oversight

Financial Review of the Navajo and Hopi Indian Relocation Commission, June 30, 1976

Published by the Government Accountability Office on 1977-08-05.

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

                            DOCUMENT RESUHE

03104 - rA22133141

Financial Review of the Navajo and Hopi Indian Relocat'on
                                                  August 5,
Commission, June 30, 1976. FGMSD-77-13; B-114868.
1977. 2 pp. + 2 appendices (13 pp.).
                                                   Hopi Indian
Report to Hawley Atkinson, Chairman, Navajo and       D. L.
Relocation Commission; by Richard   V. Maycock  (for
                                   and general  Management    Studies
Scantlebury, Director, Financial
Div.).
                                                   (2800).
Issue Area: Accounting and Financial Reporting        Div.
Contact: Financial and General  Management   Studies
                                  Financial  Management   and
Budget Function: Miscellaneous:
    Information Systems (1002).
Orqanization Concerned: Department of the Interior. and Insular
Congressional Relevance: House Committee on Interior
     Affairs; Senate Committee on Interior   and Insular Affairs.
                           U.S.C.  6301. 5  UoS.C.  6303.
Authority: P.L. 93-531. 5
                                                  the financial
          Problems which were identified inRelocation
                           and  Hopi   Indian                 Commission
activities of the Navajo                                   of  the
were relatively minor in   fiscal   year   1976  because
                                    and  fund   expenditures.     However,
Commission's limited operations                                         and
as the Commission's program    activities,    fund  disbursements,
                               problems    could  beccme   major
staff increase, these minor                             who are required
problems. The Commission assists tribal membersdispute.
to move as the result of settlement of a land paid to the
Findings/Conclusions: Incorrect salaries were            accrued for the
Commissioners, and annual leave was not properly
Commissioners. Procurement procedures werewere    not consiste-ntly
                               Trpvel   funds        not promptly
followed by the Commission.                                   fot
debligated at the end of the year. A formal manual
administrative procedures has not been developed.     not use any leave
Recommendations: The Commissioners should. (1) Affairs (BIA)
already accrued; (2) have the Bureau of Indian                balances
stop accruing leave and eliminate the accrued leave               adhere to
from payroll records; (3) direct the staff to strictly the
the BIA procurement procedures; (4) have        BIA deobligate
                    funds;  (5)  direct   the  executive   director to
unexpended travel                                                      funds
 develop procedures to insure that in the future unexpended
                                                             and  control
are promptly deobligated at yearend and to monitor    (6)  require   the
 travel fund expenditures   during  the   Wear;  and
                                                                 manual   of
 executive director to develop a formal administrative of time anl
 procedures for the preparation, review, and approval
 attendance records, travel authorizations, purchase supplies, an!
                                                       ani
 requisitions, receipt and custody of equipment (huthor/SC)
 other administrative  activities    as  necessary,
UNITED STA TES
GENERAL ACCOUNTING OFFICE


Financial Review Of The
Navajo And Hopi Indian
Relocation Commission
June 30, 1976
The Navajo and Hopi Indian Relocation Com-
mission was estabIsised to assist those tribal
members who are required to move because
of settlement of a land dispute. At the Com-
mission's request, GAO reviewed the Commis-
sion's financial activities during its initial year
of operation wl'ich ended June 30, 1976-
GAO identified these weaknesses:
      --incorrecz salaries were pail to the Com-
         missioners.
      --Annual leave was improperly accrued
        for the Commissioners.
      --Procurement procedures were not con-
       sistently followed.
      --Travel funds were not promptly deobli-
        gated at yearend.
      --An administrative manual had not been
        developer',.
 These problems were relatively rr,:nor in fiscal
 year 1976 because of the Cc;nmission's limi-
 ted operations and fund expenditures. How-
 ever, as the Comrmission's pregramn activities,
 fund disbursements, ana staff increase, these
 minor problems could become majer prob-
 lems.
 The Commission agreed with GAO's recom-
 mendations to solve these problems and is
 strengthening its administrative controls and
 practices.

