Activity 2: Account for Costs and Resources

Purpose

The purpose of this activity is to ensure your community has adequate finances and resources to assist in recovery efforts. 

Why?

Accurate accounting of losses, costs, and expenditures is a vital part of the recovery process. Disaster-affected communities need to ensure steps are taken to capture and account for recovery costs and expenditures because:

• It helps to determine financial eligibility for recovery programs. In many cases, it is a requirement of the application process.
• Fiscal and damage impact reports and analyses are also the basis of many recovery grant awards.
• Jurisdictions must ensure that the types of disaster costs incurred, such as housing, infrastructure, or transportation, are eligible expenses for the disaster recovery program utilized.

In addition to the need for fiscal responsibility, accurate accounting for losses is a reimbursement requirement for both insurance policies and disaster assistance programs and can help to offset the local cost share of Federal disaster programs (as applicable in larger disaster events). Initiating the documenting and organization of cost accounting from the earliest point in the incident helps communities to avoid funding denials, appeals, or delays. Develop standardized processes, a centralized database, and coordinated accounting tools. See Additional Guidance section for tips on this important step.

When?

Initial cost recovery starts concurrently with response operations and continues through recovery. (Days 1 - Ongoing)

How does my community do this?

1. Determine local, State, and Federal cost tracking and document retention requirements.
2. Establish a multidisciplinary team of planning, grants management, and financial management subject matter experts to develop and execute a recovery financial management plan. This team can assist with budget forecasting, cash flow management, debt monitoring, payroll, risk avoidance, disaster assessment, and expense reimbursement pertaining to both response and recovery funding streams. Members of this team might include an emergency management director, recovery managers, finance managers, grants managers, and legal counsel.
3. Establish cost tracking and document retention policies and systems. Train staff in cost tracking and document retention policies.
4. Activate and use disaster accounting general ledger lines. Ledger line items allow jurisdictions to track costs precisely, report them to agencies for reimbursement, and conduct detailed reporting and analysis. The jurisdiction must justify each expenditure and directly relate it to the incident response, as well as differentiating response costs from concurrent general operational costs.
5. Log and track time and expenses. Disaster cost reimbursement requires accurate and detailed records of the time and costs associated with response actions.
6. Document all equipment and materials used during response activities.
7. Document all damages and cost impacts. The documentation will include cost and expense reports, as well as established damage cost estimation processes. To achieve certain thresholds for disaster cost reimbursements, jurisdictions must show proof of cost and impact, which requires compiling and aggregating fiscal information.
8. If State and/or Federal recovery financial support is provided, the State of Colorado and/or FEMA will conduct monitoring visits to subgrantees, which will include assisting communities in the preparation of documentation to inform future audits.