Arthur Andersen taking on IIM accounting
Facebook Twitter Email

Arthur Andersen, the accounting firm embroiled in a scandal over the largest bankruptcy in U.S. history, has taken a major role in the Department of Interior's attempt to conduct an historical accounting of the trust assets of 300,000 American Indians.

Long delayed by the Interior, the accounting is being aided by a number of firms, according to the 8th quarterly report. But Andersen is the lead on an accounting of the assets for members of the Agua Caliente Band of Cahuilla Indians in California and is directing the department's effort on other aspects of Individual Indian Money (IIM) trust.

Work hasn't yet begun on the Agua Caliente project, which will only affect about 300 IIM accounts, according to the report. Andersen still has to submit a plan on how it will undertake this project.

According to the Riverside (California) Press-Empire, Richard Milanovich, chairman of the tribe, believes an historical accounting of his members' assets has already been completed by the Interior. The paper reported that he made the observation at a consultation session in San Diego, California, yesterday, but gave no details on the nature of the accounting to which Milanovich was referring.

With regard to the overall historical accounting, Andersen has already done some preliminary work on the IIM trust in general for the Department of Justice. The work, according to the report, involved looking at transactions in excess of $1 million.

However, the research was limited to 1985 through 1999, not to the inception of the IIM trust. The report said Andersen examined $1.5 billion in over 320,000 electronic database transactions for more than 2,200 account holders.

But this effort will be used by the Office of Historical Trust Accounting on a larger scale, according to the report. "The OHTA has directed Andersen and other supporting contractors to develop a plan detailing what additional, current supporting documentation is required, test the validity of the transactions posted to the IIM accounts . . . and develop and implement procedures to produce an accounting for IIM account holders," the report states.

Andersen has already helped DOJ examine the accounts in the Integrated Records Management System (IRMS) in order to determine how many IIM accounts are in existence and to remove multiple or duplicate names. However, as trust officials have testified during Secretary Norton's contempt trial, the IRMS database is not inclusive of all Indian landowners who may have had accounts, or still do.

Andersen's involvement with Indian trust dates to the 90s when it was hired by the Interior to do an accounting for the assets held for tribes. While it resulted in an unaccounted $2.4 billion, the effort was not historical -- it was time limited as described above -- and is still viewed by Congressional appropriators and senior officials as inadequate.

Andersen's practices are currently under scrutiny by the accounting industry due to the collapse of energy company Enron. Andersen routinely destroyed documents even thought it new the Securities Exchange Commission was investigating Enron.

Lead auditor David B. Duncan, who was fired earlier this week, admitted he did not instruct the shredding to stop until the SEC subpoenaed Andersen in November. Document protection and retention has been a significant issue for the Indian trust.

The SEC chairman is calling for a revamp of accounting policies in light of the debacle. In addition to numerous Congressional and federal probes affecting the company, Connecticut Attorney General Richard Blumenthal is launching an investigation, which may include criminal charges, against Andersen.

The investigation could result in a suspension of Andersen's business to practice in the state. No other states have publicly announced any moves on Andersen.

Update: Attorneys General of Florida and Texas have launched probes similar to Connecticut's.

For its five-year tribal effort, Andersen was paid $12 million.

Enron fired Andersen yesterday.

Get the Report:
Status Report to the Court Number Eight (1/16)

Today on Indianz.Com:
Norton scraps trust reform blueprint (1/18)
Under watch of Swimmer, TAAMS halted (1/18)

Relevant Links:
Arthur Andersen -
Indian Trust, Department of Interior -
Indian Trust: Cobell v. Norton -
Trust Reform, NCAI -

Related Stories:
Norton signs trust reform update (1/17)
Trust reform status report due this week (1/16)
Norton ordered to submit trust fund report (12/18)
Exclusive: Trust reform assessment (12/12)
Interior Solicitor on trust fund crash course (10/17)
Trust fund progress testing 'credibility' (10/11)
Trust fund fix risking 'failure' (10/10)
Memo: Solicitor's order was 'intimidating' (10/10)
In The Hoop: Interior Bungling (10/10)
Infighting delaying trust fund fix (9/20)
Objections delaying trust fund report (9/6)
Trust fund contract canceled (6/28)
Report: Litigation threatening reform project (3/8)

More on Arthur Andersen:
Arthur Andersen fired by Enron (1/18)
Andersen questioned Enron relationship (1/17)
Andersen faces rocky future (1/16)
Enron warned of imploding situation (1/15)
Enron debate a political gamble (1/14)
Auditor Andersen's name in 'tatters' (1/14)
Enron subject of criminal investigation (1/10)
Cheney met with failed Enron Corp. (1/9)
Colo. tribe an Enron investor (1/7)