 IFGMSD-77-12
                                                      AUGUST 5, 1977
                            UNITED STATES GENERAL ACCOUNTING OFFICE
                                     WASHINGTON. D.C   Z0548


DlI .31oN OF FINANCIAL AN
GENrRAL MANAGrMJT STUDIL



       B-114868


       The Honorable Hawley Atkinson
       Chairman, Navajo and Bopi Indian
         Relocation Commission

       Dear Mr. Atkinson:

            We have completed our financial review for the fiscal
       year ended June 30, 1976, which was requested by the former
       chairman of your Commission. Only those financial transac-
       tions relating to administrative functions were examined
       because no program funds were spent in fiscal year 197(.
       We reviewed records and procedures applicable to payroll,
       leave, procurement, equipment, inventory, and other financial
       areas.

            We found that incorrect salaries were paid.to the
       Commissioners, annual leave was improperly accrued for the
       Commissioners, procurement procedures were not consistently
       followed, travel funds were not promptly deobligated at the
       end of the fiscal year, and a formal manual for administra-
       tive procedures had not been developed. The enclosed summary
       (app. I) includes a discussion of these findings. We con-
       sidered your comments on our draft report in finalizing the
       report and they are included as appendix II.

            This repczt contains recommendations to ycu. As you
       know, section 236 of the Legislative Reorganization Act of
       1970 requires t'.- head of a Federal agency to submit a
       written statement on actions taken on our recommendations to
       the House Committee on Government Operations and the Senate
       Committee on Governmental Affairs not later than 60 days
       after the date of the report and to the Bouse and Senate
       Committees on Appropriations with the agency's first re-
       quest for appropriations made more than 60 days after the
       date of the report.

            we are sending copies of this report to the Chairmen,
       House Committees on Government Operations and Appropriations;
       the Senate Committee on Governmental Affairs; the House
       Committee on Interior and Insular Affairs; the Senate
B-114868

Select Committee on Indian Affairs; the Director, Office
of Management and Butget; and the Secretary of the Interior.
     We wish to express our appreciation for the courtesies
and cooperation extended our representatives during this
review.
                             Sincerely yours,     -




                             D. L. icano ebury
                              irector
APPENDIX I                                        APPENDIX I


                       SUMMARY OF
               FINDINGS AND RECOMMENDATIONS

INTRODUCTION

     Public Law 93-531 enacted December 22: 1974, established
the Navajo and Hopi Indian Relocation Commission as an inde-
pendent entity in the executive branch. In accordance with
this law, the Secretary of the Interior appointed three com-
missioners:  Hawley Atkinson, Robert E. Lewis, and Pail D.
Urbano, effective July 1, 1975.

     The purpose of Public Law 93-53i is
     "* * * To provide for final settlement of the
     conflicting rights and interests of the Hopi
     and Navajo Tribes to and in lands lying within
     the joint use area [1/] of the reservation estab-
     lished by the Executive Order of December 16,
     1882, and lands lying within the reservation
     created by the Act of June 14, 1934 * * *.

This law provides an opportunity for the Bopi and Navajo
tribes to resolve their dispute by direct negotiation and
agreement. If no-agreeaent can be reached through negotia-
tion, a settlement will be imposed by court decision. Any
settlement, either nogotiated by the two tribes or imposed
by the court, would most likely require the relocation of
some families from both tribes.
     The law requires the Navajo and Hopi Indian Relocation
Commission to
     -- develop a relocation plan;
     -- relocate those families being moved;

     -- provide assistance and moving expense payments to the
        heads of hou3eholds;
     -- purchase the homes of families being relocated;
     -- provide additional funds for the purchase of new homes;
        and


 1/The joint use area consists of approximately 1.8 million
   acres in which the Hopi and Navpjo tribes share title.
APPENDIX I                                        APPENDIX I


