oversight

Alaska Native Trust Funds

Published by the Government Accountability Office on 1997-02-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Accounting and Information
      Management Division


       B-275283


       February 27, 1997
       The Honorable Don Young
       Chairman, Committee on Resources
       House of Representatives

       Dear Mr. Chairman:

       On August 10, 1996,your committee conducted a field hearing in Anchorage,
       Alaska, on the managementof Indian Trust Fund accounts relating to Alaska
       Natives. At the hearing, witnesses informed the committee that Alaska tribal
       accounts had not been reconciled, some tribes were not receiving account
       statements, and Individual Indian Moneys (EM) account holders were not
       receiving account statements.
       On September 12, 1996,as a result of information presented at the Alaska field
       hearing, you requestedthat we provide information on seven issues related to
       Alaska Native trust funds, including whether all Alaska tribal accounts had been
       reconciled and reports on reconciliation results had been sent to the tribes;
       whether tribes and individual account holders were receiving account statements;
       and the number, size, and revenue sources for the HM accounts. The
       information that we obtained is provided in the enclosure to this letter.

       To respond to your request, we
       -   reviewed the testimony provided by witnesses at the August 1996field
           hearing to gain insight into the issues in your letter;
       -   discussedthe issues with the Special Trustee for American Indians and the
           Deputy Commissionerof Indian Affairs;’


      ‘A February 1996Secretarial Order transferred both the Tribal Trust Funds
      Reconciliation Project and the Office of Trust Funds Management (OTFM) from
      the Bureau of Indian Affajrs (BIA) to Interior’s newly created Office of the
      Special Trustee for American Indians. The Order gave OTFM line authority over
                                          GAO/AIMD-97-55RAlaska Native Trust Funds
B-275283
-       obtained from OTFM officials information on tribal and II&I accounts,
        account balances, and OTFM employees;
-       obtained information on the handling of tribal and IIM account statements
        from OTFM officials and the trust accountant located at BIA’s Juneau Area
        Office;

-       obtained information on accounts that were included in the reconciliation
        from the Office of the Special Trustee for American Indians’(OST)
        Reconciliation Project Manager;

-       discussedAlaska tribal concerns with the Chairman of the InterTribal
        Monitoring Association, which has monitored Interior’s trust fund
        reconciliation efforts; and
-       contacted Alaska Native villages and tribes to verify information about
        account statements and reconciliation reports.

We obtained comments on a draft of this letter from officials in the Department
of the Interior’s Office of Special Trustee for American Indians and BIA’s Deputy
Commissioner of Indian Affairs. They generally concurred with our responsesto
the issues, and we have incorporated their comments where appropriate. Our
work was performed f?om October 1996to February 1997in accordance with
generally accepted government auditig standards, except that, as agreed with
your staff, we did not independently verify the financial and accounting
information we obtained from OTFM.
We are sending copies of this letter to the Ranking Minority Member of the
House ResourcesCommittee, the Chairman and Ranking Minority Member of the
SenateCommittee on Indian Affams, the other members of the Alaska
congressionaldelegation, and other interested parties.




    trust accountants and IIM accounting clerks located in BIA Area and Agency
    Offices, respectively.
    2                                   GAO/AIMD-97-55RAlaska Native Trust Funds
B-275283


I hope that this information is helpful. If you have further questions, or would
like to discuss any of the issues in more detail, please contact me at (202) 512-
8341 or Gayle Fischer, Assistant Director, at (202) 512-9577.

Sincerely yours,



Linda M. Calbom .
Director, Civil Audits




3          .                         GAO/A.IMD-97-55R
                                                    Alaska Native Trust F’unds
ENCLOSURE                                                                      ENCLOSURE
                     ALASKA NATIVE TRUST FUND INFORMATION

The following are our responsesto requests for information on Alaska Native Trust F’unds
from the Chairman of the House Committee on Resources.

