Financial Management:

Focused Leadership and Comprehensive Planning Can Improve Interior's Management of Indian Trust Funds

AIMD-94-185: Published: Sep 22, 1994. Publicly Released: Sep 29, 1994.

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Pursuant to a congressional request, GAO reviewed options for improving Indian trust fund management, focusing on: (1) continuing trust fund management problems; (2) the Bureau of Indian Affairs' (BIA), the Bureau of Land Management's (BLM), and the Minerals Management Service's (MMS) efforts to correct some of those problems; (3) options that the Department of the Interior could consider to make further needed improvements; and (4) major obstacles to trust fund management improvements.

GAO found that: (1) Interior's trust fund management problems are longstanding and permeate all facets of its financial management business functions; (2) Interior has initiatives under way that could help to improve services to Indians and improve ownership, resource management, and accounting systems, but many of the initiatives are in the early stages of development and will not be completed for several years; (3) to improve trust fund management, Interior could contract for assistance to eliminate backlogs in recordkeeping, provide state-of-the-art natural resource management systems to tribes who wish to assume responsibility for managing their natural resources, obtain reliable trust fund accounting systems and contracting for banking services, and contract for investment advisors and a custodian to settle trades, safeguard securities, and track investments; (4) Interior should consider establishing an index investment fund option for tribes and comprehensively examining its mission and the way it does business to determine how and by whom Indian trust funds can best be managed; and (5) Interior should develop a comprehensive strategic plan to address the full range of problems needing corrective action.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: On October 25, 1994, Congress passed P.L. 103-412, the American Indian Trust Fund Management Reform Act of 1994.

    Matter: Congress may wish to consider enacting proposed trust fund management reform legislation to establish an Office of Special Trustee in the Department of the Interior. This office would help to ensure the proper discharge of the Secretary's trust responsibilities by: (1) developing a comprehensive strategic plan for all phases of the Indian trust management business cycle; (2) overseeing reform efforts within BIA, BLM, and MMS; and (3) coordinating the development of BIA, BLM, and MMS policies, procedures, systems, and practices.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Interior's Special Trustee for American Indians stated at his confirmation hearing on September 19, 1995, that he would develop a strategic plan for trust fund and asset management within his first year of office. The Special Trustee used a contractor to assist in exploring the range of options available in the federal and private sectors, and in April 1997, he released his strategic plan to implement the reforms required by the American Indian Trust Fund Management Reform Act of 1994.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary for Indian Affairs and the Assistant Secretary for Lands and Minerals to fully explore the range of options available in the federal and private sectors to provide input to Interior's comprehensive strategic plan for Indian trust business management.

    Agency Affected: Department of the Interior

  2. Status: Closed - Implemented

    Comments: The Department of the Interior agreed with this recommendation. According to the Land Records Officer in Interior's Office of Trust Responsibility, additional resources for eliminating the backlogs were not made available in 1995 or 1996, due to budget cuts. Interior's Special Trustee for American Indians, in his April 1997 strategic plan, called for the elimination of title and ownership determination and recordkeeping backlogs. In August 1997, the Secretary of the Interior established a trust improvement project that included two subprojects directed at eliminating probate backlogs. In August 1998, Interior deployed its Trust Fund Accounting system (TFAS), which was fully operational in May 2000. In December 1998, Interior awarded a contract to develop a trust Asset and Accounting System (TAAMS) for managing Indian trust assets. TAAMS is a centralized system with two components: the TAAMS land title system and the leasing module. This system was completed in 2006 and maintains both current and historical titles--some of the historical titles date back to the original land grant. The TAAMS leasing module was designed to track leases. However, in August 2002, Interior reported that processing of probate actions and title recordations had been slowed by the unavailability of key automated systems due to a temporary restraining order of the Court that was hearing the class-action trust litigation brought against Interior. Interior later recognized that implementation of sustainable corrective actions is dependent on business process transformation and system re-engineering. In January 2002, the Secretary initiated an effort to develop a comprehensive, department-wide approach for improving Indian trust management. On March 28, 2003, Interior issued the Comprehensive Trust Management Plan, which presented a strategic plan to guide the design and implementation of integrated trust reform efforts, including organizational reform and business transformation as well as systems architecture and a higher level of systems integration. Under the comprehensive plan, Interior placed trust management and reform activities under a new Assistant Secretary for Trust Management, separating it from other BIA operations, to provide more focus on trust management reform. During fiscal year 2007, BIA and OST converted leasing data from BIA's old legacy systems to TAAMS and integrated TAAMS with TFAS to ensure that both systems have accurate and complete title and leasing information. Further, as each Interior region's system was converted, OST would provide beneficiaries with asset statements that identify the source of the funds and a listing of assets owned in that region and any active encumbrances, as required by the American Indian Trust Fund Management Reform Act of 1994 (Pub. L. 103-414, 108 Stat. 4239 (1994). Prior to the system conversion, statements that beneficiaries received only included information on account balances and account transactions. In addition, Interior implemented a data quality and integrity project to verify the completeness and accuracy of the TAAMS title and leasing information for Indian lands.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to take immediate action to eliminate title and ownership determination and recordkeeping backlogs by reprogramming existing resources, hiring temporary employees, or contracting for services.

