Crownpoint Chapter audit says $25,000 missing
By Bill Donovan
Special to the Times
WINDOW ROCK, March 31, 2011
Auditors questioned every account they looked at - an unprecedented level of problems in a chapter audit. They issued a strong recommendation to chapter officials to monitor chapter revenue and expenses.
The chapter gets about $450,000 in funding every year from the Navajo Nation to run the chapter, provide scholarships, create jobs and improve housing.
The audit found that most of the problems surrounded a former office specialist who was put in control of the chapter's finances because there was no chapter coordinator during the period audited, Oct. 1, 2008, to Sept. 30, 2010.
The auditors did not identify the employee by name, saying only that she resigned her position just as they were preparing to examine the chapter's books. Crownpoint Chapter officials also declined to release her name.
In a letter to the auditor general's office after the audit was made public, current chapter officials, who took office a few weeks before the auditors arrived, agreed that the audit findings are "troubling."
President McGarrett Pablo, Vice President Rita Capitan and Secretary-Treasurer Helen Murphy attribute the operational problems to high turnover of chapter administrative staff during the audit period. Since then, internal control practices, including revenue reports, journals and time sheets, have been set up, they said.
The audit found that no checks-and-balances system existed to make sure funds were accounted for. It also said chapter officials failed to monitor the situation because the office specialist and others told them it was outside their authority.
Altogether the auditors found that $24,976 in chapter funds is "presumed missing."
Nothing passed muster
The auditors examined a random selection of expenditures comprising $83,033 of $266,930 spent during the audit period. They ended up questioning every transaction because of the lack of records, failure to get competitive bids, and failure to monitor whether the item purchased matched what was ordered.
For instance, the chapter paid $3,963 for hay that was then sold to chapter members. However, the auditors could find no invoice showing how many bales of hay were purchased or how much money the chapter collected from the resale.
The chapter spent $37,065 on travel expenses, of which $12,787 was part of the audit. The auditors could find no travel authorizations or trip reports or even motel or restaurant receipts to support any of the payments examined.
In the chapter's general assistance and scholarship programs, auditors found the same problems and questioned whether any of the funds - some $73,000 - was used properly. They could find no applications from people for the assistance or the scholarship program.
As a result, "there was no evidence financial assistance was awarded equitably and in a fair manner to community members and/or students," the report stated.
The auditors also found multiple problems with paychecks issued to chapter employees. They found no evidence that the chapter was withholding federal taxes, as required, but state withholding was deducted even though under state law, the chapter is supposed to bear that cost, not the employee, audits said.
They found one case where a chapter employee collected two paychecks for the same period, each for a different amount. They also found a case where the chapter failed to deduct a court-ordered child support payment from an employee's paycheck, but made the $200 payment using chapter funds.
During the two-year period under review, Crownpoint Chapter officials received $106,070 in stipends for attending meetings, but no record could be found to show proof of attendance, as required under tribal law.
The chapter collected some $2,000 in sales taxes during the audit period, but it was never reported or remitted to the tribe. Auditors also said some 50 cash receipts had been torn out of the books, so the amount owed to the tribe could potentially be higher.
"Although we identified payments to the New Mexico Department of Labor, we determined these payments were for penalties, fines and a lien against the chapter," the audit report stated.
Consequences unclear
The chapter potentially faces state, federal and tribal penalties in connection with its faulty handling of sales and payroll taxes, the auditors noted.
Auditors also reviewed nine of the 20 housing assistance awards made by Crownpoint Chapter. They found no records showing the recipients were eligible for that assistance or whether the assistance was used for the intended purpose.
There were also problems with how the chapter spent veterans' assistance funds.
The auditors looked at expenditures of $8,405 and discovered that $3,100 of it went to the former office specialist, although there were no records indicating that the money - or indeed any of the checks written on the account - went to eligible veterans. Nor were the expenditures evaluated by the local veteran's organization, the audit report said.
The auditors found that chapter bank records were disorganized and there was very little monitoring of checks. For instance, the auditors noted several pre-signed checks "lying around at the chapter house."
"Considering that the chapter had a break-in in November 2008, the chapter should be more cognizant in the case of chapter records," the audit said.
The auditors were critical of chapter officials for not monitoring the accounts.
"According to the chapter officials, they were told by chapter staff as was the local governing service center that all chapter records are confidential and cannot be viewed," the audit stated, adding that the tribe's Local Governance Act clearly states that chapter officials have oversight authorities and responsibilities.
Capitan said the Crownpoint officials have been trying to work out a plan to cure the problems but it has been "very frustrating" because the chapter still doesn't have an office specialist or coordinator.
"No one wants the job," Capitan said. "Who wants to take the job when they learn that the chapter is already a mess."
As far as any of the chapter officials know, there is no investigation of the former office specialist's role in the missing money at the chapter. Capitan said the problems would not have gotten so far is oversight had been better.
"Where was the Local Government Support Center" she asked, adding that Crownpoint isn't the only chapter with problems uncovered by a tribal audit. (Last September the LGSC in Shiprock took over administration of Shiprock Chapter because of problems uncovered by a tribal audit.)
As for chapter members, Capitan said it's no wonder that many are frustrated with their chapter leadership. "They are asking why aren't we doing out job," she said.
But until the audit was completed, she said, chapter officials weren't aware that they had this responsibility. Meanwhile, the search continues for qualified staff to handle the day-to-day operations.
"We are determined to get this done," Capitan said.
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