U.S. stimulus effort to stress accountability

WASHINGTON (Reuters) - As economic recovery funds flow to U.S. states roughly two weeks after President Barack Obama signed the economic stimulus bill into law, states, local governments and federal agencies are launching a large effort to track how they are spent.

Obama and Vice President Joseph Biden will hold a conference on Thursday with officials from each state on making sure the funds are spent correctly and that the public can scrutinize how the money flows.

"States have a huge responsibility in partnering with us to ensure that dollars spent as part of the Recovery Act are spent wisely, with transparency and accountability," said Biden in a statement.

Along with the vice president, whom Obama appointed to oversee implementing the $787 billion American Recovery and Reinvestment Act, the U.S. Comptroller, Congress and citizens will be keeping an eye on the funding effort.

"There are many implementation challenges to ensuring adequate accountability," Acting Comptroller Gene Dodaro told Congress this week in prepared testimony. "Experience tells us that the risk for fraud and abuse grows when billions of dollars are going out quickly."

The Government Accountability Office is required by the law to check on how states spend the stimulus money, and Dodaro said its first bimonthly review of selected states and localities will be completed next month.

The GAO has tagged a group of 16 states, containing nearly 65 percent of the U.S. population, for these checks, but all states must file information on how they spend the dollars they will receive over the next two years.

Also, the GAO's Forensic Audits and Special Investigations unit will keep an eye on programs and funding that could be subject to fraud and will conduct targeted investigations.

Dodaro said his nonpartisan agency has contacted state inspector generals, auditors and budget officers to coordinate reporting.

Ohio is one of the states that will have bi-monthly reviews from the GAO, along with California, New Jersey and New York, which will receive the lion's share of the stimulus funding. Ohio Governor Ted Strickland established an independent deputy inspector general to monitor the stimulus spending.

"Ohio taxpayers deserve nothing less than a full and transparent accounting of how the federal stimulus resources will be spent in their communities," he said in a statement.

At the same time, half of the states have set up websites akin to the federal www.recovery.gov to show citizens where the money is going.

James Oberstar, chairman of the House of Representatives Transportation Committee, said states will have to send letters providing details of how they intend to spend the $40 billion earmarked for highway, transit and water infrastructure programs by April 3. Congress will recess shortly after, but Oberstar, a Minnesota Democrat, pledged his committee would hold a hearing on the letters when the legislators returned.

(Additional reporting by Karen Pierog in Chicago; Editing by Kenneth Barry)