Issue 1: Provide the number of Alaska Native tribal trust fund accounts which
         were excluded from the reconciliation process completed earlier this
         year [1996] by Arthur Andersen & Company.

GAO Response: OST officials told us that no Alaska Native tribal trust accounts’that
had balances at any time during fiscal years 1973through 1992were excluded from the
reconciliation warp performed by Arthur Andersen, LLP, BIA’s contractor. Information
provided by the Reconciliation Project Manager indicates that the contractor’s 20-year
reconciliation effort included 17 Alaska Native account holders-2 tribes, 1 village, 1 trust
corporation, and the 13 Alaska Regional Corporations created under the Alaska Native
Claims Settlement Act.
In addition to the contractor’s work, OST officials told us that OTFM performed tribal
account reconciliations for fiscal years 1993through 1995that included the 12 Alaska
account holders that had open tribal accounts during that time frame. According to an
OTFM official, the number of tribal trust fund account holders covered by the two
reconciliation periods differed because (1) the Alaska Native Claims SettIementAct
accounts, from which funds were distributed to the 13 Alaska Regional Corporations,
were closed prior to fiscal year 1993and, thus, were not covered by OTFM’s 3-year
reconciliations, and (2) in 1995,funds previously maintained in a single account for
multiple tribes were separated into accounts for eight different account holders after BIA
and the tribes reached agreement on distribution ratios.

At your committee’s Alaska field hearing, one witness expressedconcern that the Alaska
Native Escrow Fund (ANEW)may not have been covered by BIA’s tribal account
reconciliation. The Reconciliation Project Managertold us that the Alaska Native Escrow
F’undis a name that has been used to refer to two different accounts, and that one
account, which was designated as a Treasury tribal trust fund account, was included in

‘According to Interior’s Reconciliation Project Manager,the accounts reconciled by BIA’s
contractor were Alaska Native trust fund accounts maintained in OTFM’s trust funds
general ledger as subsidiary accounts to Treasury’s “Indian Tribal Trust Funds”account.
‘%I May 1996,we reported that while Interior completed its reconciliation effort, tribal
accounts could not be fully reconciled due to missing records and the lack of an audit
trail in Interior’s automated Indian trust accounting systems (F’inancialMana9ement:
BIA’s Tribal Trust Fund Account Reconciliation Results (GAO/AID-9663,May 3, 1996).
4                                             GAO/ADD97-55R Alaska Native Tivst F’unds
ENCLOSURE                                                                    ENCLOSURE
the contractor’s reconciliation, but the other account, which was considered by BIA and
OTFM to be a deposit fund account, was not included.
According to the Reconciliation Project Manager,the ANEF account that was included in
the BIA contractor’s reconciliation existed from 1981through 1984 and contained funds
that were set aside under the Alaska Native Claims Settlement Act for pending appeals.
The ANEF account that was not included in the BIA contractor’s reconciliation was
established by Treasury in 1976 as a deposit fund account for proceeds derived from
contracts, leases, permits, rights-of-way, and easementsafter January 1, 1976,pertaining
to resources on lands that were withdrawn under the Alaska Native Claims Settlement
Act for selection by Alaska Native Corporations. While the second ANEF account was
not covered by the contractor’s 20-yearreconciliation effort, OTFM officials told us that
this account was covered by OTFM’s reconciliations for fiscal years 1993through 1995.
However, OTFM has not issued reconciliation results on this ANEF account because
OTFM has not yet identified the beneficial owners of the account proceeds.
At the tune of your Committee’s Alaska field hearing, some Alaska Native tribes may not
have been aware that their accounts had been included in the BIA contractor’s
reconciliation work or in OTFM’s reconciliation work becauseOST had not yet provided
reports on the results of those reconciliation efforts to all tribal account holders. The
Reconciliation Project Manager told us that OST sent reports on the BIA contractor’s 20-
year reconciliation results to account holders, including Alaska Regional Corporationq3
between January and October 1996and sent account statementsbased on OTFlWs
reconciliation work for fiscal years 1993through 1995to account holders between mid-
January 1996 and late January 1997.
However, we determined that, as of February 11, 1997,OST had not provided either a
report on the BIA contractor’s 20-yearreconciliation results or statements from OTFM’s
3-year reconciliation work to one Alaska village with a tribal a&count because OTF’M’s     .
system showed an incorrect account holder name for that tribal account. In commenting
on a draft of this report, the Reconciliation Project Managertold us that he has confirmed
that the reconciliation report and account statements had been sent to the incorrect
account holder and that action has been taken to send the reconciliation report and
statements to the correct account holder. The Reconciliation Project Manager also told
us that a review of the one and only disbursementmade from this account during the



