal agencies with 
the framework necessary to establish internal controls and thus 
safeguard and monitor assets and inventory to prevent waste, loss, or 
unauthorized use. 

Our testimony today is focused on (1) the amount of cash that foreign 
countries donated, and the extent to which cash had been used to assist 
in the relief efforts; and (2) the extent to which those federal 
agencies with responsibilities regarding the international assistance 
had policies and procedures in place to ensure the appropriate 
accountability for the acceptance and distribution of in-kind 
donations, including foreign military donations. 

Summary: 

Given that the U.S. government had never before received such 
substantial amounts of international disaster assistance, ad hoc 
procedures were developed to manage the acceptance and distribution of 
the cash and in-kind assistance. It is understandable that not all 
procedures would be in place at the outset to guide the acceptance and 
distribution of the assistance and provide a higher level of 
accountability. 

In the absence of guidance for international cash donations for a 
domestic disaster, DOS developed an ad hoc process to manage cash 
donations from 36 countries that totaled $126 million. DOS recorded the 
funds in a designated account at the U.S. Treasury, and we were able to 
account for the deposits and disbursements of the cash. As cash 
donations arrived, an NSC-led interagency working group was established 
to make policy decisions about the use of the funds. FEMA officials 
told us that they had identified an account that could be credited with 
interest to receive the international cash donations and presented to 
the working group a number of items that the donated funds could be 
spent on. The NSC-led interagency working group determined that the use 
of the donated funds, if accepted under the Stafford Act, would be more 
limited than if the funds were held until accepted under the gift 
authorities of other agencies. In October 2005, FEMA accepted $66 
million of donated funds under the Stafford Act and spent the funds on 
a case management grant to provide case workers to assist 100,000 
households affected by Hurricane Katrina. As of March 16, 2006, $60 
million had not been distributed and remained in an account at Treasury 
that did not pay interest.[Footnote 8] Treasury may pay interest on 
funds accepted by FEMA under the Stafford Act. Since Treasury did not 
have the authority to pay interest on the funds in the DOS account, the 
purchasing power of those funds held in the DOS account have decreased 
due to inflation. Further since an additional $400 million or more in 
potential donations could materialize, it is important that cash 
management policies and plans be implemented to address the forthcoming 
funds to maintain the purchasing power of the donated funds. 

At the time of the Hurricane Katrina disaster, FEMA, USAID/OFDA, and 
DOD lacked sufficient policies and procedures to adequately ensure 
appropriate accountability for the acceptance and distribution of in- 
kind donations--including foreign military donations. Lacking this 
guidance, these agencies established ad hoc policies and procedures to 
account for the acceptance and distribution of assistance; however, the 
ad hoc policies and procedures did not include internal controls for 
the appropriate federal agencies to maintain adequate oversight of the 
assistance that would assure the assistance was received at designated 
distribution points. For example, FEMA and USAID/OFDA were unable to 
provide us evidence that they had determined or confirmed that 
international in-kind assistance arrived at FEMA distribution points. 
Also, the lack of guidance, inadequate information up-front about the 
nature and content of foreign offers of in-kind assistance, and 
insufficient advance coordination before agreeing to receive items, 
resulted in food and medical items, such as Meals Ready to Eat (MREs) 
and medical supplies that arrived and did not meet USDA or FDA 
standards and thus could not be distributed in the United States. This 
resulted in storage costs of about $80,000. For receiving foreign 
military donations for disaster relief, DOS established a process to 
coordinate with FEMA and DOD, but the procedures allowed for confusion 
about which agency was to accept these items. FEMA and DOD each assumed 
the other agency had accepted these donations under their respective 
gift authorities, but it is not clear either agency did so. As a 
result, even for the foreign military donations that were vetted 
through the DOS process, it is unclear whether any agency properly 
accepted or maintained oversight of these donations and knew how they 
were eventually used. In addition, DOD's lack of internal guidance 
regarding the DOS task force coordinating process resulted in some 
foreign military donations that arrived without DOS, FEMA, or DOD 
knowledge or oversight. 

