Instead, FEMA has made moderate to modest progress in eight of nine of the most important preparedness areas, according to the report, which was not released but was obtained by CongressDaily.
Homeland Security Inspector General Richard Skinner is scheduled to testify Thursday along with FEMA Director R. David Paulison at a Senate Homeland Security and Governmental Affairs Committee hearing to examine whether FEMA is better to prepared to handle a catastrophe than it was when hurricanes Katrina and Rita ravaged the Gulf Coast in 2005.
"FEMA officials said that budget shortfalls, reorganizations, inadequate information technology systems and confusing or limited authorities negatively affected their progress," the IG report asserts.
"We agree with FEMA," the report adds. "FEMA would also benefit from better knowledge management and plans for sustaining initiatives that are under way."
According to the report, FEMA has made moderate progress in five areas: overall planning, coordination and support, interoperable communications, logistics and acquisition management.
The agency has made modest progress in three areas: handling evacuations, providing housing for displaced persons, and building a workforce to deal with disasters.
FEMA has the most need -- rated as making only limited progress -- in clearly defining mission assignments, the report concludes.
The report says that FEMA has made substantial progress only in providing law enforcement agencies access to its records and improving the ability of the Gulf Coast to evacuate.
But overall, none of the nine major areas was given the highest rating of making substantial progress.
The IG's office said it did not perform an in-depth assessment of each of the nine areas, but used its broad knowledge of the areas to gauge the agency's overall progress.
In a written response to the report, Paulison said the inspector general did not accurately reflect much of the work his agency has done over the last two years or how some responsibilities fall to other components of the department.
He also said the agency has a new strategic plan.
Paulison said the IG's reporting methodology should be more comprehensive, writing that it was "unclear as to how the IG calculated and tabulated the ratings for the nine key areas."
Paulison disagreed with an IG recommendation that FEMA conduct a comprehensive needs assessment.
"FEMA has no shortage of recommendations of improvements the agency needs to make, and has had our capability gaps clearly spelled out," he wrote. "The sheer workload associated with responding to the administrative documentation requirements of over 700 recommendations from DHS, OIG and GAO is directly impacting our continued efforts to improve FEMA."
At Thursday's hearing, Paulison is also likely to explain to the committee that he does not intend to resign immediately.
News outlets in Florida began reporting Wednesday that he was going to resign based on comments he made to them at a hurricane conference. Paulison issued a statement hours after the news reports saying his comments were taken out of context.
"Let me be clear: I have no plans to leave at this time, and am committed to moving FEMA's mission forward," he said. "It is a fact that I serve President Bush, and therefore my service will end when we move into the next administration. However, I can assure you that this announcement is not imminent."