Finding Text
Special Tests and Provisions – Material Weakness in Internal Control Over Compliance and Material Non-Compliance Criteria: Per 25 U.S. Code Sec 450e-3, “Advance payments made by the Department of the Interior (DOI) to Indian tribes, tribal organizations, and tribal consortia pursuant to the Indian Self-Determination and Education Assistance Act (ISDEAA) may be invested, before such funds are expended for the purposes of the grant, compact, or annual funding agreement, so long as such funds are (1) invested by the Indian tribe, tribal organization, or consortium only in obligations of the United States, or in obligations or securities that are guaranteed or insured by the United States, or mutual (or other) funds registered with the Securities and Exchange Commission and which only invest in obligations of the United States or securities that are guaranteed or insured by the United States or (2) deposited only into accounts that are insured by an agency or instrumentality of the United States, or are fully collateralized to ensure protection of the funds, even in the event of a bank failure.” Condition/Context: Of the Tribes’ advanced DOI grant proceeds recognized as unearned revenues of $5,855,829 as of December 31, 2022, $5,605,829 was uninsured and uncollateralized or not invested in securities that are guaranteed by the United States. Questioned costs – There were no reportable instances of questioned costs. Cause: Lack of sufficient training over specific compliance requirements and insufficient internal controls over this compliance requirement may have contributed to this finding. Effect: The advance payments of grants pursuant to the ISDEAA are exposed to custodial credit risk and the Tribes are not in compliance with the requirements for investment of advance funding. Repeat finding: This is not a repeat finding from the prior year. Recommendation: We recommend the Tribes consider either entering into a collateralization agreement with a bank or invest the advanced federal grant payments in U.S. backed securities to ensure they are in compliance with grant agreements. Views of responsible officials and planned corrective action: The Tribes will evaluate options to either enter into a collateralization agreement with a financial institution or invest advanced federal grant funds in U.S. government-backed securities to ensure compliance with grant requirements. Additionally, staff will receive training on applicable federal regulations governing advanced payments.