3Reports on the 20-year reconciliation results for the Alaska Native Claims Settlement Act
accounts from which funds were distributed to the 13 Alaska Regional Corporations,
including the ANEF account, were sent to the 13 Alaska Regional Corporations in
September 1996.
5                                           GAO/AIMD-97-55RAlaska Native Trust Funds
ENCLOSURE                                                                    ENCLOSURE
20-year reconciliation period showed that the funds were disbursed to the correct account
holder.
We also determined, in December 1996,that OST had not provided copies of account
statements covered by OTFM’s 3-year reconciliations to 8 of the 12 Alaska Native tribes
and villages. Of these 8, OST did not send statementsto 6 Alaska Native tribes and
villages until early January 1997becauseOST lacked the name of a designated report
recipient for the statements and, therefore, this information had to be researched. In
addition, OST had not sent statementsto the remaining two villages because their
research indicated that these villages no longer had tribal councils. We contacted the two
villages and confirmed that they did, in fact, have tribal councils. We provided this
information to the Reconciliation Project Manager’sstaff who told us that they confirmed
our information and sent reconciliation results to those villages on January 28, 1997.
Additional detail about the distribution of account statements is included in our response
to issue 3.
Issue 2:   Provide the number of Alaska Native trust fund accounts which are
           Individual Indian Money (IIM) accounts being administered by O!CE’M as
           of September 30,1996.

GAO ResnonSe: As of September30, 1996,OTF’Mreported that it was &ministering
1,276Alaska Native IIM accounts with an aggregatevalue of $11,X3,110.35. One of those
accounts was a tribal IIM account with a balance of $110,129,another 933 were individual
IIM accounts with an aggregatebalance of $9,705,612,and 342 were other4 IIM accounts
with an aggregatebalance of $1,347,369.Additional detail is provided in our response to
issue 6.

Issue 3:   Ident@ Alaska Native trust fund accounts, both IIM accounts and tribal
           accounts, which are being administered without any individual or
           corporate entity receiving reports on account activity.

GAO ResDonse: According to OTFM officials, of the 1,276Alaska Native TIM accounts
that OTFM was administering on September30, i996, OTFM lacked address information
for 13 account holders and sent the monthly account statements for an additional 303
individual IIM accounts to the trust accountant in the Juneau Area Office. The 13
“whereabouts unknown” IIM accounts are discussedfurther in our response to issue 4.


4”Other”JIM accounts include (1) special deposit accounts intended to be used as
temporary repositories for such purposes as escrow and holding funds until account
owners can be identified and (2) undistributed interest accounts used to aggregate
adjustments to manual interest calculations that proved to be incorrect.
 6                                          GAO/AIMD-97-55RAlaska Native Trust F’unds
ENCLOSURE                                                                     ENCLOSURE
The 303 IJM account statements sent to the Juneau Area Office were addressed to BIA
Agency Office Superintendentsand were sent to the Juneau Area Office to be kept in a
centralized tile. According to OTFM officials, 198 of the statements were for accounts
that had zero balances and codes indicating that the accounts had been closed, 32 of the
statements were for deceasedaccount holders whose estates are pending probate, 18 of
the statements were for account holders who are minors, and the remaining 55 statements
were for accounts that are being “controlled for various reasons’as determined by the
[BIA Agency Office] superintendent.” The trust accountant told us that the JIM
statements received at the Juneau Area Office were not forwarded to IIM account
holders.

