Financial Management

The Bureau of Indian Affairs (BIA) has spent more than five years and $21 million in a massive effort to locate supporting documentation and reconcile trust fund accounts, but tribal accounts could not be fully reconciled or audited due to missing records and the lack of an audit trail in BIA's systems. Because BIA does not know the universe of transactions or leases, it does not know the total amount of receipts and disbursements that should have been recorded. Indian tribes have raised questions about the adequacy and reliability of the reconciliation results. If follow-up meetings with the tribes do not resolve these concerns, the settlement process that GAO has recommended could be used as a framework for resolving disagreements on account balances. In addition, due to cost considerations and the potential lack of supporting documentation, reconciliations for individual Indian accounts were never done, and no alternative procedures were developed to verify these account balances. Because any attempt to reconcile these accounts would be costly and the results would be limited, these accounts should be included in the settlement process.

GAO found that: (1) BIA has spent over $21 million over 5 years in its attempts to reconcile and certify Indian trust fund accounts; (2) BIA and its reconciliation and certification contractors modified their contracts and procedures numerous times because of missing records, lack of an audit trail, and cost and time constraints; (3) in January 1996, BIA provided each tribe with a report package on the results of the reconciliation procedures performed; (4) BIA did not fully disclose in the report which procedures specified in the reconciliation contract were not performed, scope limitations, or changes in methodologies for procedures that were performed; (5) BIA issued reports to 112 tribes regarding their portions of multitribe judgment awards for claims against the federal government, but may not issue reports to all tribes involved because some are no longer recognized by the federal government and it may not be able to locate the tribes or their descendants; and (6) at a February 1996 meeting with BIA, tribal representatives expressed concerns about the adequacy of the reconciliation objectives and scope, the effect of missing documents on account balance accuracy, and the thoroughness of procedures for accuracy testing.