Auditing and Financial Management:
BIA's Trust Fund Loss Policy
AIMD-94-59R, Jan 14, 1994
Pursuant to a congressional request, GAO reviewed the Bureau of Indian Affairs' (BIA) draft policy and procedures to reconcile its Indian Trust Fund account losses. GAO found that: (1) the BIA draft policy does not address some of the weaknesses of the earlier draft; (2) the draft policy's definition of losses does not include interest that is earned but not credited to the appropriate account; (3) the draft policy does not establish the steps necessary to detect, prevent, document, and resolve trust fund losses, since BIA trust fund systems do not have a mechanism to identify losses; (4) BIA needs to explain the appropriate notification and loss calculation documentation necessary for reporting losses and make its time frames for notification consistent and clear; (5) the draft policy incorrectly states that loss of interest on a certain type of account is not an obligation of the United States; (6) the draft policy lacks procedures for account holders to respond to and comment on BIA decisions; (7) BIA should clarify the draft policy's language regarding the availability of appropriated funds for reimbursing losses and the reasons for transferring funds between accounts; and (8) BIA should change its quarterly and annual reporting of estimated losses to coincide with other significant accounting-cycle benchmarks and reports.