Intergovernmental partnership aims to limit risks in stimulus spending

As agencies scramble to spend stimulus funds under the 2009 American Recovery and Reinvestment Act, an intergovernmental financial management organization is offering up new tools to help ensure that accountability isn't sacrificed for expediency.

The Partnership for Intergovernmental Management and Accountability, which comprises high-ranking financial management officials in federal, state and local governments, has published a number of documents and assessment tools to help agencies monitor funds spent under the economic stimulus package.

The Partnership was established by the Association of Government Accountants in 2007 to improve accountability across governmental jurisdictions.

"The highest-risk organizations that get federal funds are frankly the new guys on the block," said Tom Cooley, chief financial officer at the National Science Foundation and a co-chair of the Partnership. "They don't understand the game they've decided to enter and that's where it can come back to bite you if you haven't done a good enough job identifying those institutions" and worked to ensure they can manage federal funds, he said.

While agencies have a lot of experience monitoring money that goes to primary recipients of federal funds, the guidance for tracking stimulus funds requires that they be equally adept at overseeing the use of funds by sub-recipients -- those organizations and contractors that may be several tiers down on the management ladder where the work actually is being performed.

"That's important for a couple of reasons," Cooley said. "First of all, the taxpayers want to know that the money is being spent for the reason it was put out the door and there is no waste, fraud or abuse." But it's equally important for taxpayers to understand in a transparent way exactly where the money is being spent.

He cited a scientific research program funded by NSF through a private institution based in Washington. The institution actually awards most of that funding to Texas A&M University, which in turn oversees research that is conducted aboard a ship that operates out of Galveston, Texas, but travels around the globe.

It's not enough to know that the Washington-based institution is administering the contract appropriately, Cooley said. As the responsible authority for the federal funds, NSF needs to be able to document the full program. "Most of the money pays for the ship and the crew on the ship that goes out and conducts the research. You want to make sure the right money is going to pay the salaries of those guys on the ship, that they can paint the hull and scrape it whenever they need to, and that they can fly the research scientists to the ship when they need to," Cooley said.

Much of the stimulus money will be distributed through normal channels -- block grants to states and conventional appropriations. To the extent that agencies have strong internal controls and solid financial management and accounting processes in place, handling the stimulus funding shouldn't present any special problems.

But the recovery act also creates new programs in some cases, which may require new mechanisms for distributing the money, Cooley said. The CFO's role is to make sure "if there are going to be any shortcuts taken [to normal financial management operations] then we need to document what those are going to be and make sure we've got some failsafe buttons in place so we don't accidentally do anything wrong to get anybody in trouble," he said.