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Investigators Probing $95 Million in BIA Discrepancies

January 10, 1991

WASHINGTON (AP) _ Federal investigators have discovered $95 million in discrepancies in Bureau of Indian Affairs records and are cracking down on its accounting practices, officials announced Thursday.

A review by the Interior Department and the presidential Office of Management and Budget found ″longstanding, fundamental problems in the BIA accounting and financial system,″ said a statement from the two agencies.

The investigators found BIA’s Albuquerque-based accounting system could be accessed by 12,000 employees, making it easy to alter payment records.

″In fiscal year 1990 alone, over 500,000 adjustments were made to the BIA financial management system,″ according to the joint statement.

Officials said that $95 million of the agency’s $1.3 billion budget may have been misspent or spent properly but erroneously recorded.

The disclosure comes as Interior Secretary Manuel Lujan pressed White House officials for more money for the BIA in the fiscal 1992 federal budget. The BIA is part of the Interior Department.

″We need to convince people that the Bureau of Indian Affairs is worth saving and worth fighting for,″ said Lujan’s spokesman, Steve Goldstein.

Goldstein said Interior officials discovered six months ago there might be irregularities in the BIA accounting practices and began to investigate.

He said the department believes the $95 million cannot be accounted for because of ″accounting discrepancies,″ as BIA officials have contended. But he acknowledged that the 500,000 adjustments, entered in the agency’s computers, had not been explained.

The Interior Department’s inspector general is investigating what happened to the money.

The case demonstrates ″insufficient attention to financial management over decades,″ said Frank Hodsoll, OMB’s executive associate director for management.

The discrepancy ″poses a series of questions that are of sufficient gravity that we want to make sure we know what is going on and work with the Interior Department to fix it,″ he said.

Lujan and OMB Director Richard Darman announced a plan to improve BIA management, which Lujan has said needed restructuring.

All adjustments to the BIA financial system will have to be approved by a team set up by the Interior Department as part of the investigation.

In addition, a ″complete overhaul and revamping″ of BIA’s financial accountability system will be conducted. The new system - with new accounting and financial controls, a special review system for spending adjustments and specialized controls over procurements and grants as well as rapid conversion of BIA’s system to the new federal financial system - is to be in place by the beginning of October, according to the joint statement.

Problems cited by the joint investigation include:

-″Uncontrolled access by BIA employees to the accounting system.″

-Employees’ ability to make changes and shift funds to make the books balance.

-″Poor controls″ over procurement and grant contracts totaling more than $500 million annually.

-Failure to use standard double-entry accounting methods and ledger accounts that thus cannot be balanced.

Sources said Lujan is seeking an increase of more than $100 million in the BIA budget, to be used mostly for Indian education programs. Darman’s office is not recommending the increase.

The BIA, which oversees the nation’s Indian reservations and operates 84 offices, mostly in the Southwest and the Plains, has been plagued by problems.

Congress has repeatedly attacked BIA’s management of nearly $2 billion in trust funds held by the Interior Department for native Americans. Congress charged in 1989 that the agency had lost up to $19 million of the funds because of poor recordkeeping.

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