Financial Management: BIA Has Made Limited Progress in Reconciling Indian Trust Fund Accounts and Developing a Strategic Plan

GAO discussed the Bureau of Indian Affairs' (BIA) progress in reconciling the Indian Trust Fund accounts and developing a strategic plan for trust fund financial management improvement. GAO noted that: (1) trust fund management problems include erroneous allocation of receipts, erroneous payments to account holders, failure to consistently invest trust fund balances, and failure to pay interest; (2) as of March 1992, a contractor had reconstructed and reconciled fiscal year 1990 transactions for all but 276 of 2,010 tribal trust accounts; (3) in February 1992, BIA suspended the contractor's efforts to reconcile Individual Indian Money accounts, since the reconciliation costs frequently exceeded the account balances; (4) problems affecting reconciliation efforts include the volume of accounting records, record gaps, record accuracy, fractionated interests due to heirships, poor documentation, unreliable data, and inconsistent revenue calculation and distribution; (5) reconciliation alternatives include relying on balances maintained by tribes, having account holders verify account balances, allowing tribes to reconcile their accounts, and legislatively settling accounts; (6) BIA has not yet developed a comprehensive plan for improving trust fund management and has largely focused its attention on piecemeal corrective actions; and (7) staffing and training deficiencies, lack of coordination among BIA offices, and out-of-date and ineffective accounting systems and internal controls have also contributed to BIA financial management problems.