A new report from the Department of Homeland Security found that both New York City and the state of New York have failed to adequately manage millions of dollars in federal grants meant to help improve homeland security.

The inspector general found that of the $725 million granted during three years by the Federal Emergency Management Administration (FEMA), New York officials spent $67 million on questionable costs not aligned with homeland security goals or strategies. In some cases, officials failed to implement security improvements, execute agreements or track progress, reported The Washington Times.

"It is obscene that Michael Bloomberg's New York City government failed to ensure that millions of dollars in Department of Homeland Security grants were actually being spent to protect the city. It is particularly astonishing that this occurred in New York City, which one would expect to be hypersensitive about the proper, effective spending of funds provided to prevent terrorism," Richard Manning, president of Americans for Limited Government, told the Times.

"The New York City government's cavalier attitude toward ensuring that their chosen subcontractors are wisely spending federal taxpayer homeland security monies to protect the public's safety is almost unfathomable," Manning added.

After reviewing 23 subgrants that New York granted to state counties, auditors found that none of the 23 grants were administered within the 45-day time limit required by FEMA. It occasionally took as many as 670 days after the deadline to issue the funds.

Auditors blamed excessive red-tape for causing the delays, writing, "delays in obligating funds to subgrantees may be attributed to both the state and the subgrantees having to obtain several levels of approval before funds were obligated."

Once funds were finally handed out, there were no management controls in place to ensure funds were used correctly, reported the Times.

OIG auditors also found significant overtime payments that had nothing to do with key counter-terrorism missions.

While there haven't been any specific terror threats reported, both the Federal Bureau of Investigation and the U.S. Department of Homeland Security issued recent terror guidance specifically citing July 4 celebrations as possible targets, and leaders around the nation are taking steps to increase security and surveillance.

"We are keenly aware that New York State remains a top target for terrorists," New York Gov. Andrew Cuomo said Friday, reported CNN. "As we celebrate with family and friends this Independence Day, I urge all New Yorkers to not only remember the freedoms that we hold dear, but also remain cautious of their surroundings and learn to recognize and report suspicious activity.