Office of Special Trustee for American Indians: Financial Statement Audit Recommendations and the Audit Follow-Up Process

摘要

In 1994, Congress enacted the American Indian Trust Fund Management Reform Act, Pub. L. No. 103-412, recognizing the federal government's fiduciary responsibilities toward American Indians. The act called for more effective management of the Department of the Interior's (Interior) fiduciary responsibilities, required an annual audit of Indian trust funds, and created the Office of Special Trustee for American Indians (OST) in Interior. In 1996, the Secretary of the Interior ordered the transfer of responsibility for trust fund management, including preparation of the financial statements of the Tribal and Other Trust Funds and Individual Indian Monies Trust Funds (Indian trust funds), from the Bureau of Indian Affairs (BIA) to OST. Since then, OST has prepared and independent public accountants have audited the financial statements of the Indian trust funds. The auditors have issued qualified audit opinions each year since 1996 because of inadequacies in Interior's trust-related systems, controls, and processes, disagreements between Interior and the trust funds' beneficiaries on amounts owed, and potential claims against the government. Congress expressed concern about deficiencies identified and reported in the Indian trust funds' annual financial statement audits for fiscal years 1996 through 2005. Congress asked us to determine (1) the reported status of OST management's responses to financial statement audit recommendations from fiscal years 1996 through 2005 and (2) whether financial statement audit follow-up procedures and controls for OST are designed to meet the requirements of applicable guidance and whether controls are in place to reasonably assure that audit follow-up objectives are achieved. This letter transmits our slides we used to brief Congressional staff on October 5, 2006. Financial statement audit follow-up procedures and controls for OST are designed to meet the requirements of the Office of Management and Budget's (OMB) Circular No. A-50, Audit Follow-up, and internal controls are in place to reasonably assure that audit follow-up objectives are achieved. OMB Circular No. A-50 prescribes standards for audit follow-up. We identified Interior policies addressing each of the standards. We also found that OST, Interior, and Interior's Office of Inspector General (OIG) have implemented specific control procedures directed at assuring effective audit follow-up. At the same time, we did not see evidence that Interior is conducting a periodic evaluation of its entire audit follow-up system. Such an evaluation is required by OMB Circular No. A-50 to assure efficient, prompt, and proper resolution of audit recommendations. However, the independent auditors of the Indian trust funds may mitigate any associated risks for financial statement audits because they annually validate whether OST's previously identified underlying deficiencies, which were the basis for the recommendations, have been corrected.