When the tab for the $787 billion American Recovery and Reinvestment Act starts to be counted in October, an unlikely group of government employees may well prove to be the most capable of insuring the stimulus’ success. The Association of Government Accountants held their fourth annual Internal Control & Fraud Conference in Washington, D.C. last week.
And the national backdrop to this year’s AGA conference was in many ways ideal for those in the business of detecting and preventing government fraud, abuse and waste. States are struggling to stay within eyeshot of their projected revenue targets, government employees are being furloughed across the country and the 200-day stimulus spending goal of $225 billion had just been passed.
The 787-billion-pound gorilla in the room was the first subject of discussion. The over 500 attendees listened as Earl E. Devaney, Recovery Accountability and Transparency Board chairman, spoke about priority number one: fraud prevention, rather than detection.
Mr. Devaney, and other conference speakers, called for a different approach – one that emphasized proactive prevention. “We had to get our heads around prevention. What can we do on the front end of this pipeline,” Devaney asked.
Former Virginia Representative and current director at Deloitte Federal Government Services, Tom Davis, echoed Devaney’s statements in a phone interview, saying proactive fraud prevention and strict punishment of those found to have committed fraud or abuse is key. “You need to send a chill down the spine of those who would violate the law,” Mr. Davis said. “There are plenty of laws on the books, but sometimes we don’t use those and chase things down in a smart fashion.”
“In a bad economy, fraud rises exponentially,” Mr. Davis said, “and with the stimulus, so much money is coming out so quickly – the system is ripe for fraud.”
As of late as July, the picture did not look great for state auditors. The Government Accounting Office (GAO) found there are staff shortages and an overall lack of funding available to audit Recovery Act funds properly. Davis said the picture has changed somewhat since the beginning of summer, but only “on the margins.”
“Congress and the administration has helped a little – now states can use some of their ARRA funds to help pay for the overhead,” Davis said. As for the upcoming deadline for the first round of Recovery Act reporting, Mr. Davis urged diligence and patience from those watching the funds.
“Oct. 10 is not going to be as smooth as you would like, but hopefully it will mean permanent change – everyone will have to be patient and cognizant of the fact that this is a huge undertaking and not everything will fit perfectly,” he said.
“I think we’re heading in the right direction. Over time, 300 million IGs will improve the business of government,” Davis said, referring to the millions of Americans who will be able to monitor government spending on websites like Recovery.gov and USASpending.gov.
In his concluding remarks to the AGA last week, Mr. Davis said, “Never has what you do been more important to the country.”
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