[Independent Auditors Report on the Financial Statements for Fiscal Years 1999 and 1998 for the Office of the Special Trustee for American Indians Tribal and Other Special Trust Funds and Individual Indian Monies Trust Funds Managed by the Office of Trust Funds Management]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 01-I-205

Title: Independent Auditors Report on the Financial Statements
       for Fiscal Years 1999 and 1998 for the Office of the Special
       Trustee for American Indians Tribal and Other Special Trust
       Funds and Individual Indian Monies Trust Funds Managed
       by the Office of Trust Funds Management

 
Date:  January 31, 2001

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******************************
U.S. Department of the Interior 
Office of Inspector General

EXECUTIVE SUMMARY

Independent Auditors Report on the Financial Statements for Fiscal Years 1999 and 1998 for the
Office of the Special Trustee for American Indians Tribal
and Other Special Trust Funds and Individual Indian Monies Trust Funds 
Managed by the Office of Trust Funds Management 
Report No. 01-I-205
January 2001

The Office of Trust Funds Management contracted with the independent public accounting firm
of Griffin and Associates, P.C., to audit the financial statements of the Office of the Special
Trustee for American Indians.   For the fiscal year 1999 annual financial report, two sets of
financial statements with accompanying notes were issued:  one set for the Tribal and Other
Special Trust Funds and one set for the Individual Indian Monies Trust Funds.

Griffin and Associates issued qualified opinions because cash balances were materially greater
than those reported by the U.S. Treasury, major deficiencies in the accounting systems controls
and records caused the systems to be unreliable, and certain Trust Funds beneficiaries disagreed
with balances recorded by the Office of Trust Funds Management and had filed or were expected
to file claims against the Office of Trust Funds Management.  These conditions prevented the
cash and Trust Funds balances and the receipts and disbursements from being audited.  In
addition, a potential liability to the Federal Government existed because of the lawsuits filed over
the Government's fiduciary responsibilities.  

Griffin and Associates report on the internal control structure contained two new nonmaterial
internal control weaknesses:  one on interfund and intrafund transfers and one on fund level
reporting.  The report made two recommendations to correct these weaknesses.

AUDITEE COMMENTS AND OFFICE OF INSPECTOR GENERAL EVALUATION

Based on the response from the Office of Trust Funds Management, both recommendations were
considered resolved but not implemented.




C-IN-BIA-036-00-R










January 31, 2001

Memorandum

To:  Special Trustee for American Indians,
Assistant Secretary for Indian Affairs

Subject:  Independent Auditors  Report on the Financial Statements for Fiscal
Years 1999 and 1998 for the Office of the Special Trustee for American Indians Tribal and Other
Special Trust Funds and Individual Indian Monies Trust Funds Managed by the Office of Trust
Funds Management (No. 01-I-205)

The Office of Trust Funds Management contracted with the independent public accounting firm
of Griffin and Associates, P.C., to audit the financial statements of the Office of the Special
Trustee for American Indians.   For the fiscal year 1999 financial report,  two sets of financial
statements with accompanying notes were issued:  one set for the Tribal and Other Special Trust
Funds (pages 7-23) and one set for the Individual Indian Monies Trust Funds (pages 24-40). 
Comparative data for the prior year have also been presented.  

Opinion

Griffin and Associates issued qualified opinions (pages 4-6) because cash balances were
materially greater than those reported by the U.S. Treasury, major deficiencies in the accounting
systems' controls and records caused the systems to be unreliable, and certain Trust Funds'
beneficiaries disagreed with balances recorded by the Office of Trust Funds Management and
had filed or were expected to file claims against the Office of Trust Funds Management.  These
conditions prevented the cash and Trust Funds balances and the receipts and disbursements from
being audited.  In addition, a potential liability to the Federal Government existed because of the
lawsuits filed over the Government's fiduciary responsibilities.  

Internal Controls

Griffin and Associates' report on the internal control structure (pages 41-60) contained two new
recommendations (page 49) to address the following nonmaterial internal control weaknesses: 
-  Interfund and intrafund transfers.  Currently, interfund and intrafund transfers are not always
recorded using the SEI system's transfer process.  This results in substantial manual efforts to
identify and reclassify these transfers for financial reporting purposes.  

-  Fund level reporting.  The current system is designed to generate individual trust account
statements but does not currently generate a fund level statement of trust fund balances or
statement of changes in trust fund balances.  Such statements are currently generated through
off-line manipulation of the system data.

