BIA’s cover-up, suppression, falsification of official records, conspiracy to defraud, finger pointing, stone-walling and illegal reprisal will be described further in chapters that follow. The Inspector General contributes to the problem by poor auditing which in turn can be traced to the lack of independence. Other federal agencies aided BIA in making it’s retaliation against me effective for reporting these issues. But that’s another story, and it’s described later.
While employed by BIA I examined several financial systems. Each of them had problems with missing cash and fraud. BIA’s track record for integrity and honesty was zero. I was stopped before I could go any further, and Congress and the courts have allowed that to stand. Both Congress and the courts, including the U.S. Supreme Court, are fully informed about this mess (by me, if no one else), and they just let it continue.
Don’t let your Senator or Congressional Representative kid you that this is new information they were not aware of. They do know about it, and by allowing it to continue they appear to like it.
Many of BIA’s financial systems do not use double entry accounting, in the full meaning of that term, and internal controls (a system of checks and balances) are frequently ignored. When an accountant issues a report on a system, he or she is required by the standards of the accounting profession to report any basic failures in the system. My job description also required me to recommend improvements, which I did.
To prepare myself to review, report and recommend improvements to BIA’s various systems, I studied reports made by other authorities about BIA’s general accounting. Here is that background information:
U.S. CONSTITUTION, Article I, Sec. 9:
“... and a regular statement and account of the public money shall be published from time to time.”
WASHINGTON POST, 12/26/85 Article:
This Washington, DC newspaper had an article titled “Federal Accountant’s Find Huge Losses.” It said
“The federal government lost billions of dollars this year because of poor management in virtually every major agency, the General Accounting Office concluded this week. ... widespread and often long outstanding weaknesses and breakdowns in agency internal controls continue to result in wasteful spending, poor management and losses involving billions of dollars in federal funds, Charles A. Browsher, comptroller general and head of GAO, wrote in a letter presenting the report to congress ...
WEEKLY HIGHLIGHTS, 12/18/86:
This report was issued by the Department of the Interior, from the office of the Assistant Secretary for Policy, Budget and Administration.
“The Secretary’s statement provided reasonable assurance that the Department’s systems of internal control are adequate, except for the Bureau of Indian Affairs ... “ Two programs within other agencies were also described as deficient.
GAO/AFMD-82-71:
This was a report by the Comptroller General to the Congress of the United States, titled Major Improvements Needed in the Bureau of Indian Affairs Accounting System:
“[BIA] has lost accountability over hundreds of millions of dollars ... because its ... accounting and finance system produces unreliable information. ... GAO believes that the Bureau’s system must be completely redesigned.”
Page 1. “Bureau managers have not acted to correct these design deficiencies ... Financial information was unreliable and internal controls were inadequate ... system is not maintained on the accrual system ...”
Page ii. ... “Key trust fund accounting records were out of balance by millions of dollars ... bureau personnel did not follow prescribed accounting and internal control procedures.”
Page iii. “Bureau personnel ... did not complete required monthly reconciliations of detailed subsidiary ledgers ... bureau managers ... acknowledged that the information was unreliable.”
After studying BIA’s accounting system I agree that the information given by the reports above is correct. I did not find that any improvements had been made by BIA since those reports were issued.
The system is not poor; it is terrible. I discovered a few more problems on my own that were not mentioned in the above reports. One was that in many cases double-entry accounting was not used, in defiance of rules established by the Comptroller General thirty years earlier.
The Area Office has from 600 to 800 employees working at Billings or on the reservations, and a budget of more than thirty million dollars. In an enterprise that size you would expect to find several accountants and auditors, and a usable system of financial reporting.
I found that there was no clear listing (journal) of accounting transactions. There were no financial statements; no balance sheets. Trust accounting was near worthless (see IIM ), and the general accounting system was riddled with errors.
This was unbelievable. I wondered if all federal agencies were like this. There was another agency in our office building, so I visited the accountant for the Bureau of Reclamation.
Their accountant had two personal computers for his own use, and he had journals and financial statements. Their accounting personnel used double entry accounting and believed they were in compliance with all standards set by the Comptroller General.
The fact that my reports referred to accounting deficiencies in BIA’s system was cited in Benjamin’s “Notice of Removal” as a cause for my being fired.
Recommending specific improvements, and offering to design or install them was seen by Benjamin as a matter of personal arrogance. This was also cited as a reason for my being fired.
