The present work focuses on a class of nonlinear distributed processes with component faults. An adaptive detection observer with a time varying threshold is proposed that provides additional robustness with respect to false declarations of faults and minimizes the detection time. Additionally, an adaptive diagnostic observer is proposed that is subsequently utilized in an automated control reconfiguration scheme that accommodates the component faults. Simulation studies of the Kuramoto-Sivashinsky nonlinear partial differential equation are included to demonstrate the proposed fault detection and accommodation scheme.