10% of tribal office's budget held
Capital Improvement Office issues are a 'major concern,' 20% of director's salary withheld

Copyright © 2008
Gallup Independent
By Kathy Helms
Diné Bureau

WINDOW ROCK — The Division of Community Development’s Capital Improvement Office has failed to comply with a corrective action plan approved by the Budget and Finance Committee in 2001 and remains under sanction.
As a result, the Office of the Controller has been withholding 10 percent of General Funds appropriated to the program and 20 percent of the CIO director’s annual salary. That, too, will remain in effect, according to a report presented to Budget and Finance Wednesday by the Auditor General’s Office.

Because CIO falls under the executive branch, Chief of Staff Patrick Sandoval was asked to attend the presentation.

“The auditor general presented the audit findings of the CIO office. As you recall, last year Council approved $5 million. That’s $5 million at this point they don’t know, we don’t know, if they got those projects completed,” B&F Committee Chairman LoRenzo Bates told him.

“And now we’re going to Council and asking them to approve another $12 million when we don’t even know about the other $5 million. It’s a major concern.” B&F is expected to finalize the budget package today and present it to Council the first week in September.

Stanley Yazzie of Community Development told Bates, “I know that some of the money was expended. I think what I would need to do is get a report from CIO and get a copy to you on how much money was expended.”

Sandoval said he also would like to come back before the committee after meeting with the auditor general, the division director and others. “I think it’s safe to assume that everything that is reported may not be completely accurate,” he said.

According to Acting Auditor General Elizabeth Begay, the third follow-up review found that CIO has had considerable time to implement corrective actions since the plan was approved in 2001. One of the findings — that CIO needed to strengthen project selections and appropriation procedures — still has not been resolved.

“Our review found that the projects presented by the CIO to the Navajo Nation Council for funding under the $5 million shortfall capital projects could not be verified as shortfall projects. CIO could not provide the project files to determine the project cost for each project,” the report states.

Consequently, it was unclear whether the projects funded from the $5 million were incomplete projects from previous years that required additional funds to complete.

The review also questioned whether there is a clear understanding by CIO of how a capital improvement planning process should be carried out, since there have been no significant improvements in developing a comprehensive capital improvement plan, or CIP, and budget.

In 2004, the AG’s office issued a “best practice” review report to provide information on how the process should be carried out to produce a creditable and useful CIP. Auditors said CIO has taken more of a “haphazard approach,” and as a result, “there is little confidence in the CIO and its ability to effectively carry out the CIP process to produce an acceptable capital improvement plan.”

On April 8, the Transportation and Community Development Committee approved more than $10 million in capital projects that were purported to have matching funds from state agencies. Auditors said that to date, CIO could not provide documents verifying the match.

According to the report, CIO continues to put the Navajo Nation at risk of approving capital projects with matching funds that may not materialize and end up with funding shortfalls.

CIO has continued to have an unexpended capital balance over the years, auditors said. In FY2004 CIO received $35.9 million and had $10.8 million unexpended. In 2008, CIO was appropriated $57 million and had an unexpended capital balance of $22.8 million.

CIO provided a project list that is being reconciled to the Navajo Nation Financial Management Information System, however, the list does not have the project completion status for further evaluation. “The CIO does not effectively monitor the project and budget. Consequently, CIO may not be aware that a project has expended a majority of its budget but (may) only be 50 percent completed,” auditors said.

CIO also has not closed the accounts of projects that are complete and still have balances. “CIO and the Office of the Controller agreed that for these accounts, FMIS will be programmed to stop further financial activities until such time CIO reverts any unexpended funds back to the Navajo Nation General Fund,” the report states.

Auditors concluded that since there have been no significant CIO improvements in implementing its corrective action plan since 2001, “we question whether the current CIO director’s performance was sufficient for what is needed to effectively direct the CIO.”