     -- construct or acquire new homes if requested or, if a
        family does not find suitable housing, through its own
        means.
As of June 30, 1976, the Hopi and Navajo tribes had not
reached an agreement and the court had not imposed a settle-
ment.
     Puklic Law 93-531 also provides that the Department of
the Interior shall furnish, on a nonreimbursable basis,
necessary administrative ind housekeeping services to the
Commission. This was done during fiscal year ended June 30,
1976, by Interior's Bureau of Indian Affairs (BIA) and in-
cluded the processing of budget, allotment, and personnel
actions; payrolls and travel vouchers.
     BIA's accounting system was originally approved in
January 1953 by the Comptroller General. Preliminary to
the redesign of the system, the principles and standards
were reissued and reapproved in November 1972 and a revised
system design is scheduled for resubmission to us in 1978.
Commission financial activities
for year ended June 30, 976
     From July 1, 1975, through February 3, 1976, the
Commission used BIA's funds for its activities. During
that period the Commission submitted time and attendance
records, travel authorizations, travel vouchers, and re-
quisitions for services, equipment, and supplies through
BIA's Joint Use Agency in Flagstaff, Arizona. The Commission
received its appropriation in February 1976, and began process-
ing transactions directly through BIA's Field Administrative
Office in Albuquerque, New Mexico. Following receipt of its
appropriation, the Commission reimbursed BIA $17,925.61 for
funds expended on the Commission's behalf. The Commission
used office space provided by the Joint Use Agency until May
1976, when it obtained its own office space in Flagstaff
through the General Services Administration.
     Congress appropriated $12,700,000 for Commission
activities for the fiscal year ending June 30, 1976. Of
this amount $400,00b was for administrative expenses
and $12,300,000 for the relocation program. During
the fiscal year, the Commission obligated $180,962.70 and
spent $66,348.05 for administrative expenses. No program
funds were obligated or spent.
     We prepared the following financial summary based
on data provided by the Commission and BIA.

                              2
APPENDIX I                                           APPENDIX I


                        Financial Summary
                 Fiscal Year Ended June 30, 1976
          Navajo and Hopi Indian Relocation Commission

Approrriated administrative funds                $400,000.00
Obligated                                         180,962.70
Balance                                          $219,037.30


                                Obligations       Disbursements
Travel                          $65,640.13         $10,689.81
Personnel costs                  52,678.49          47,925.87
Legal services                   33,588.30           3,348.33
Equipment                        22,005.55              -
Supplies and materials            5,192.36           3,552.99
Rents, communications,
 and utilities                      647.99               251.94
Transportation of things            530.77                 -
Printing and reproduction            22.40                22.40
Other services                      656.71               556.71
    Total                     $180,962.70         $66,346.05
Commission employees
     The Office of Management and Budget imposed an employ-
ment ceiling of 10 full-time employees on the Commission
extending through September 1977. The Commission had three
employees as of June 30, 1976, and two additional individuals
were hired during the transition quarter. According to Com-
mission estimates, a total of 10 employees will be on board
by September 1577.
Scope of review
     We reviewed the Commission's financial records for
the fiscal year ended June 30, 1976, at the Commission's
office in Flagstaff, Arizona, and SIA's Office of Adminis-
tration and Field Administrative Office, Albuquerque, New
Mexico. Our review was limited to financial transactions
related to administrative functions because no program
funds were obligated or spent during fiscal year 1976.
     We met with Commission and BIA employees responsible
for preparing financial documents, maintaining records, and
data processing to gain an understanding of their respective


                                3
APPENDIX I                                          APPENDIX i

responsibilities nd to l3arn how the Corimission's financial
transactions were processed by the financial system. Proce-
dures and records applicable to the Commission's payroll,
leave, personnel appointments, procurement, equipment, inven-
tory, and related financial areas were reviewed. We did not
evaluate the BIA financial systems which process the Commis-
sion's financial transactions.

FINDINGS AND RECOMMI:NDATIONS

     Our review identified certain-weak.,esses which caused
problems in the Commission's financial operations during
its first year of activity. These problems need to be
corrected so that 'gie Commission can fully comply with ap-
plicable laws and regulations and have better control over
resources.

     We found that

     -- incorrect salaries were paid to Commissioners,

     -- annual leave was improperly accrued for the Commis-
        sioners,
     -- procurement procedures were not consistently followed,

     -- unexpended travel funds were not deobligated, and

     -- a formal administrative procedures manual was not
        developed.

