Recommendations have been made to the Federal Emergency Management Agency that it designate the American Samoa Government a high risk assistance recipient.
The suggestion comes from the Office of the Inspector General at the US Department of Homeland Security.
It says the situation needs monitoring now that 90 million US dollars in federal aid has been allocated to the local government following last year's earthquake and tsunami.
According to the federal agency, the territorial government is financially unstable and has a history of converting federal grants to pay for other purposes.
A Homeland Security audit says independent public accountants and federal auditors have repeatedly identified material weaknesses with the American Samoa government's ability to manage and account for federal funds.