(CN) – Montana’s Crow Indian Tribe may have to repay up to $14.5 million for highway construction on its reservation because the federal government says the tribe cannot find the receipts for the project.
A report released Monday by the U.S. Interior Department’s Office of Inspector General says the Crow Tribe claimed expenditures, through its contractor, for $14,492, 813 for costs associated with a highway contract from November 2016.
The contract at issue is a government-to-government agreement between the tribe and the federal government.
The Interior Department sought to audit the contract, but said in Monday’s report it unable to.
“We could not perform the audit because the contractor and the [Bureau of Indian Affairs] could not provide the necessary documentation for its contract or claim. Thus, we could not determine whether the contractors’ claimed costs of $14,492,813 were allowable under federal laws and regulations … and supported by the contractor’s records. We question, therefore, the entire claim of $14,492,813,” the report states.
The Crow Indian Reservation in southeast Montana entered into a tribal transportation agreement with the Bureau of Indian Affairs (BIA) to plan, build and maintain highway projects that are located on or near its reservation.
The Interior Department report said a Crow Tribe expense report from September 2015 showed $13.9 million in expenses, while its general ledger showed claimed costs of $10.8 million, resulting in a $3.1 million discrepancy.
“We conclude that the tribe’s accounting system is inadequate to handle federal funds,” the report states.
“We requested the detailed general ledger that agrees to the $14,492,813 in claimed costs. The tribe submitted a general ledger to us with claimed costs of $10,813,971,” it continues. “The tribe could not provide records to account for the $3,678,842 difference between the agreement and the general ledger. These issues demonstrated that the tribe did not have the necessary internal controls to properly report expenses and reconcile its records. We found that the tribe claimed $14,492,813 in costs that were not allowable or allocable, and that these questioned costs resulted from deficient internal controls.”
The tribe also did not submit supporting documents for $14.5 million in payments it allegedly made for the highway project, according to the Interior Department.
“The tribe could not provide any supporting documentation for $14,492,813 in payments to subcontractors, vendors, and internal transactions,” the report states. “We requested the necessary documentation numerous times during two site visits, and through e-mails to the finance and legal departments and the chairman of the tribe. They all stated that the records have not been located. Therefore, we question the total amount of the agreement’s $14,492,813.”
Monday’s report said government-to-government agreements with tribes allow more flexibility on the tribes’ parts, and as a result “there is less administrative work for both the tribe and BIA staff, which increases the BIA’s availability to provide technical assistance to tribes.”
It further said the Crow Tribe could not manage the contract because of personnel turnover in the tribe’s finance department. According to the report, the contractor that began managing the tribe’s finance department in December 2016 was fired in July 2017, and the department was re-established only after the contractor and “all the finance personnel working for the contractor were let go.”
“Tribal officials told us that the reason they could not support expenses claimed on the agreement was because the tribe had to hire a new finance department to help manage its federal agreements and the accounting records,” the report states. “The old contractor did not know how to manage federal agreements and the accounting records associated with the agreements. The tribe did not have adequate internal controls and a sufficient accounting system to track claimed costs. As a result, the tribe was unable to support expenses claimed on the agreement.”
The Crow Tribe has now lost its ability to operate as a government-to-government contractor.
According to Susan Messerly, acting deputy director for the Interior Department’s Rocky Mountain Region, the Crow Tribe was designated as “high risk” in 2016 and must now receive funding from the federal government on a reimbursable basis only, not in advance.