Auditing and Financial Management:

Bureau of Indian Affairs' Efforts to Reconcile and Audit the Indian Trust Funds

T-AFMD-91-2: Published: Apr 11, 1991. Publicly Released: Apr 11, 1991.

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GAO discussed the Bureau of Indian Affairs' (BIA) efforts to reconcile and audit the Indian trust funds. GAO noted that: (1) numerous audit reports have pointed out serious accounting and financial management problems and weak internal controls throughout BIA; (2) the lack of general ledger control over accounts, inaccurate data, the lack of accounting systems documentation, and inadequate management of the Indian trust funds caused numerous accounting errors; (3) the first phase of the BIA trust fund reconciliation and audit project would identify the correct account balances for over 500 tribal accounts and 17,000 individual Indian money trust accounts; and (4) BIA planned to use the first-phase results to develop plans for moving into a second phase that would cover the remaining 1,500 tribal and 283,000 individual Indian money accounts. GAO believes that: (1) legislation may be needed to provide appropriations for monies owed to account holders or relief for unrecoverable overpayments that go back many years; (2) BIA planned to implement the Department of the Interior's six-part plan to help it control fund accounting transactions, reconcile all account balances, and implement a new Interior-wide accounting system; and (3) BIA must ensure that it carries out its financial responsibilities efficiently and effectively by developing a comprehensive financial management plan for both its appropriated funds and trust fund operations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In September 1991, BIA issued its Reconciliation Project Management Plan for Indian trust funds. Contract modifications document revisions to the initial plan.

    Recommendation: To ensure effective reconciliation, audit, and accounting for Indian trust funds, the Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to finalize the trust funds reconciliation project management plan. The plan should address key issues such as contractor oversight, BIA project support and staffing, the role of the designated tribal representatives, and contractor reporting.

    Agency Affected: Department of the Interior

  2. Status: Closed - Implemented

    Comments: BIA has established plans and timetables for reconciling and certifying tribal accounts in response to congressional direction to terminate the effort at the end of fiscal year 1995, and prepare reports to tribes on the reconciliation results, as required by the American Indian Trust Fund Reform Act of 1994.

    Recommendation: To ensure effective reconciliation, audit, and accounting for Indian trust funds, the Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to develop plans and timetables for audit and certification of reconciled accounts.

    Agency Affected: Department of the Interior

  3. Status: Closed - Implemented

    Comments: Our April 1994 testimony reiterated our 1991 recommendation that BIA develop complete and consistent written trust fund management policies and procedures and directed that BIA place a priority on their issuance. In June 1996, we reported that during 1995 BIA's Office of Trust Funds Management (OTFM) had developed two volumes of trust fund Individual Indian Money (IIM) accounting procedures for use by BIA's Area and Agency Office trust fund accountants and provided them to BIA's Area and Agency Offices. Also during 1995, OTFM developed two records management manuals, which address file improvements and records disposition. Missing records were the primary reason that many trust fund accounts could not be reconciled during BIA's previous 5-year reconciliation effort. In addition, OTFM developed a records management implementation plan, including an automated records inventory system. OTFM also issued a revised trust fund loss policy addressing major issues, such as articulating steps to detect, prevent, and resolve losses for accounts with financial institutions. The development of policies and procedures for accounting, records management, a records inventory system, and trust fund investments contributed significantly to BIA efforts to improve trust fund management going forward.

    Recommendation: To ensure effective reconciliation, audit, and accounting for Indian trust funds, the Secretary of the Interior should direct the Assistant Secretary for Indian Affairs to develop policies and procedures to ensure that balances remain accurate once the accounts are reconciled.

    Agency Affected: Department of the Interior

  4. Status: Closed - Implemented

    Comments: Interior's financial statement auditor issued an unqualified audit opinion on Interior's fiscal year 2012 financial statements and audit procedures included activity related to BIA.

    Recommendation: To address BIA long-term financial management problems, the Secretary of the Interior should direct the Department's Chief Financial Officer to ensure that BIA financial management improvement initiatives, including reorganization plans, tie into and support the Chief Financial Officers (CFO) Act's objectives.

    Agency Affected: Department of the Interior

 

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