The report also contained a summary of all internal control issues (pages 42-44).  Of the 44
issues reported, 2 were for the current year and 42 were from prior years' audit reports.  Of the 42
issues, 17 recommendations remained unimplemented as of September 30, 1999 (pages 49-60). 
However, 10 of these unimplemented recommendations are addressed to or are to be
implemented by the Office of Trust Funds Management, 4 are addressed to or are to be
implemented by the Bureau of Indian Affairs, and 3 are addressed to or are to be jointly
implemented by the Office of Trust Funds Management and the Bureau.  

Compliance

Griffin and Associates' report on compliance with laws and regulations (pages 61-64) contained
one material noncompliance issue, two immaterial noncompliance issues, and two other
noncompliance issues.  

The material issue was that tribal organizations and classes of individual Indians have filed
various claims against the Federal Government for its failure to fulfill its fiduciary
responsibilities and have made other related charges.  The immaterial noncompliance issues
(Nos. C.1 and C.3) related to the Office of Trust Funds Management's accepting voluntary
deposits, which are generally prohibited by the Code of Federal Regulations (25 CFR 115.8), and
agency offices' accumulating funds in excess of $5,000 before deposits to the Treasury were
made, which was in violation of the Treasury Fiscal Requirement.  The report noted several
instances where the Office of Trust Funds Management accepted voluntary deposits to Individual
Indian Money accounts. 

The other noncompliance issues related to the Office of Trust Funds Management's disclosure in
its management representation letter that, since September 30, 1995, it had not complied with the
Federal Managers' Financial Integrity Act of 1982 and that the Office of Trust Funds
Management had not followed proper delegation of authority procedures for making
disbursements from accounts.  Specifically, the Office of Trust Funds Management did not
assess (1) the effectiveness of its internal control structure over safeguarding the assets against
unauthorized acquisition, use, or disposition; (2) compliance with laws and regulations; and (3)
financial reporting based upon control criteria established under the Act. 

The report contained no recommendations for the compliance issues because it is implied that the
agency should comply with the law or the regulation.
 
 Based on the response from the Office of Trust Funds Management (which was incorporated
into Griffin and Associates' report), we consider the recommendations resolved but not
implemented.  Accordingly, the recommendations will be referred to the Assistant Secretary for
Policy, Management and Budget for tracking of implementation.  
  
In conjunction with the audit, we reviewed Griffin and Associates' report and related working
papers.  Our review, as differentiated from an audit performed in accordance with generally
accepted government auditing standards, was not intended to enable us to express, and we do not
express, opinions on the financial statements of the Office of the Special Trustee for American
Indians, on management's assertions about the effectiveness of its internal controls, or on its
compliance with applicable laws and regulations.  Griffin and Associates is responsible for the
auditors' report dated April 2000 and the conclusions expressed in the report.  However, our
review disclosed no instances in which the independent public accountant did not comply in all
material respects with generally accepted auditing standards.  

Since the report's recommendations are considered resolved, no further response to the Office of
Inspector General is required (see Appendix 1).

Section 5(a) of the Inspector General Act (5 U.S.C. app. 3) requires the Office of Inspector
General to list this report in its semiannual report to the Congress.  In addition, the Office of
Inspector General provides audit reports to the Congress.

This report is intended for the information of management of the Office of the Special Trustee
for American Indians, the Bureau of Indian Affairs, the Office of Management and Budget, and
the Congress. However, this report is a matter of public record, and its distribution is not limited.



Roger La Rouche
Assistant Inspector General for Audits


[CONTACT THE OFFICE OF THE SPECIAL TRUSTEE FOR AMERICAN INDIANS, FOR
INFORMATION ON  THE FINANCIAL STATEMENTS FOR FISCAL YEARS 1999 AND
1998, FOR THE OFFICE OF THE SPECIAL TRUSTEE FOR AMERICAN INDIANS TRIBAL
AND OTHER SPECIAL TRUST FUNDS AND INDIVIDUAL INDIAN MONIES TRUST
FUNDS MANAGED BY THE OFFICE OF TRUST FUNDS MANAGEMENT, WHICH ARE
NOT INCLUDED.]







APPENDIX 1

STATUS OF CURRENT
AUDIT REPORT RECOMMENDATIONS