Officials from DOS, FEMA, and DOD acknowledged the need for delineated 
policies and procedures to manage international assistance in the event 
that the United States receives international assistance in the future. 
As called for by The Federal Response To Hurricane Katrina: Lessons 
Learned,[Footnote 9] officials from DOS, FEMA, and DOD told us that by 
June 1, 2006, they will provide policies and procedures for managing 
international assistance to the Homeland Security Council. We made six 
recommendations that focus on specific areas for agencies with a role 
in international assistance to develop in the National Response Plan or 
other appropriate plan. Our recommendations complement the 
administration's recommendations, but are more specific in some areas, 
such as the management of cash donations. For example, we recommended 
that alternative cash management options be considered, including the 
placement of cash donations in an account that would pay interest while 
decisions are made regarding the use of the donations. We also 
recommended that oversight of in-kind donations be maintained by 
tracking the donations from the time of receipt to disbursement, to 
provide reasonable assurance that assistance is delivered as intended. 
In addition, we recommended that plans be established for the 
acceptance of donated items that include coordination with regulatory 
agencies, such as USDA and FDA, in advance to prevent items that cannot 
be distributed from coming into the United States. We also recommended 
that DOD develop and issue internal guidance to commanders to ensure 
that all foreign military donations for disaster relief are coordinated 
through DOS to ensure appropriate acceptance, coordination, and 
oversight of the donations. In commenting on our draft report, DOD and 
DHS generally agreed with our recommendations. 

Cash Donation Management Policies, Procedures, and Plans Were Not in 
Place: 

In the absence of international cash donation management policies, 
procedures, and plans, DOS developed an ad hoc process to manage the 
cash donations flowing to the U.S. government from other countries for 
Hurricane Katrina relief efforts. By September 21, about $115 million 
had been received and as of December 31, 2005, DOS reported that $126 
million had been donated by 36 countries. Our review noted that DOS's 
ad hoc procedures did ensure the proper recording of international cash 
donations and we were able to reconcile the funds received with those 
held in the designated DOS account at Treasury. Also, an NSC-led 
interagency working group was established to determine uses for the 
international cash donations for domestic disaster relief. In October 
2005, $66 million of the $126 million donated had been accepted by FEMA 
under the Stafford Act and used for a Hurricane Katrina relief grant. 
As of March 16, 2006, the other $60 million from international 
donations remained undistributed. Once accepted by FEMA under the 
Stafford Act, funds would be limited to use on activities in 
furtherance of the act. We were told that the NSC-led interagency 
working group did not transfer the funds to FEMA because it wanted to 
retain the flexibility to spend the donated funds on a wider range of 
assistance than is permitted under the Stafford Act. During this period 
and while deliberations were ongoing, the funds were kept in an account 
that did not pay interest, thereby diminishing the purchasing power of 
the donated funds and losing an opportunity to maximize the resources 
available for relief. Under the Stafford Act, FEMA could have held the 
funds in an account that can pay interest, but Treasury lacks the 
statutory authority to credit DOS-held funds with interest. A number of 
options could be considered to address this situation if there are dual 
goals of flexibility and maintaining purchasing power. 

Key Events Involving the Use of International Cash Donations: 

Table 1 below shows the dates of key events in the receipt and 
distribution of the international cash donations according to 
documentation received and interviews with DOS and FEMA officials. 

Table 1: International Cash Donations Received and Used--Key Dates: 

Date: August 29, 2005; 
Event: Hurricane Katrina hit Gulf Coast region. 

Date: September 2, 2005; 
Event: DOS Hurricane Katrina Task Force established. 

Date: September 3, 2005; 
Event: DOS provided deposit instructions to diplomatic and consular 
posts for foreign cash donations. 

Date: September 6, 2005; 
Event: FEMA identified account that can earn interest. 

Date: September 21, 2005; 
Event: About $115 million in foreign donations received. 

Date: September 23, 2005; 
Event: FEMA presented items the funds could be spent on. 

Date: October 20, 2005; 
Event: DOS transferred $66 million to FEMA. 

Date: October 28, 2005; 
Event: FEMA awarded case management services grant to United Methodist 
Committee on Relief. 

Date: February 28, 2006; 
Event: $60 million in remaining donations undistributed. 

Date: March 16, 2006; 
Event: Memorandum of Agreement signed between DOS and Department of 
Education to spend remaining $60 million. 

Source: GAO analysis. 

