Major Improvements Needed in the Bureau of Indian Affairs' Accounting System

AFMD-82-71: Published: Sep 8, 1982. Publicly Released: Sep 8, 1982.

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GAO examined the Bureau of Indian Affairs' (BIA) automated accounting and finance system to determine whether it ensures that: (1) contract and grant cash advances, expenditures, and balances on hand are properly and accurately reported; (2) contract and grant cash advances are not requested prematurely, thus causing balances to exceed immediate and reasonable cash needs; (3) trust fund cash receipts and disbursements are properly handled and controlled and are accurately and completely recorded in the accounting records; (4) trust funds are properly invested; and (5) BIA properly and completely discharges its fiduciary responsibilities as trustee for Indian trust funds.

GAO found that the accounting system is not functioning properly and that little action has been taken to resolve known problems. Accounting for contracts, grants, and Indian trust funds has lacked attention. Managers cannot properly discharge their responsibility as trustee for the trust funds or control millions of dollars of cash advances to contractors and grantees, because they are not receiving reliable information from their accounting system. GAO believes that recent BIA efforts to enhance its accounting system are misdirected and that its acquisition of new computer equipment will not solve the system's serious design and operating problems. To reestablish accountability and control, BIA needs to take the following corrective action: (1) purge unreliable information from the automated accounting records for contractor and grantee cash advances and trust funds; and (2) develop and implement management controls to ensure compliance with prescribed accounting, internal control, and financial reporting procedures. BIA must also redesign or modify the automated accounting and finance system to correct known, longstanding deficiencies so that managers' financial information needs are met.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Interior should direct the Commissioner of Indian Affairs to ensure that prescribed accounting procedures are followed by making sure that: (1) Indian contractors and grantees file required expenditure reports on the prescribed due dates; (2) BIA personnel enter expenditure information promptly in the accounting system; (3) BIA personnel suspend letter-of-credit drawdown privileges for Indian contractors and grantees who fail to comply with prescribed financial reporting and accounting procedures; (4) BIA personnel responsible for trust funds complete all required monthly reconciliations of subsidiary and general ledger accounts and promptly enter appropriate correcting entries in the accounts; (5) local office managers provide for prescribed separation of duties in handling trust fund transactions; and (6) investment branch personnel do not exceed available trust fund cash in making investments.

    Agency Affected: Department of the Interior: Bureau of Indian Affairs

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Interior should direct the Commissioner of Indian Affairs to develop written procedures for entering transaction information into the automated accounting and finance system.

    Agency Affected: Department of the Interior: Bureau of Indian Affairs

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Interior should direct the Commissioner of Indian Affairs to make the maximum use practicable of the check preparation and distribution services of the Treasury's Division of Disbursements in making trust fund disbursements.

    Agency Affected: Department of the Interior: Bureau of Indian Affairs

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Interior should direct the Commissioner of Indian Affairs to reconcile detailed subsidiary and summary general ledger trust fund accounts, investigate the differences disclosed, and make appropriate correcting entries in the accounts. In doing so, all trust fund securities and cash should be counted.

    Agency Affected: Department of the Interior: Bureau of Indian Affairs

  5. Status: Closed - Not Implemented

    Comments: The BIA accounting system redesign effort will include maintaining contract and grant records on the accrual basis of accounting, consequently, this recommendation will be accomplished through the redesign effort.

    Recommendation: The Secretary of the Interior should direct the Commissioner of Indian Affairs to maintain the accounting records for contracts and grants on the accrual basis of accounting.

    Agency Affected: Department of the Interior: Bureau of Indian Affairs

  6. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Interior should direct the Commissioner of Indian Affairs to recover any excess cash held by contractors and grantees.

    Agency Affected: Department of the Interior: Bureau of Indian Affairs

  7. Status: Closed - Implemented

    Comments: The Secretary directed the Commissioner of Indian Affairs to implement this recommendation on October 1, 1984. Because of the extended time frames necessary to complete the required actions, it is difficult to predict when the Commissioner will be able to complete the task.

    Recommendation: The Secretary of the Interior should direct the Commissioner of Indian Affairs to determine the actual amount of expenditures made and outstanding cash advances held by Indian contractors and grantees and record this information in the automated accounting system.

    Agency Affected: Department of the Interior: Bureau of Indian Affairs

  8. Status: Closed - Not Implemented

    Comments: Action on the redesign of the BIA accounting system was suspended pending final decisions on an effort to design a standardized accounting system for Interior component agencies. This recommendation should not remain open because GAO will follow-up on Interior's accounting system design efforts through its annual reviews to monitor agency efforts relative to section 49 of FIA.

    Recommendation: The Secretary of the Interior should direct the Commissioner of Indian Affairs to initiate the redesign or modification of the automated accounting and finance system to eliminate design deficiencies and operate on the accrual basis of accounting. The new system should be adequately documented and the documentation kept up to date. Also, controls should be established to ensure that system modifications are approved before implementation and that the modifications are fully documented. When the system redesign is complete, the new system should be sent to the Comptroller General for approval.

    Agency Affected: Department of the Interior: Bureau of Indian Affairs

 

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