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Tuesday, August 16, 2011

Risky business: US states cutting financial management

Aug 16 (Reuters) - Many states, walloped by budget problems, have cut spending on financial management and put themselves at greater risk of fraud and theft while making it harder to bring in revenues, according a survey released on Tuesday.

About eight out of 10 state financial managers said that budget cuts "mean new kinds of risks for their governments' financial and operations activities," according to the Association of Government Accountants' Annual CFO Survey.

They are having a harder time rooting out fraud, waste and abuse, the financial officers told the survey, which was conducted by Grant Thorton LLP's Global Public Sector. They also do not have as many monitors in place to make sure employees do not abuse systems, such as charging the state for excessive or fraudulent travel.

The cuts might also catch states in a trap, causing them to lose more revenues. The survey of state government workers, state financial officers, and federal employees such as Inspectors General, found that states could end up losing federal funds "if they cannot comply with federal reporting and other requirements that accompany the money."

-Lisa Lambert, Reuters.com

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