GAO finds unresolved Indian trust management problems
The Office of Special Trustee still can't guarantee the accuracy of the billions of dollars it holds in trust for individual Indians and tribes, according to a new report.

Fourteen years after the passage of the American Indian Trust Reform Act, the balances of the individual and tribal trust accounts are not reliable, the Government Accountability Office said. Interest hasn't been properly determined for individual and tribal beneficiaries, some tribal accounts have negative balances and millions of dollars in payments haven't been distributed to tribal members, the report said.

"OST's ability to prepare and report on Indian trust funds' financial statements that are fairly stated depends on correcting material weaknesses identified in the financial statement audits and establishing historical beginning trust fund balances," the GAO said in the report released on Tuesday.

Additionally, the Bureau of Indian Affairs has failed to correct several deficiencies in its handling of the trust. Among other issues, the agency lacks an accounts receivable system, has fallen behind on probates and has failed to implement changes that would "prevent or detect errors," the GAO said.

Created by Congress in 1994, OST is charged with overseeing and implementing the reform of the Indian trust. But the problems reported by the GAO have been outstanding since 1996.

"To no one's surprise, this report shows that the Interior Department continues to be a complete mess in its efforts to clean up the scandal that it created decades ago with its well-documented mismanagement of the Indian trust," said Elouise Cobell, the lead plaintiff in the landmark trust fund lawsuit.

According to the government's records, OST holds more than $2.8 billion in trust for about 1,450 tribal accounts. The Individual Indian Money (IIM) trust consists of more than 277,000 accounts with assets of about $420 million.

Audits conducted by two major accounting firms since 1996 have shown that OST doesn't know whether the account balances are correct. The Treasury Department's ledger, for instance, shows different numbers for the IIM trust than Interior's.

Thousands of IIM beneficiaries also haven't received the money they are due, the audits have shown. Instead, OST has kept the money in Special Deposit Accounts worth millions of dollars.

Griffin & Associates conducted the audits from 1996 to 2000 and made about 60 internal control and compliance recommendations to OST. According to the GAO, 37 recommendations have been cleared.

KPMG has been conducting the audits since 2001 and made two broad recommendations that remain outstanding. The first relates to OST's financial reporting and the second affects the BIA's handling of the trust.

Despite the ongoing work, OST has failed to perform follow-up on the audits, the GAO said. "[W]e did not see evidence that Interior is conducting a periodic evaluation of its entire audit follow-up system," the report stated.

In a September 2006 letter, the Interior Department disputed that characterization and listed ways in which it said it was conducting evaluations. But GAO said the there was no independent assessment to determine whether the deficiencies are being corrected.

"Interior does not evaluate the effectiveness of its audit follow-up activities directly," the GAO said in a briefing to the Senate Indian Affairs Committee, which requested the report. "Instead, it relies on the number of corrective actions reported as resolved by its bureaus to measure its own effectiveness. In addition, we found no evidence that Interior verifies this bureau-reported information."

Since the start of the Bush administration, OST's budget and mission has rapidly exploded. The fiscal year 2008 budget seeks $196.2 million for the agency, an increase of $15 million from 2007.

Government Accountability Office Report:
Office of Special Trustee for American Indians: Financial Statement Audit Recommendations and the Audit Follow-Up Process (February 2007)

Earlier GAO Report:
The Office of the Special Trustee Has Implemented Several Key Trust Reforms Required by the 1994 Act, but Important Decisions about Its Future Remain (January 2007) | Abstract | Highlights

Inspector General Report:
Allegations Concerning Senior Officials of the Office of Special Trustee for American Indians (May 2005)

Sen. Johnson Letter:
Request for OST Investigation (May 3, 2004)

Relevant Links:
Office of Special Trustee -

Related Stories:
Top OST officials well rewarded for reform work (1/17)
OST questioned on reform agenda by GAO (1/9)
Ross Swimmer: Interior still 'working' on trust (07/28)
Accounting firm defends social relations with OST (07/27)
OST contract tied to favors to top officials (7/25)
OST officials awarded $6.6M contract to friends (7/24)
Ross Swimmer: Indian trust not about mismanagement (3/29)
Tribes, states weigh lawsuits against oil companies (5/8)
Ross Swimmer: Indian trust not about mismanagement (3/29)
Norton denies fraud or major problem with trust (3/29)
GAO report warns of billions in lost oil, gas royalties (3/29)
Tribes, states object to Interior's lack of audits (03/01)
Pombo starts investigation of DOI royalty program (2/16)
Bush, Democrats oppose $7B royalty giveaway (2/15)
Interior to give away $7B in oil and gas royalties (2/14)
Oil companies fall behind on royalty payments (2/10)
DOI allows underpayment of natural gas royalties (01/24)
Editorial: Interior's endless charade on Indian trust (06/10)
OST fares no better under Ross Swimmer's leadership (6/7)
Bush administration won't give up fight on Cobell (03/18)
McCain weighs GAO probe of Indian trust debacle (03/10)
Johnson promises 'meaningful' investigation of OST (06/21)
Johnson seeks investigation into OST expansion (05/07)
Swimmer to retain control of Indian appraisals (04/06)
Senate panel hears conflicting views of reorganization (03/11)
Anderson praises Cobell suit in NCAI speech (2/25)