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Par Urges More Oversight for Aid Spending

Increasing the oversight and transparency of state spending in response to the massive influx of federal aid has proven to be a formidable task for the Governor. As the state embarked upon its recovery from the hurricanes of 2005, the administration promised two key tools: independent accounting auditors and a Web site to report federal aid. Neither has materialized.

The Louisiana Recovery Authority (LRA) should adopt a resolution urging the Governor to quickly develop a Web site where all state spending of federal hurricane-related aid is detailed and frequently updated. Additionally, the LRA should make a formal request to federal officials and the Governor to speed up negotiations and approval for Louisiana’s contracts with independent auditors. The LRA meets again on June 15.

The delay in hiring the independent auditors at least partially can be blamed on red tape at the federal level. But, the delay in setting up a Web site to help the public track billions in federal aid is a matter of priority. Building confidence in the state’s ability to ethically and legally spend recovery aid is essential to persuading Congress to approve further assistance and encouraging residents and businesses to remain or return.

Two national, independent accounting firms have been identified to assist with the immense record-keeping and auditing tasks required to track and monitor the spending of billions in federal aid the state now controls. But no contract has been finalized yet. The holdup is reported to be at the federal level, where approval must be given to use recovery aid to pay for the services.

Negotiations so far have whittled down the original draft contract with Deloitte and Touche, a nationally prominent accounting firm, from a long-term relationship to a 90-day effort. The contract with the secondary external accounting firm, UHY, LLP of Washington, D.C., is on hold, because the scope of that work is dependent on details in the Deloitte contract. As currently proposed, the Deloitte contract would provide a team of about 30 auditors to perform a set of forensic auditing tasks that would safeguard the state’s recovery spending against fraud and abuse.

The Legislative Auditor and Inspector General currently are performing all pre-audit functions to monitor aid spending, and they are struggling to keep up with the additional workload. However, the bulk of the funding has yet to reach the state. When aid in excess of $12 billion for housing, economic development and infrastructure repairs begins to flow through the state treasury, the state’s accounting demands will spike. That date is approaching rapidly, as Congress yesterday finally approved the last chunk of funding for the housing program.

The complex nature of intergovernmental aid distribution raises skepticism that the state will manage federal money well and without corruption. To dispel myth and foster public understanding of the government’s spending priorities, the state should create a central location for information to track the wide variety of funding sources and recipients throughout the recovery process. A publicly accessible Web site would be the most efficient way to disseminate this information.

Federal aid is coming into the state in a variety of forms, including Community Development Block Grants, Hazard Mitigation Grants, education subsidies, law enforcement subsidies, Social Services Block Grants, Community Disaster Loans,

FEMA relief to individuals, FEMA public assistance funding and other direct appropriations. Most of this funding must flow through the state’s treasury and must be documented every step of the way until payment or reimbursement is made for a specific completed service or function. Reporting these financial details to the public would add an extra layer of complexity to the state’s administration of the funds, but the costs should be minimal.

Providing maximum transparency and oversight for the unprecedented spending endeavor the state now faces should be made a top priority to prevent fraud and corruption and to shine light on the state’s successes as recovery progresses. The LRA should pass resolutions at its next meeting to urge quick implementation of these important tasks.


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