     We believe the Commission should correct these problems
by strengthening its administrative controls and practices.

     These problems were relatively minor in fiscal year 1976
because of the Commission's limited operations and fund expend-
itures. Bowever, as the Commission's program activities, fund
disbursements, and staff increase, these minor problems could
become major.  In the following sections we recommend specific
corrective action for the problems identified.

Incorrect-salary paid
to Commissioners

     Our review of fiscal year 1976 payroll records showed
that in some pay periods the Commissioners were underpaid
and in others they were overpaid, resulting in net salary
underpayments totaling $2,523.25. The following schedule
summarizes the amount of, and the reasons for, incorrect
payments.


                                4
APPENDIX I                                             APPENDIX I


                   Summary of Incorrect
             Salary Payments to Commissioners

Reason for underp,.mnent:                           Amount

    Full day's pay not claimed                  $2,101.85
    Clerical errors                              1,047.84

        Total underpayment                      $3,149.69

Reason for overpayment:

    Clerical errors                             $    626.44

        Net underpayment as of 6/30/76          $2,523.25

     Full day's pav not claimed
     During the fiscal year ended June 30, 1976, the
Commissioners diC not always claim the full day's pay to
which they were entitled.

     Public Law 93-531, which established the Commission,
provides that each Commissioner shall receive a full day's
pay for any portion of a day spent on Commission business.

     Our review of payroll records indicated that two
Commissioners were underpaid $2,101.85 because, for some
pay periods, they did not claim a full day's pay when
only part of the day was spent working on Commission
business. Additional underpayments may have been made
because, on occasion, all three Commissioners accumulated
hours worked each day until an 8-hour day could be reported
on the activity reports used to prepare time and attendance
forms. Because the activity reports do not show how the
hours were accumulatte we could not determine if the
Commissioners should have claimed more days and if they
were underpaid additional amounts beyond the $2,103.85.

     The Commissioners expressed concern ovar being paid for.
a full day when only a small part of the day was spent on
Commission business. It appears that their workload will
substantially increase once the relocation program is under-
way.  In the meantime, better planning and work scheduling
could minimize the number of days when small amounts of
time are spent on Commission business.




                                 5
 APPENDIX I                                           APPENDIX I

     Cleric_Jerrors

     The Commissioners received incorrect salary payments
because clerical errors were made when supplemental time
and attendance forms for payroll adjustments were submitted
to BIA for processing.  Both over and underpayments were
made which resultel in the Commissioners being underpaid
$421.40.

     The Commission's Executive Director told us that BIA
prepared and processed time and attendance records until
February 1976. After the Commission hired its Executive
Director in January 1975 and received its appropriation in
February 1976, it began preparing the time and attendance
records and reviewed those UlIA had previously done. 5T.e re-
view showed numerous discrepancies between Commissioners'
hours worked and paid and resulted in supplemental-time and
attendance forms being prepared and submitted in Ma.rch 1976.
However, the Commission staff entered an incorrect number
of hours worked (both urderstatements and overstatements)
on the supplemental time and attendance forms and BIA
applied an incorrect hourly rate in computing pay for the
Commissioners.

     Our review of transactions subsequent to March 1976
showed that the Commission staff was promptly submitting
necessary supplemental time and attendance forms. We also
found no errors in ;he time and attendance forms, including
supplementals, prepared subsequent to March 1976. If the
Co.mission staff maintains this accuracy, incorrect salary
payments resulting fro? clerical errors should be minimized.

Conclusions

     The Comm.ssioners are obligated, by law, to accept a
full day's pay for eaclh day they spend any time on Commission
business; they have no option to do otherwise.

     Our review indicated that the Commissioners were under-
paid because, in some pay periods, they did not claim a full
day's pay for days when minimal time was spent on Commission
business.