While at BIA I had pointed out a way to greatly reduce overhead (by $2.5 million annually) by some simple improvements in our accounting. Part of BIA’s general accounting work (computer processing, sorting, etc.) is farmed out to Martin Marietta, a huge corporation. In approach, this was a throwback to the days of using outside service bureaus, before computers were generally available.
I devised a way to do this work on our existing BIA computers, at little or no cost, thus there was no need for the $2.5 million Martin Marietta contract. A private business would jump at a chance like this, but in BIA it was not given serious consideration. Why?
Well, two reasons. First, Martin Marietta is a sacred cow, and BIA veterans know you don’t mess with sacred cows. If you take a look at contributors to election campaigns, Martin Marietta is high on the list. They won’t lose that contract, even if the work is a total waste, which it is. Congress will protect them.
The second reason is that I had just come from the “private sector,” my mind was still free to think of creative things, and I had accomplished many improvements of this type during my career. Even with no help, I believed I could make system improvements that would allow for this change to be accomplished after about three months work. In the eyes of my supervisor, Bill Benjamin, this kind of thinking was so outlandish as to be absurd. To give him the benefit of all doubt, perhaps within the federal government he’s correct. And, you don’t mess with sacred cows.
Another sacred cow is the Mellon family, another huge political contributor. When the heat grows heavy on BIA accounting and trust services, a favored alternative is to suggest farming-out various functions to the Mellon National Bank. Good for Indians? No way, it would eliminate many Indian jobs. Cost savings? Not really, but great for the friends of our politicians. If a BIA employee points out the flaws related to sacred cows, he’s in trouble. I did, and I was.
Unlike other large enterprises, BIA does not employ auditors. BIA’s auditing is done by a related agency, the Office of Inspector General. Both agencies are part of Interior and both report to the same administrator, the Secretary of the Interior. I call that a “sweetheart” audit, and you have now seen enough examples of OIG’s kissy-kissy work to form your own opinion. Rarely, there is an audit by the General Accounting Office (GAO), a branch of Congress, but that is still part of the Federal Government, so even their work lacks full independence.
The Single Audit Act (a relatively new federal law) applies to tribal governments. It requires independent audits by outside CPAs, most of which are honest and reliable. There is a problem here of lower requirements for BIA (with no independent audits) than for tribal government. This is a case of one rule for the ruler and another for the ruled; tyranny.
The Interior OIG does sloppy, substandard auditing. You saw an example of that earlier where they congratulated the Billings office for reconciling it’s IIM accounts in a “timely and accurate” manner. After I pointed this out, it took another two years for OIG to admit that their report was wrong, and they did that privately rather than publicly.
Using the Freedom of Information Act, I requested a copy of OIG’s audit papers for that 1985 audit. The only work they did to arrive at their wrong conclusion was to ask the clerk if the accounts were reconciled. The clerk answered “yes.” OIG did nothing to verify the answer, which was wrong. You don’t have to be an auditor to know that’s not good auditing.
In this country auditing standards are well established. It is very clear what an auditor must say in the audit report when reporting on a situation like BIA’s. If the books don’t balance and are unreliable, the auditor must say so. If the organization has no journals and financial statements, the auditor must say so, or simply refuse to be associated with the client.
I won’t list everything to be included in an audit report, but you get the general idea. OIG does substandard work and issues “sweetheart” reports that do not meet minimum auditing requirements. OIG’s reports (that I have seen) lightly skip over or ignore the problems described above. The reader is not warned that the OIG audit report can not be fully relied on. It is not possible to perform a good audit (and produce a meaningful audit report) if the records that the audit is based on are in a real mess.
Almost six years after the events at BIA took place, I had a letter from Senator Daniel Inouye, Chairman of the Senate Select Committee on Indian Affairs. A copy is reprinted for you to read.
OK, he said some kind words to boost my ego, but in effect it was just too bad, he couldn’t help. He did insert a few digs - to blame the Executive Branch, rather than Congress, and to repeat BIA’s claim that I was fired for something other than whistleblowing. Do you think that BIA would list “to suppress honesty” or to “restrict free speech” as the reason for firing an employee? He noted that my finding proved to be correct, and that there was an injustice, but leaves it at that.
Inouye covers himself nicely, but he has known about these problems for years and has not used his very powerful position to correct them. He profits from business as usual, so talk rather than action is what you get. He’s a Senator from Hawaii, whose Native Americans have one of the worst deals going, and he has not done much to make it better. I appreciate the kind remarks in his letter, but he has the power to raise a real stink about this, and has not done it.
In a later chapter you will see how these problems were reported to BIA and how BIA handles those who report problems. Now let’s take a look at what it means to blow the whistle.
No comments:
Post a Comment