We discussedthis handling of IIM account statements with OTFM officials and they told
us that they had initiated a project in January 1997to determine which of these 303
statements should be sent to IIM account holders. The OTFM project includes reviews of
(1) all closed JIM accounts to determine if that status is appropriate, (2) all JIM accounts
for estatespending probate to determine whether estate administrators have been
designated, (3) ah JIM accounts that are coded “controlled, minors,” to determine whether
the accounts are properly coded for minor status and whether statements are being sent
to legal guardians for the accounts with legal guardianship documents on file, and (4) all
JIM accounts coded “controlled for various reasons as determined by the superintendent”
to determine the reasons for this status and whether the status should continue.
In addition to the IIM accounts, OTFM officials provided information that indicates that
OTFM was administering tribal accounts for 10 Alaska Native tribes and villages on
September30, 1996. (Two of the 12 Alaska tribes and villages, whose tribal accounts had
been covered by OTFM’s reconciliations for fiscal years 1993through 1995, had closed
their accounts by September30, 1996.) OTFM officials told us that OTFM was sending
monthly account statementsto the 10 tribes that had open tribal accounts as of
September30, 1996,either directly or through the Juneau Area Office. However, when
we contacted the 10 tribes, we could not confirm that all had received monthly account
statements. Officials of three tribes told us that they received monthly statements,
officials at two other tribes told us that they received account statements less frequently
than monthly, and officials at five tribes told us that they had not received any statements
for at least a year. We provided this information to OTFM’s customer service
representative, and OTFM officials later told us that they had checked OTFM’s address
information for the tribes and that they would provide account statements to those tribes
that had not yet received their statements.



‘As of February 6, 1997,OTFM had not yet determined why these accounts are being
controlled by the Superintendent.
7                                           GAO/AIMD-97-55RAlaska Native Trust Funds
ENCLOSURE                                                                     ENCLOSURE
In addition, an official at one tribe we contacted, who co-ed       that the tribe received
monthly account statements, told us that the tribe also received monthly statements for
an account that does not belong to the tribe. We determined that these statements
belong to an Alaska tribe that was not shown as a tribal account holder in the
information OTFM provided us. We contacted that tribe and confirmed that it was not
receiving any account statements from OTF’M. We then informed the OTF’Mcustomer
service representative about this situation, and he told us that he would follow up on the
information that we provided. Subsequently,OTFM officials told us that the account had
been associatedwith an incorrect account holder name for more than 20 years in the
trust accounting systems. They said they would correct the tribal account holder name
and address information in the system and send account statements to the correct
account holder.

Issue 4:   Provide the number of Alaska Native trust fund accounts which are IIM
           accounts which do not have a current related beneficiary address.

GAO ResDonse: According to information provided by OTFM, 13 of the 1,276Alaska
Native Trust Fund IIM accounts being admimstered by OTFM on September30, 1996,
were designatedin OTF’M’ssystem as “whereabouts unknown.” The September 30, 1996,
balances of the 13 IIM accounts coded “whereabouts unknown,” were as follows:
-    6 accounts had a zero balance;
-    3 accounts had a balance of less than $100;
-    3 accounts had a balance of over $100, but less than $1,000;and
-    1 account had a balance of over $1,000,but less than $10,000.
Issue 6:    Provide a listing   of sources of revenue for Alaska Native trust fund IIM
            accounts.

GAO ResDonse: OTFM’s analysis of the Juneau Area data base showed that sources of
revenue for Alaska Native IIM trust fund accounts for fiscal year 1996were as follows.