     If the Commissioners, collectively or individually, do
not fee; that they should receive a full day's pay for
limited R.rk, they could make arrangements to donate part
of their salaries to the Government. Either the Commission's
legal counsel or BIA's General Counsel should be able to make
the legal arrangaments necessary to effect such a donation.


                              6
APPENDIX I                                        APPENDIX I


Agency comments

    The Commission Chairman stated that the Commissioners
had some philosophical differences with the requirement that
they be paid for a full day's work regardless of the length
of time spent working on Commission business. This problem
has been corrected since the volume of Commission work is
significantly increasing and the Commissioners are scheduling
their activities to concentrate theirwork and minimize the
number of days when small amounts of time are spent on Com-
mission business.  In addition, the Commissioners are now ac-
cepting a full day's pay for those days in which Commission
business is conducted. Beyond this, there will be a recon-
ciliation of incorrect salary payments.

    Concerning clerical errors, the Chairman said that addi-
tional internal controls had been established and additional
staff assigned so that in the future errors would be minimized.

Commissioners' annual leave
improperly accrued

    Part-time employees without established tours of duty
during the adminstrative work week may not accrue annual leave
(5 U.S.C. 6301, 6303 (1970)). The Commissioners do not have an
established tour of duty during an administrative work week.
However, BIA began accruing annual leave improperly for one
CoTmissioner in July 1976. We discussed this problem with a
BiA official who said he would investigate the matter and take
corrective action.  In February 1977 we called the Commis-
sion's Erecutive Director to see if the problem had been
eliminated. Be told us  that the Commissioner was still ac-
cruing annual leave, it was also being accrued for the other
two Commissioners, and the Commissioners had not taken any
annual leave as of February 17, 1977.
Conclusions and recommendations
    The Commissioners are not entitled to the annual leave
they are accru.ng. We recommend that the Commissioners
    -- not use any leave already accrued and
    -- have BIA stop accruing annual leave and
       eliminate accrued leave balances from
       payroll records.
APPENDIX I                                         APPENDIX I

Agency comments
     The Commission Chairman agreed with our recommendations
and stated that they had been implemented.
Procurement procedures not followed
     Our tests of procurement records showed that, in several
instances, the Commission staff bypassed BIA's procurement
procedures. These procedures require the Commission to sub-
mit requisitions for needed materials, supplies, furniture,
equipment, and other items to BIA's Field Administrative Of-
fice, Property and Supply Branch. When a requisition is re-
ceived, the Branch issues the purchase order necessary to
obtain the needed item.
     We identified cases where the Commission staff ordered
items directly from vendors before the issuance of a pur-
chase order. Subsequent to ordering these items, justi-
fications were sent to BIA so that purchase orders could
be issued and the vendors' invoices could be paid. For
example, in March 1976, the Commission staff ordered four
calculators costing a total of $1,350.88 from a local
Flagstaff firm. All calculators were received by March 31,
1976, the same day the Commission staff submitted justi-
fications to BIA. Purchase orders were not issued until
April 13, 1976.
Conclusions and recommendations
     BIA's procurement procedures are reasonable and, if
followed, provide effective internal control over procure-
ment actions. We recommend that the Commissioners direct
the staff to strictly adhere to the BIA procurement proce-
dures.
Agency comments
     The Commission Chairman stated that the Office of the
Secretary now provides administrative services for the
Commission and had specified procurement procedures to be
followed when procuring needed materials and equipment.
Be said that the Commission staff follows these procedures
and effective internal control over procurements has been
established.
Travel funds not deobligated
     Travel funds obligated from July 1, 1975, through
September 30, 1976, and not expended during that year were
APPENDIX I                                     APPENDIX I


not deobligated. In JU'y 1975, funds were obligated for
the Commirsioners' anticipated official travel from July 1975
through September 1976. Later in the fiscal year, funds were
also obligated for travel by Commission employees. Neither
the Commissioners nor Commission employees traveled as much
as planned and a balance remained in the obligated travel
fund account on September 30, 1976. This balance was not
deobligated at the end of the fiscal year as it should have
been.