    Agency Affected: Department of the Interior

  3. Status: Closed - Implemented

    Comments: During fiscal year 1995, BIA's Office of Trust Funds Management (OTFM) issued two volumes of accounting desk procedures to BIA's Area and Agency Offices and the Deputy Commissioner for Indian Affairs instituted a process whereby OTFM advised BIA's Area and Agency Offices of corrective actions needed to ensure accurate trust fund accounting, and monitored efforts by these offices to ensure that needed improvements were implemented. These improvements cover accurate and timely postings of collections and periodic reconciliations of accounting data. On February 9, 1996, a Secretarial Order transferred OTFM to the new Office of the Special Trustee for American Indians and gave OTFM line authority over BIA field office trust accounting functions. In addition, OTFM has initiated action to clean up field office accounting records and bring those offices in compliance with the new accounting policies and procedures.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to take immediate action to correct field office trust fund accounting weaknesses.

    Agency Affected: Department of the Interior

  4. Status: Closed - Implemented

    Comments: The Department of the Interior agreed with this recommendation. In April 1997, the Special Trustee for American Indians released his strategic plan, which called for the acquisition of an integrated trust fund management system. In August 1997, the Secretary of the Interior established a Trust Improvement project that includes subprojects directed at (1) acquiring a new Individual Indian Money (IIM) accounting system and (2) acquiring a system that integrates BIA land records and ownership information and trust fund accounting information. Contracts were awarded for both systems and the new IIM accounting system has been deployed. However, difficulties were encountered in acquiring the land records and ownership information system. In March 1998, the Office of Trust Fund Management contracted with a commercial vendor to use a version of its trust accounting system that provides basic collection, accounting, investing, disbursing, and reporting functions. In August 1998, the new Trust Fund Accounting System (TFAS) was deployed and was fully operational in May 2000. TFAS is an accounting and investment system that enables the automated production of account statements for individual Indians and tribal account holders. It replaced a module in BIA's Integrated Records Management System and two Office of Special Trustee systems. TFAS also allows automated trade settlements, automated payments of financial asset income, daily securities pricing, and automated reconciliation. Interior subsequently contracted for assistance in Developing a Comprehensive Trust Management Plan, which was issued in January 2002. This Plan provided strategic direction for trust organization reform and realignment and trust systems architecture. Under this plan Interior developed and implemented the Trust Asset and Accounting Management System (TAAMS) and converted old legacy system land ownership and leasing accounts to both TFAS and TAAMS to ensure that both systems contained accurate and complete information. The TAAMS Title Module maintains and tracks land title documents, including supporting revenue distribution, invoicing, acquisitions, and all legal details relating to land transactions. The TAAMS Leasing Module establishes, tracks, and manages various contracts, such as surface area, mineral, rights of way, and range; automates invoicing, collections, and revenue distributions using captured payment information, and tracks leases of Indian assets. Selected data interfaces with TFAS ensure that both systems have accurate and complete title, leasing, and financial information.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to take immediate action to ensure timely action to replace the BIA subsidiary and Individual Indian Money accounting system with a system that integrates BIA land records and ownership information and trust fund accounting information.

    Agency Affected: Department of the Interior

  5. Status: Closed - Implemented

    Comments: The Department of the Interior agreed with this recommendation. The Special Trustee for American Indians, in his April 1997 strategic plan, called for the acquisition of an accounts receivable/master lease subsystem data, tickler, and collection system that uses lease-contract and ownership information for trust income verification, reconciliation, billing, payments, collection, accounting, disbursement, audit, asset quality review, and compliance purposes. In August 1997, the Secretary of the Interior established a trust improvement project that included a subproject for acquiring a master lease/accounts receivable subsystem. However, in April 1999, GAO questioned the adequacy of Interior's procedures for acquiring Indian trust systems and made additional recommendations (see AIMD-99-53). In August 2004, Interior reported that it would soon solicit proposals for a new, integrated, land and natural resource management system. Interior fully implemented its Trust Asset and Accounting Management System (TAAMS) in 2006. While TAAMS lease, land, and minerals management records were integrated between TAAMS and the Trust Fund Accounting System (TFAS) delays in processing lease records and related collections and payments continued. Interior subsequently made technical upgrades to TAAMS, which were released in May 2015. Tribal representatives will have access to system records, allowing them to encode documents into TAAMS or use the system for research. Interior began training tribal representatives on the new TAAMS release in preparation for system conversion targeted for September 25, 2015, and the new system will be available on the following Tuesday, September 29, 2015, pending a successful validation and verification. Tribal TAAMS users from compacted and contracted tribes will be asked to compare data fields from both versions of TAAMS. Deployment is planned for the first quarter of 2016.

    Recommendation: The Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to take immediate action to ensure that leases and other contractual information are maintained and validated to ensure that all earned trust fund revenues are billed for, collected, and posted to the correct account.

    Agency Affected: Department of the Interior

 

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