Thoreau working to correct failures

Copyright © 2008
Gallup Independent
By Kathy Helms
Diné Bureau

WINDOW ROCK — Thoreau Chapter residents passed a resolution several months ago calling for an audit. As a result, the Office of the Auditor General reviewed the chapter’s financial records and found a number of deficiencies.

Those were outlined during a recent Budget and Finance Committee meeting by Karen Briscoe, senior auditor, who reported four findings: The chapter lacks adequate internal controls; cash receipts activities lack accountability; chapter records are in poor condition, and the Five Management System needs to be implemented to improve accountability.

Acting Auditor General Elizabeth Begay said that based on the audit report, there is clearly lack of control over accounting of revenues and expenditures.

“But the purpose of the audit is to add value to the chapter. We identified the deficiencies, we provided recommendations, and based on that, the chapter developed a corrective action plan to correct the deficiencies,” Begay said.

She said it was explained to them that once Budget and Finance approves the corrective action plan, the chapter is responsible for implementing the plan or will face sanctions after one year. Budget and Finance approved the plan.

Auditors reviewed the chapter’s financial records for 18 months, beginning Oct. 1, 2006, through March 31. Briscoe said that at the time of the audit, the chapter did not have any staff. The community services coordinator resigned in July 2007 and the office specialist resigned in March. During the review, the chapter had a temporary office assistant performing general office tasks and carrying out daily operations.

Thoreau Delegate Edmund Yazzie said the chapter has been working with the auditor general and has hired a chapter coordinator “who is very knowledgeable in helping us correct these deficiencies.” He asked B&F to approve the corrective action plan “to help Thoreau Chapter get started to make corrections for the betterment of our people.”

Briscoe said the chapter receives the majority of its revenue from the central government. For the 18 month period, the chapter received $692,321 and incurred $247,531 for operating, travel, stipend, payroll and financial assistance-related expenditures.

Auditors selected a sample of $41,996 to test controls over those expenditures and found that 98 percent of the total sample, or $41,224 were questioned costs.

Auditors examined six months of bank reconciliations and found all to be inaccurate. Auditors compared cash receipt tickets totaling approximately $26,014 to bank deposits and found approximately $1,471 of cash receipts were not deposited during the 18-month period.

Auditors said the chapter is not properly accounting for its cash receipts because not all cash receipts were recorded to the cash receipts journal. A comparison of the cash receipts recorded on pre-numbered tickets against the receipts posted to the journal revealed a variance of $11,692 in cash receipts not recorded to the journal.

Although chapter policies and procedures require bi-weekly deposits when receipts total $100, records showed the chapter made large deposits, and some were not made for weeks until cash accumulated into several hundred dollars. In the absence of permanent staff, officials have been depositing the cash receipts.

In one incident, an official who took possession of $1,145 in cash receipts did not deposit the monies the same day and consequently, the monies were stolen when the official’s vehicle was burglarized.

The chapter savings account bank statements showed several cash withdrawals totaling $33,071, which were made contrary to chapter policies. There were no documents to determine how the cash withdrawals were used.

The chapter is not paying its payroll taxes, and auditors were unable to locate any reports submitted to the IRS. Payroll taxes for the quarters ending March and June of FY2007 and December and March of FY2008 were not remitted to the IRS. Auditors estimated the chapter owes approximately $10,174 in taxes to the IRS, along with penalties and fees, and about $43.80 to the New Mexico Department of Labor.

Auditors could not determine whether all hay purchased for resale by the chapter was subsequently resold. In FY 2008, the chapter purchased 768 bales totaling $6,185, of which 24 bales were unaccounted for. There is no evidence a physical count of hay was conducted.
Also, according to a representative from the Office of Navajo Tax Commission, the chapter is in non-compliance with reporting and remitting sales taxes to the Navajo Nation for FY 2007 and 2008. The chapter owed approximately $829 in sales taxes, plus penalties and fees.

Thoreau Chapter had 30 housing recipients for FY 2007 and FY 2008, of which 16 recipients were selected for compliance test work. The awards totaled $9,412. The chapter did not obtain the support documentation needed to evaluate the eligibility of the applicants, therefore there is no assurance that all recipients were eligible for assistance or that funds are used as intended.

Auditors also chose 20 disbursements totaling $8,614 from the Student Financial Assistance fund for review. The chapter did not have adequate documentation on file such as applications, transcripts or verification of enrollment to provide reasonable assurance that applications were properly reviewed before awarding assistance to the applicant.