 8                                           GAOMMD-97-55R Alaska Native Trust Funds
ENCLOSURE                                                                       ENCLOSURE
                  Sources of Alaska Native IIM Trust Fund Account Revenues
                          (Unaudited data, as of September30, 1996)

    Source                                                              Revenue
    Range and lease rental income                                   $       1,580
    Interest income                                                     1,676,161
    Land sales by individuals                                           9,278,344
    Other payments                                                      4559,696
     Total                                                        $16,616,781


OTFh4officials told us that the “Other payments”line item contains several types of
revenue, including the proceeds from timber sales. They said that they would not be able
to determine the amount of revenue from timber sales for fiscal year 1996or to determine
the other revenue sources contained in this line item unless they performed a time-
consuming analysis of source documents. Therefore, we were not able to list all sources
of revenue. OTFM officials told us that they are reviewing field office postings of revenue
source codes to determine if the codes are being used appropriately. OTFM officials told
us that after completing their review they plan to issue a guidance letter to field offices.
Issue 6:     Provide an estimate of the percentage of Alaska Native Trust Fund IIM
             accounts which contain (a) less than $100, (b) between $100 and
             $1,000, (c) between $1,000 and $10,000, (d) between $10,000 and
             $lOO,OOO,and(e)inexcess     of$lOO,OOO.

GAO Remonse:       According to information provided by OTFM, on September 30, 1996,
OTFM was administering Alaska Native IIM accounts with the ranges of balances shown
in the following table.




9                                           GAOMMD-97-55R Alaska Native Trust F’unds
  ENCLOSURE                                                                       ENCLOSURE
                          Alaska Native IIM Accounts and Balances
                         (unaudited data, as of September30, 1996)

Account balance                            Number of Percent of total IIM            Aggregate
                                            accounts           accounts”            dollar value
Tribal   IIM
$100,000and over                                    1                      0.1       $ 110.129
 Subtotal                                            1                     0.1       $ 110,129
Individual     IIM
Less than $0.00                                      2                     0.2       $   (2,056)
Zero balance                                      357                     28.0                0
Between $0 and $100                               299                     23.4            5,517
Between $100 and $1,000                           105                      8.2           34,878
Between $1,000and $10,000                          53                      4.2          185,543
Between $10,000and $100,000                       102                      8.0        2,911,871
$100,000and over                                  15                       1.2        6.569?861
 Subtotal                                         933                     73.1       $9,705,614

Other IIM
Less than $0.00                                      2                     0.2       $ (48,929)
Zero balance                                      222                     17.4                   0
Between $0 and $100                                30                      2.4             357
Between $100 and $1,000                            21                       1.6          11,132
Between $1,000and $10,000                          47                      3.7          177,599
Between $10,000and $100,000                         18                      1.4        556,870
$100,000and over                                  2                       0.2          650,338
  Subtotal                                        342                     26.8       $1,347,367

Total                                            1,276                   100.0     $11,163,110


   “Due to rounding, some subtotals are not equal to the column total.


   The two individual IIM accounts that have a combined negative balance of $2,066are
   overdrawn due to an overpayment that was made and a duplicate check that was issued.
   The two other II&l accounts with a combined negative balance of $48,929were
   established by OTF’Mto aggregateinterest adjustmentsthat need to be made because
   interest distributions based on manual calculations proved to be inaccurate.


   10                                         GAO/AIMD-97-55RAlaska Native Trust F’unds
ENCLOSURE                                                                 ENCLOSURE
Issue ‘7: Identify the number of individuals employed at OTFM who have ever
          Peld positions of employment within the Department of the Interior
          outside of OTFM and its predecessor organizational units (for example,
          having been previously employed in the Anchorage Area Office of MA),
          and whose previous position included duties relating to Alaska Native
          trust fund IIM or tribal accounts.

GAO ResDonse: According to information provided by OTFM, one OTFM employee
meets the above-statedcriteria That employee has been with OTFM for a little over 2-l/2
years and the employee’scurrent title is accountant. Previously, that employee had
served for between 1 and l-l/2 years in the position of operating accountant in the
Branch of l?inaneial Management’sIIM Trust Section at the Juneau Area Office.




(913779)

11                                        GAO/AlMD-97-55RAlaska Native Trust Funds
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