[End of table] 

In early September 2005, FEMA officials identified an account at the 
U.S. Treasury for recording international cash donations and a number 
of potential uses for the donations that would help meet relief needs 
of the disaster. By September 21, 2005, about $115 million in foreign 
cash donations had been received. In a paper submitted to the NSC-led 
interagency working group, dated September 22, 2005, DOS recognized 
that every effort should be made to disburse the funds to provide swift 
and meaningful relief to Hurricane Katrina victims without compromising 
needed internal controls to ensure proper management and effective use 
of the cash donations and transparency. FEMA officials told us that on 
September 23, 2005, they had identified and proposed to the NSC-led 
interagency working group that the international cash donations could 
be spent on the following items for individuals and families affected 
by Hurricane Katrina: social services assistance, medical 
transportation, adapting homes for medical and handicap needs, job 
training and education, living expenses, building materials, furniture, 
and transportation. At NSC's request, on October 7, 2005 FEMA presented 
more detailed proposals for using the foreign donations. On October 20, 
2005, with the NSC-led interagency working group consensus, DOS 
transferred to FEMA $66 million of the international donations to 
finance case management services to help up to 100,000 households 
affected by Hurricane Katrina define what their needs are and to obtain 
available assistance. 

As of February 2006, the remaining $60 million had not been released, 
pending the NSC-led interagency working group determination about the 
acceptance and use of the remaining funds. DOS and FEMA officials told 
us that for the remaining $60 million in donated funds, the NSC-led 
interagency working group had considered a series of proposals received 
from a number of both public and private entities. At the time of our 
review, we were told that the NSC-led interagency working group decided 
that the vital needs of schools in the Gulf Coast area would be an 
appropriate place to apply the donations, and that they were working 
with the Department of Education to finalize arrangements to provide 
funding to meet those needs. FEMA officials told us that under the 
Stafford Act, they could use donated funds for projects such as 
rebuilding schools, but projects for new schools buildings are not 
consistent with Stafford Act purposes unless replacing a damaged one. 
Also, according to DHS officials, the Act would have required that 
receiving entities match FEMA funds for these purposes. However, 
because of the devastation, the entities would have difficulty matching 
FEMA funds, which in essence limited FEMA from doing these types of 
projects. According to DHS, FEMA considered whether it would be useful 
for donated funds to contribute to the non-federal share for applicants 
having trouble meeting the non-federal share, but would need 
legislative authority to use it to match federal funds. We contacted 
NSC to further discuss these matters; however NSC did not respond to 
our requests for a meeting. On March 16, 2006, DOS and the Department 
of Education signed a Memorandum of Agreement regarding the use of $60 
million of the international cash donations. 

Inadequate Cash Management Policies and Planning Reduced Purchasing 
Power of Some International Cash Donations for Disaster Relief: 

Advance planning is very important given the outstanding pledges of 
$400 million or more that DOS officials indicated may still be 
received. While acknowledging that the U.S. government has never 
previously had occasion to accept such large amounts of international 
donations for disaster relief, going forward, advance planning is a 
useful tool to identify potential programs and projects prior to the 
occurrence of an event of such magnitude. In the case of Hurricane 
Katrina, while the NSC-led interagency working group reviewed various 
proposals on the use of the remaining $60 million, DOS held the funds 
in an account at the U.S. Treasury that did not earn interest. Treasury 
lacks the statutory authority to credit those DOS-held funds with 
interest. For the time the funds were not used, their purchasing power 
diminished due to inflation. If these funds had been placed in an 
account that could have been credited with interest to offset the 
erosion of purchasing power, the amount of funds available for relief 
and recovery efforts would have increased while decision makers 
determined how to use them. The U.S. government would be responsible 
for paying the interest if these funds were held in an account at the 
Treasury that can pay interest. Although the Stafford Act does not 
apply to the donated funds maintained in the DOS account at Treasury, 
the Stafford Act does provide that excess funds accepted under the Act 
may be placed in Treasury securities, and the related interest paid on 
such investments would be credited to the account. Had the foreign 
monetary donations been placed in Treasury securities, we estimate that 
by February 23, 2006, the remaining funds for relief efforts would have 
increased by nearly $1 million.[Footnote 10] 

The Administration's report, The Federal Response To Hurricane Katrina: 
Lessons Learned, released on February 23, 2006, recognized that there 
was no pre-established plan for handling international donations and 
that implementation of the procedures developed was a slow and often 
frustrating process. The report includes recommendations that DOS 
should establish before June 1, 2006, an interagency process to 
determine appropriate uses of international cash donations, and ensure 
timely use of these funds in a transparent and accountable manner, 
among others. DOS officials recognized that the ad hoc process needed 
to be formalized and planned to develop such procedures by June 1, 
2006. When developing policies and procedures, it is important that 
consideration also be given to strategies that can help maintain the 
purchasing power of the international donations. If the goal is to 
maintain both purchasing power and flexibility, then among the options 
to consider are seeking statutory authority for DOS to record funds in 
a Treasury account that can pay interest similar to donations accepted 
under the Stafford Act pending decisions on how the funds would be 
used, or to allow DOS to deposit the funds in an existing Treasury 
account of another agency that can pay interest pending decisions on 
how the funds would be used. 

