Economic Crisis Resource Center > Troutman Sanders LLP

Liability Risk Management Under The American Recovery And Reinvestment Act Of 2009

by Troutman Sanders LLP

The new Stimulus Bill, styled the American Recovery and Reinvestment Act of 2009 (ARRA), appropriates over $780 Billion to stimulate the economy through federal, state and private activity.  It uses at least 10 federal agencies, all state and local governments willing to participate, and as many private businesses as qualify for the contracts, grants, loans and loan guarantees funded by the Act.

Four factors intensify the compliance risks and challenges that attend receipt of any ARRA funds:

  1. The appropriated money will provide the greater stimulus the faster it gets out and into American commerce.
  2. Many of the programs receiving ARRA funding are not designed for the appropriated amount of those funds, or there are no programs for the funding purposes.
  3. As a consequence of factors 1 and 2, the standards, rules and requirements for many of the funding programs will be evolving as the funds are distributed and used.
  4. The Administration’s policy and the text of the statute impose an unprecedented level of accountability and transparency, not merely for detecting failures, but for “preventing” fraud, waste and abuse.

There are, however, actions ARRA recipients can take to manage this liability risk.

  • Recognize the reality of the ARRA’s conflicting goals;
  • Segregate all ARRA functions, funds and accounting;
  • Create secure, supportive records;
  • Assign, empower and equip a specific compliance officer;
  • Maintain constant contact with the funding agency and Congress.

>> CLICK TO READ DETAILS OF THE RISK AND MANAGEMENT TOOLS…

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Stuart F. Pierson
Practice Group Leader