This Is Not Attest
Then again, accounting engagements rarely examine 120 years of activity, involve 320,000 accounts, and cover 100 million transactions. What's more, an industry standard for fiduciary accounting doesn't exist. Auditors and trust managers tend to follow the Uniform Principal and Income Act of 1997. But that code was developed by the insurance industry and has not been adopted by every state. Says Ira Herman, director of the estate and trust practice at J.H. Cohn: "There is no such thing as GAAP for fiduciary accounting."

Even critics of the OST's approach acknowledge the unusual circumstances surrounding the Historical Accounting Project. "This is obviously not a traditional audit," says Geoffrey Rempel, a former Price Waterhouse CPA working for the Cobell litigants. But, Rempel asserts, "you can still take the principles in GAS [governmental accounting standards] and GAAP and apply them here."

In truth, it's tough to tell what accounting standards the OST is applying. The DoI touts the phalanx of consulting firms working on the project, including five accounting firms. (All declined to be interviewed for this story.) But the firms are not performing an audit. Instead, the Historical Accounting Project more closely resembles an "agreed-upon-procedures" engagement. Indeed, internal DoI documents show that the agency has instructed the accounting firms to refrain from using the word audit or even attestation when discussing their roles in the project.

Mostly, the firms are adhering to something called the Accounting Standards Manual. That lengthy, oft-revised book is extremely detailed. It is also the OST's handiwork. Thus, the accounting firms are following OST guidelines — and are not offering conclusions about their findings. As Grant Thornton noted in a letter regarding its role as quality-control agent: "[the firm's] assessment of the quality of work performed by...accounting teams performing the historical accounting is based primarily on [the] Accounting Standards Manual.... This assessment is not an audit and, accordingly, we do not express an opinion."

The OST does note that the quality-control firm "tests for compliance with the American Institute of Certified Public Accountants standards." Those guidelines, however, address the professional conduct of consultants, and not audit standards.

Location, Location, Location
Still, the absence of a GAAP audit does not mean that the numbers produced by the Historical Accounting Project are off. Nor does it mean that lease money intended for Native Americans found its way into the wrong pockets. "When I started working with Cherokee Nation in 1972," recalls Swimmer, "I met a lot of BIA people. They took a lot of pride in what they did. And they weren't out to try and cheat anybody."

Without a good paper trail, it's hard to say for sure if Native Americans have received all monies due them. DoI officials say the effort in Lenexa is providing the necessary documentation to corroborate transactions. In a recent court filing, the Interior Department noted that "[w]ith few exceptions, the Indian trust records needed for the historical accounting exist, are being located with success, and are being used to reconcile IIM account transactions."

Critics charge that the standards used by the OST to confirm transactions fall far below what you'd find in the private sector. DoI memos do reveal that the department advised accountants working on the project to use "alternative procedures," as well as their own judgment, to verify transactions in the absence of moresolid documentation. "When you peel off the veneer," insists Rempel, "the procedures they're using could validate anything."

A canceled check, for instance, is apparently not required to prove that a payment was made by a lessee. This surprises J.H. Cohn's Herman: "As a fiduciary, you have the absolute responsibility of knowing every single receipt and every single disbursement, and you want to know every document that's associated with it."

The OST could have difficulty finding every document. Some records-warehouses on reservations were little more than glorified sheds. In 1999, Treasury reported that 162 boxes relating to the Indian trust-fund litigation had been accidentally destroyed. Apparently, the boxes contained government forms reflecting disbursements made by federal agencies from 1900 to 1958.

The revelation did not exactly calm fears in Indian country about the veracity of the Historical Accounting Project. "If the normal bar for trust accounting is 100, this project started out at 50," claims Harper. "Now it's at 2. Ultimately, it will be down to 0." He pauses. "This whole thing is an exercise in nothing."

On September 10, the DoI said it would not comply with a federal judge's order to turn over electronic trust data to the Cobell plaintiffs.

In Lenexa, the trucks keep rolling in. The work continues.

John Goff is a senior editor at CFO.

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