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

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

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: John F. Simonette Team: General Accounting Office: Accounting and Financial Management Division Phone: (202) 275-9490