Lack of Guidance Regarding the Accountability for International In-Kind 
Assistance: 

In the absence of guidance, we found a lack of accountability in the 
management of the in-kind assistance. Specifically, FEMA did not have a 
process in place that confirmed that the in-kind assistance sent to 
distribution sites was received. The lack of guidance, inadequate 
information about the nature and content of foreign offers of in-kind 
assistance, and insufficient advance coordination also resulted in the 
arrival of food and medical assistance that could not be used in the 
United States. Also, the ad hoc procedures created to manage foreign 
military donations allowed for confusion about which agency--FEMA or 
DOD--should accept and be responsible for oversight of such donations. 

Lack of Policies and Procedures to Confirm Receipt of Goods at 
Distribution Points: 

Because of the lack of guidance to track assistance, USAID/OFDA created 
a database to track the assistance as it arrived. We found that 
USAID/OFDA reasonably accounted for the assistance given the lack of 
information on the manifests and the amount of assistance that was 
arriving within a short time. However, on September 14, 2005, FEMA did 
request USAID/OFDA to track the assistance from receipt to final 
disposition. However, the system USAID/OFDA created did not include 
confirming that the assistance was received at the FEMA distribution 
sites. In part, USAID/OFDA did not set up these procedures on its own 
in this situation, because its mission is to deliver assistance in 
foreign countries and it had never distributed assistance within the 
United States. FEMA officials told us that they assumed USAID/OFDA had 
these controls in place. FEMA and USAID/OFDA officials could not 
provide us with evidence that confirmed that the assistance sent to 
distribution sites was received. Without these controls in place to 
ensure accountability for the assistance, FEMA does not know if all or 
part of these donations were received at FEMA distribution sites. 
Internal controls, such as a system to track that shipments are 
received at intended destinations, provides an agency with oversight, 
and for FEMA in this case, they help ensure that international 
donations are received at FEMA destination sites. 

Inadequate Guidance, Information, and Coordination Resulted in the 
Arrival of Food and Medical Items That Could Not Be Used: 

We noted that the guidance the agencies created did not include 
policies and procedures to help ensure that food and medical supplies 
that the U.S. government agreed to receive and came into the United 
States met U.S. standards. The lack of guidance, inadequate information 
up-front about the nature and content of foreign offers of in-kind 
assistance, and insufficient advance coordination with regulatory 
agencies before agreeing to receive them, resulted in food and medical 
items, such as MREs and medical supplies, that came into the United 
States even though they did not meet USDA or FDA standards and thus 
could not be distributed in the United States. We noted that FEMA's 
list of items that could be used for disaster relief that was provided 
to DOS was very general and did not provide any exceptions, for 
example, about contents of MREs. DHS commented on our report that FEMA 
repeatedly requested from DOS additional information about the foreign 
items being offered and DOS did not respond. Both instances represent 
lost opportunities to have prevented the arrival of items that could 
not be distributed in the United States. The food items included MREs 
from five countries. Because of the magnitude of the disaster, some 
normal operating procedures governing the import of goods were waived. 
According to USDA and FDA officials, under normal procedures, entry 
documents containing specific information, which are filed with U.S. 
Customs and Border Protection, are transmitted to USDA and FDA for 
those agencies' use in determining if the commodities are appropriately 
admissible into the United States. Without consultation or prior 
notification to USDA or FDA, the Commissioner of U.S. Customs and 
Border Protection authorized suspension of some normal operating 
procedures for the import of regulated items like food and medical 
supplies. Consequently, USDA and FDA had no involvement in the decision 
making or process of agreeing to receive regulated product donations, 
including MREs and medical supplies, and no opportunity to ensure that 
they would all be acceptable for distribution before the donated goods 
arrived. Both USDA and FDA, based on regulations intended to protect 
public health, prevented distribution of some international donations, 
which resulted in the assistance being stored at a cost of about 
$80,000. 

