A landmark tribal government-working group was announced last week by the Financial Accounting Foundation (FAF) – the entity that oversees the organizations that set the national accounting standards for governments and industry alike. The decision to form a working group comes after a historic educational session in March between representatives from Nafoa, the Southern Ute Indian Tribe, the FAF, the Governmental Accounting Standards Board (GASB), and the Financial Accounting Standards Board (FASB). The new working group will focus on finding a financial solution that accommodates the tribal governance model.
Federal funding shortfalls and the inability for tribal governments to derive a tax base from federal trust lands has forced tribal governments to adapt. Tribal governments have come to rely on government revenues generated from economic development to create and supplement government programs and services.
“We applaud the Financial Accounting Foundation’s Trustees for their support in the GASB forming the working group and recognizing the tribal government revenue model. Our history with the U.S. Government is unique among governments and our different way of providing revenue to serve our citizens should be recognized,” said Nafoa President Tina Danforth. “We are thrilled to see progress on the issue after years of Nafoa and the GASB working together and building productive relationships.”
Tribal governments’ reliance on economic development to fund essential services to their citizens has negatively impacted audits – even for tribes with strong financial (AAA) ratings. Negative audits, in the form of dual audit opinions, can impact federal funding, bank loans, and the ability to raise capital. “The economic development model of funding governments was formed out of necessity. The negative perception of the dual audit opinion has resulted in additional burdens and the potential loss of economic opportunities,” said Lorelei Cloud, Treasurer of the Southern Ute Indian Tribe.
The educational session centered on how federal Indian policy has shaped today’s tribal governments and resulted in a complex government framework that does not allow tribes to fit neatly into the existing accounting standards for local governments. The working group will likely include the FAF, the GASB, the FASB, tribal governments, federal agencies, and other professionals that work in Indian Country. The group will also recommend other industries and stakeholders that should have input.