     According to section 1311 (a) of the Supplemental Appro-
priation Act of 1955, as amended (31 U.S.C & 200(a) (1976)),
no amount should be recorded as an obligation unless it is
supported by documentary evidence that it .s a legal liabil-
ity of the Government.  In this case, since the travel has
not taken place there is no liability and no obligation has
been incurred.

     Because t1ie travel funds were not deobligated, Comiis-
sion records do not accurately' reflect the amount of travel
obligations outstanding as of Tune 30, 1976, and September 30,
1976, and total obligations are overstated in the records.

      As a related matter, when travel is authorized and funds
obligated for a full year, additional controls are needed to
insure that no more funds are spent than are obligated. Since
the Commissioners did not travel much in fiscal year 1976,
a large unexpended balance remained in the travel fund account
at yearend. Bowever, when the relocation program gets underway,
the Commissioners will most likely do considerable traveling
and the obligated travel funds could be overspent, unless the
Commission's staff closely monitors expenditures during the
year.

Conclusions and recommendations

     The Commission's obligated but unexpended travel funds
need to be deobligated because they are invalid and travel
expenditures must be closely controlled to prevent overex-
penditures.

     We recommend that the Commissioners

     -- have BIA deobligate the unexpended travel funds; and

     -- direct the Executive Director to develop procedures
        (1) to insure that, in the future, unexpended travel
        funds are promptly deobligated at yearend and (2)
        to monitor and control travel fund expenditures during
        the year.
APPENDIX I                                        APPENDIX I


Agency comments

     The Commission Chairman stated that the unexpended
travel funds had been deobligated and procedures were estab-
lished to prevent overexpenditures and to insure prompt de-
obligation of unused travel funds.

Lack of formal procedures manual
for administrative functions
     The Commission receives most administrative and
housekeeping services, including accounting services, from
BIA but also performs certain administrative functions for
itself without a written, formal procedures manual. These
functions include preparation of time and attendance records,
authorization and preparation of travel vouchers; prepara-
tion of requisitions for procurement of equipment, supplies,
and services; and receipt and custody of equipment and
supplies.
     The publication of agency procedures in manual form
is necessary to guide the individuals responsible for carrying
out the Commission's day-to-day activities in a uniform and
systematic manner.  Generally, the absence of a procedures
manual for administrative functions can lead to errors which
can remain undetected for extended periods. Identifyirj the
causes of these errors is difficult, if not impossible, be-
cause the correct procedures for processing administrative
actions are not documented. The Commission's failure to
promptly deobligate travel funds and to strictly adhere to
BIA procurement procedures are two examples of problems re-
sulting from the lack of an administrative procedures manual.

     Training new employees to perform administrative func-
tions is difficult when a manual is not available. These
employees must rely on the oral instructions of the other
employees since no definitive, written sources of informa-
tion are available. This would make training new employees
difficult and could result in additional administrative
problems. The Commission's budget estimates for fiscal 1977
and 1978 indicate that its staff will double in size, also
adding to the problems.

Conclusions and Recommendations

     A formal, written administrative procedures manual
should be prepared for all administrative functions per-
formed by the Commission. This manual would strengthen the




                               10
APPENDIX I                                        APPENDIX I

implementation of administrative functions as the Commis-
sion's staff increases and would assure consistent applica-
tion of administrative procedures when personnel turnover
occurs. Administrative procedures manuals adopted by BIA
or other Government agencies could serve as guides in
developing the Commission's manual.

     We recommend that the Commissioners require the
Executive Director to develop a formal administrative manual
of procedures for the preparation, review, and approval of
time and attendance records; travel authorizations; purchase
requisitions; receipt and custody of equipment and supplies;
and other administrative activities as necessary.

Agency comments

     The Commission Chairman sta'ted that an administrative
procedures manual is being developed and should be completed
within 60 days.




                            11
APPENDIX II                                                              APPENDIX II

                           UNITED ST kTES GOVERNMENT
            NAVAJO & HOPI INDIAN RELOCATION COMMISSION
             2708 N FOURTH ST P   dBOf-"e FLAGSTAFF    ARIZONA   86001


                                      June 29, 1977




  Mr. D. L. Scantlebury
  Director
  Division of Financial and General Management Studies
  United States General Accounting Office
  Washington, D. C. 20548

  Dear Mr. Scantlebury:

  This letter is a follow-up to my letter of May 26th.

