Summary

For years, the Interior Department has been unable to correct many serious financial management problems affecting the Indian trust funds, including (1) backlogs in land title and beneficial ownership determinations and recordkeeping, (2) inadequate management of natural resource assets to ensure that all earned revenues derived from natural resources are collected, (3) improper accounting practices, and (4) limited trust fund investment options. In addition to recent management initiatives to implement needed improvements, additional options would more fully address trust fund management problems. Further, more focused leadership, management commitment, and a comprehensive strategic plan would help Interior to effectively address all of its trust fund management responsibilities.

GAO found that: (1) Interior's trust fund management problems are longstanding and permeate all facets of its financial management business functions; (2) Interior has initiatives under way that could help to improve services to Indians and improve ownership, resource management, and accounting systems, but many of the initiatives are in the early stages of development and will not be completed for several years; (3) to improve trust fund management, Interior could contract for assistance to eliminate backlogs in recordkeeping, provide state-of-the-art natural resource management systems to tribes who wish to assume responsibility for managing their natural resources, obtain reliable trust fund accounting systems and contracting for banking services, and contract for investment advisors and a custodian to settle trades, safeguard securities, and track investments; (4) Interior should consider establishing an index investment fund option for tribes and comprehensively examining its mission and the way it does business to determine how and by whom Indian trust funds can best be managed; and (5) Interior should develop a comprehensive strategic plan to address the full range of problems needing corrective action.