South Fork Band Council

CONDITION: The Band does not have sufficient cash to cover deferred revenue (advanced grant dollars). The Band had a cash balance at September 30, 2016 of $256,197 and the total amount of deferred revenue at that date is $418,601. CRITERIA: Grant funds are required to be expended only for activities authorized by grant agreements. Using one grant?s funds to finance another grant, or to finance general fund spending, is a violation of the grant agreement. In a memorandum to the Inspector General- United States Department of the Interior, dated February 8, 1998, the office of the Solicitor- United States Department of the Interior addressed the use of Federal funds awarded and paid in advance of award expenditures to an Indian Tribe under the Indian Self- Determination and Education Act (ISDEAA). The memorandum states, ?The ISDEAA authorizes the expenditure of Federal funds transferred under the ISDEAA contracts and annual funding agreements only for the Federal programs covered by those contracts and annual funding agreements, and not for other tribal programs that are not authorized by the ISEAA unless otherwise specifically authorized by Federal law. Accordingly, such Federal funds should not be transferred to tribal accounts, lent to such tribal accounts, or expended for programs not authorized by the above mentioned laws.? Under Federal award standards- OMB Circular A-102 Common Rule, Section 20 (3)- Standards for financial management systems, Internal Control the circular addresses the award recipient?s requirement to properly safeguard Federal award assets, ?Effective control and accountability must be maintained for all grant and subgrant cash, real and personal property, and other assets. Grantees and subgrantees must adequately safeguard all such property and must assure that it is used solely for authorized puposes.? EFFECT: The awarding agency could disallow the use of advanced funding towards carrying expenditures for other federal programs until such time that appropriate draws are made for those programs. CAUSE: Management did not make timely draws on their EPA and BIA roads grants during the fiscal year. The grant receivable balance as of September 30, 2015 was $193,284. Advanced grant dollars from the Bureau of Indian Affairs have been used to cover expenditures incurred for EPA and BIA-roads programs. RECOMMENDATION: We recommend that the Band utilize advance grant dollars only for authorized purposes and maintain guaranteed or insured cash balances in excess of deferred revenue. We also recommend that the BIA and I.H.S. advance dollars be deposited into a separate bank (savings) account first and then wired over to the Band?s central checking account only on a reimbursable basis. CURRENT YEAT STATUS: UNRESOLVED. The Band had a cash balance at September 30, 2019 of $189,662 and the total amount of unearned revenue at that date is $787,809. The shortfall of cash balance is calculated as follows: Cash Balance $ 189,662 Grants Receivable 216,467 Adjusted Cash Balance 406,129 Unearned Revenue (787,809) Difference ? Cash Shortfall $ (381,680) VIEWS OF RESPONSIBLE OFFICIALS: See Corrective Action Plan.

CONDITION: The South Fork Band did not monitor budgets for the fiscal year under audit. Other than initial grant budgets submitted and approved by the grantor agencies, no other budgetary controls were in place in fiscal year 2016. CRITERIA: OMB Uniform Guidance outlines procedures over the establishment, review and modification of budgets. As well, prudent management principles dictate use of budgets to control spending. According to the Band?s Management Systems policy ?The tribe?s finance department, with the active participation of the Administrative Officer, will have the main responsibility for establishing proper procedures and budget status reports specifically for the tribe to have the means to compare actual expenditures to budgeted expenditures. Budgets will be revised monthly for actual versus budgeted expenses and will reflect additional funding.? EFFECT: The Band has a greater risk of deficit spending within its programs. RECOMMENDATION: The Band should revise its current budgetary policies to include more detailed procedures in the area of budget monitoring. The requirement to budget extends to all of the Band?s programs, not just federal grants and contracts. Proper planning through effective budgeting procedures can help significantly in controlling deficit spending. CURRENT YEAR STATUS: UNRESOLVED. The Band did not monitor budgets for the fiscal year which resulted in multiple programs having actual expenditures quite different than the original approved budgets. VIEWS OF RESPONSIBLE OFFICIALS: See Corrective Action Plan.

CONDITION: A lack of proper recordkeeping existed over the procurement of goods and services for the fiscal year. 4 out of 4 procurements tested were lacking proper bids/quotes and 2 out of 2 were missing suspension/debarment support. CRITERIA: The Band?s Management Systems Policy section for Procurement Standards (A) 3 states the ?Minimum procurement limit for ths will be set at $5,000 per single purchase.? The Procurement Standards (A) 6 states ?South For Band Council will maintain records sufficient to detail the significant history of procurement for three years after final payment has been made. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.? The Methods of procurement to be followed (C), 3 ii. section of the Band?s Management Systems Policy states, ?Proposals will be solicited from an adequate number of qualified sources.? CAUSE: The Band?s adopted policies are more strict than the federal guidelines. Management of the Band has not implemented their own adopted policies. Also, there does not appear to be a centralized filing system for bids and quotes obtained in the procurement process. EFFECT: A lack of adherence to approved policy may result in noncompliance for purchases made under federal awards. RECOMMENDATION: Implement the use of a procurement checklist which documents the decision making process surrounding a procurement and centralized filing of all support for each procurement should also be required under written approved policies. VIEWS OF RESPONSIBLE OFFICIALS: See Corrective Action Plan.