Policies and Procedures Were Lacking in the Oversight of Foreign 
Military Donations: 

In the absence of policies and procedures, DOS, FEMA, and DOD created 
ad hoc policies and procedures to manage the receipt and distribution 
of foreign military goods and services. However, this guidance left 
open which agency--FEMA or DOD--was to formally accept the foreign 
military assistance and therefore each agency apparently assumed the 
other had done so under their respective gift authorities. As a result, 
it is unclear whether FEMA or DOD accepted or maintained oversight of 
the foreign military donations that were vetted through the DOS Task 
Force. The offers of foreign military assistance included, for example, 
the use of amphibious ships and diver salvage teams. FEMA did not 
maintain oversight of the foreign military donations that it accepted 
through the DOS task force. A FEMA official told us that they were 
unable to tell us how the foreign military donations were used because 
FEMA could not match the use of the donations with mission assignments 
it gave Northern Command. Moreover, FEMA and Northern Command officials 
told us of instances in which foreign military donations arrived in the 
United States that were not vetted through the DOS task force. For 
example, we were told of military MREs that were shipped to a military 
base and distributed directly to hurricane victims. For the shipments 
that were not vetted through the Task Force, DOS, FEMA, and DOD 
officials could not provide us information on the type, amount, or use 
of the items. As a result, the agencies cannot determine if these items 
of assistance were safeguarded and used as intended. 

In closing, since the U.S. government had never before received such 
substantial amounts of international disaster assistance, we recognize 
that DOS, FEMA, USAID/OFDA, and DOD created ad hoc procedures to manage 
the receipt, acceptance, and distribution of the assistance as best 
they could. Going forward, it will be important to have in place clear 
policies, procedures, and plans on managing and using both cash and in- 
kind donations in a manner that provides accountability and 
transparency. If properly implemented, the six recommendations included 
in our report issued today will help to ensure that the cognizant 
agencies fulfill their responsibilities to effectively manage and 
maintain appropriate and adequate internal control over foreign 
donations. 

Mr. Chairman, this concludes GAO's prepared statement. We would be 
happy to respond to any questions that you or Members of the Committee 
may have. 

GAO Contacts and Staff Acknowledgments: 

For further information on this testimony, please contact either Davi 
M. D'Agostino at (202) 512-5431 or dagostinod@gao.gov or McCoy Williams 
at (202) 512-9095 or williamsm1@gao.gov. Contact points for our Offices 
of Congressional Relations and Public Affairs may be found on the last 
page of this report. Individuals making key contributions to this 
testimony included Kay Daly, Lorelei St. James, Jay Spaan, Pamela 
Valentine, and Leonard Zapata. 

FOOTNOTES 

[1] GAO, Hurricane Katrina: Comprehensive Policies and Procedures Are 
Needed to Ensure Appropriate Use of and Accountability for 
International Assistance, GAO-06-460 (Washington, D.C.: Apr. 6, 2006). 

[2] In-kind donations are noncash items such as food, clothing, 
blankets, and tents that were donated by foreign countries to the U.S. 
government. Foreign military donations came directly from foreign 
militaries to the United States and included such items as the use of 
amphibious ships, divers, and pumps. 

[3] Also, pursuant to Homeland Security Presidential Directive 5, the 
Secretary of Homeland Security is the principal federal official for 
domestic incident management, and the Secretary of State is charged 
with the responsibility to coordinate international activities related 
to the prevention, preparation, response, and recovery from a domestic 
incident within the United States. 

[4] The U.S. government did not accept all offers of assistance. For 
example, the United States did not accept one offer of cash from a 
country due to ongoing U.S. sanctions against the country. 

[5] Robert T. Stafford Disaster Relief and Emergency Act, 42 U.S.C. § 
5201 (b). 

[6] The Homeland Security Council ensures the coordination of all 
homeland security-related activities among executive departments and 
agencies and promotes the effective development and implementation of 
all homeland security policies. 

[7] GAO, Standards for Internal Controls in the Federal Government, 
GAO/AIMD 00-21.3.1 (Washington, D.C.: November 1999). 

[8] On March 16, 2006, DOS and the Department of Education (ED) signed 
a Memorandum of Agreement that states that $60 million will be 
transferred to ED for use in school reconstruction projects and other 
projects in the Hurricane Katrina-affected areas. We did not review the 
details of this agreement. 

[9] The White House, The Federal Response To Hurricane Katrina: Lessons 
Learned (Washington, D.C.: Feb. 23, 2006). 

[10] Interest was computed based on an estimated average annual yield 
of 5 percent for Treasury Government Account Series from October 21, 
2005, to February 23, 2006.