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GAO to closely monitor 16 states' stimulus spending

Guidelines for how states spend and report their funds under the American Recovery and Reinvestment Act of 2009 are still under development. The deadline for public reporting to begin at is July 13th, so they still have some time to work out the details...and, trust me, they and GAO would be well advised to use all the time they have to get it right. However, GAO has already engaged the 16 states that contain 65% of the nation's population and will, therefore, be receiving roughly two-thirds of the total recovery funds.

The states are Arizona, California, Colorado, Florida, Georgia, Iowa, Illinois, Massachusetts, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and Texas.

GAO will also "sample localities within these states to provide a perspective on the use of Recovery Act funds at a local level."

Here's the key paragraph from the GAO report.

"GAO will be reaching out to the respective governors' and state auditors' offices to begin the work needed for our first bimonthly review to be completed this April...These recipient reports are to include information on funds received, the amount of recovery funds obligated or expended to projects or activities, and the projects or activities for which funds were obligated or expended...Finally, our Forensic Audits and Special Investigations unit (FSI) will be undertaking ongoing risk assessments to identify specific programs and funding streams that are especially vulnerable to fraud, and it will conduct targeted investigations based on its assessments."

If you do business in these states, don't be surprised if agency folks are more skittish than usual about dotting all the "i's" and crossing all the "t's." Take a moment to read the full GAO report (it's only 17 pages) for some added business development insight. Don't assume that the rest of the states won't get an occasional visit from the FSI. (I think I see a new primetime hit: FSI: Washington.)

Of course, my recommendation is for the states to reorganize themselves as investment banks. Then they won't have to worry about financial oversight at all!

(Hat tip to NASCIO's Pam Walker for putting me on to this development.)

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