Easily the most critical thing to hit the accounting technology market this year and for the near future is the stimulus money offered by the American Recovery and Reinvestment Act (ARRA). Beginning in the next few years, untold billions of dollars will be spent on tech R&D, a new “smart grid” for electrical power and broadband projects, to name just a few.
And no matter where you stand on the political spectrum, two things are obvious about this cash bonanza: It is potentially the largest major expenditure in the history of the U.S. government; and no one is in control.
Pushed through in haste as an election promise, the ARRA mandates all kinds of things but has virtually no instruction set. Instead, the tech dollars are allocated to the National Telecommunications and Information Administration of the U.S. Department of Commerce and the Rural Utility Service of the U.S. Department of Agriculture. General oversight and planning responsibilities are given to the Federal Communications Commission, setting up a massive three-way cat-fight for control of the money in Washington, a massive gridlock in terms of coordinating the distribution of the funds. What’s worse, most of the money won’t even get allocated until next year, but must be spent immediately when it gets there.
So what does all of this have to do with accountants? First and foremost, it means $100 million or more of the funds will be set aside for audits of how the money is spent. It is a foregone conclusion that as soon as the money is spent there will be allegations of fraud abuse, and auditors will have a field day sorting it all out.
Even on the accounting side, though, there will be plenty of work. We are just now learning the first details of how to apply for the money, and two things have happened. First, the government is extending the deadlines because they can’t get the application procedures in place in time to meet the original deadlines. And second, the number of anticipated applications has swelled to half a million — with a million or more grant applications possible.
It’s a nice time to be an accounting firm serving government. And it’s an even nicer time to be serving clients who want to be one of the million, since good grant writers can be hard to come by. And it’s the best time of all to be an audit firm.
But there are a few things that accountants will need in order to keep pace with the whirl of grants, loans and gifts available under the ARRA:
- Read the law itself. It is available online at www.recovery.gov, and other places. The language of the law can be important to the outcomes of your clients’ applications, and you will need to check carefully to determine how the law may affect each of your clients.
- Thing big. The stimulus money doesn’t just go to private companies, but to the states and local communities, as well. Almost anyone can be eligible to submit a grant or loan application.
- Check out the Government Accounting Standards Board guidance on accounting procedures for government programs, and the advice of the Government Accountability Office on audits for government programs.
- Line up an experienced grant application editor that can be recommended to clients to get them into the pipeline.
- Be meticulous about the paperwork. With government tech audits done to date, missing or incomplete files are considered a major problem.
As of today, three rounds of grant and loan applications are envisioned. But
the plans are flexible due to a still-sluggish economy, the demands of other
priorities, and the whims of politicians. Accounting firms that get up to speed
most quickly will be the ones most likely to benefit.