  As you are no doubt aware, the Commission is a relatively new agency
  and the Commission's request for a review by GAO was prompter Iiy the
  Commission's desire for direction in developing effective fi- vial
  operating guidelines. In this regard, the review visit was -ost help-
  ful, and the report has become an important management tool.

  I am happy to say that the problems identified in the review have been
  resolved. A major feature of this is that since the GAO review, the
  Commission has negotiated a Memorandum of Agreement with the Secretary
  of Interior - a copy of which is attached. This agreement makes pro-
  vision for the Office of the Secretary - Operations to provide adminis-
  trat:i-e and housekeeping services, and has thus brought about a substan-
  tial upgrading in procedures.

  The following addresses the specific problems identified in the review:

       Incorrect Salary Paid to Commissioners. As pointed out in the
  review, the Commissioners had some philosophical differences with the
  requirement that they be paid for a full day's work regardless of the
  length of time spent working on Commission business. This problem has
  been corrected since as was pointed out in the review, the volume of
  Commission work is significantly increasing and the Commissioners are
  scheduling their activities in a manner which concentrates their work.
  This minimizes the number of days when only a small amount of time is
  spent on Commission activities. In addition, the Commissioners are now
  accepting a full day's pay in compliance with applicable standards, for
  those days in-which Commission business is conducted. Beyond tk.is,
  there will be a reconciliation of over and underpayments itemized.

      Clerical Errors. The review indicates that subsequent to March 1976
 reports were being submitted with complete accuracy, and steps have been
 taken to minimize the mossibility of future errors. These efforts in-
 volve assigning additlonal staff to this area; and establishing new
 internal controls, el.g., cross referencing and designating an individual
 to certify the timekeeper's reports.


                                       12
APPENDIX II                                                   APPENDIX II

  Mr. Scantlebury
  Page Two

       Commissioner's Annual Leave. In direct response to the review,
  accrued leave balances have been eliminated from the payroll records,
  and leave is no longer being accrued. Moreover, no Commissioner has
  charged any annual or sick eave. Beyond the above, at such time as
  the Commissioners may determine an astablished tour of duty during
  an administrative work week, a schedule of annual leave may be insti-
  tuted.

       Procurement Procedures. Pursuant to the Memorandum of Understanding
  with the Secretary of Interior, the Commission now utilizes the procure-
  ment process of the Office of the Secretary - Operations. This process
  requires the Commission to submit requests for materials, equipment,
  etc., to the Office of the Secretary - Operations. All procurement
  policies instituted by this office are complied with by Commission staff,
  thus effective internal controls over procurement have *een established.

       Travel Funds N)t Deokliaated. As a direct result of the review,
  all travel authorizations with balances prior to April 1, 1977 have been
  deobligated. These travel authorizations issued after April 1, 1977
  have a record showing travel expenditures charged against the authoriza-
  tions. This will offset any chance of over-expenditure and will show
  any balan.e of obligation remaining when the travel authorization expires.
  The travel authorization balance will be deobligated immediately on
  expiration.

      Lack of a Formal Procedures Manual. Pursuant to the Hlemorandum
 with the Office of the Secretary, most administrative and housekeeping
 services, including accounting services from that office, are procedurally
 documented. Those administrative functions performed within the adminis-
 trative structure of the Commission are systematically being identified
 and a procedural manual being developed, which should be comp3e ted within
 60 days.   (A copy will be forwarded to you upon completion.) The pro-
 cedures covered by this manual will include ail phases of the relocation
 mission.

 When we receive authorization from you for audit release, we will comply
 with Section 236 of the Legislative Reorganization Act of 1970.

 Thank you for your staff's efforts in accomplishing a =ost helpful finan-
 cial review of this Agency.

                                  Sincerely,




                                     ley Atkino
                                  Chairman
 HA:mJ.
 Enclosures


                                    13