In a recent feature with the Arizona Society of CPAs (ASCPA), REDW Principal and National Tribal Practice Leader, Wesley Ryan Benally, CPA, recognizes the benefits of expanding professional services to tribal entities, noting that the undertaking poses compelling challenges for accountants and CPAs. Serving Native American Tribes requires an elevated level of service. Following the same reporting framework of the Governmental Accounting Standards Board (GASB), tribes are subject to the Single Audit Act under the OMB Uniform Grant Guidance as they operate much like a state or local government. Even grant programs can be specific to tribes and naturally will come with their own set of compliance requirements. Wes’s insights on expertly serving Indian Country—and notes for interested professionals and firms—are featured in the July/August 2022 issue of AZ CPA Magazine, shared with permission below.
The Importance of Serving Tribal Entities
BY WESLEY RYAN BENALLY, CPA (DINÉ)
The 22 federally recognized tribal nations within the state of Arizona make a vital contribution to the economics and wellbeing of the state. While most people reflexively think of gaming as the primary economic engine for tribes, there is more. But let’s start there.
In the fiscal year ending June 30, 2021, gaming generated $1.9 billion in revenue for the 16 Arizona tribes that operate Las Vegas-style casinos, six tribes with slot machine transfer rights agreements and two other tribally owned gaming facilities. Since 2002, tribally owned entities have contributed over $1.82 billion in total revenues to the state through their gaming revenue compacts.
About 12 percent ($228 million) of that total was directed to cities, towns and counties for governmental services benefitting the general public, such as public safety and economic development. Another 9 percent ($171 million) funded the state’s regulatory expenses. More than $97 million was contributed to the Arizona Benefits Fund, funding education programs, emergency services, wildlife and habitat conservation, tourism and the prevention and treatment of problem gambling.
As significant as this gaming revenue is, non-gaming jobs and related support services offered by tribes add to the state’s overall economy as well. Through industries such as construction, hospitality and land development, non-gaming operations on or off tribal lands can include solely tribal-owned or joint ventures with private parties or, more uncommonly, with other governmental entities. In fact, High Country News’s At the Crossroads special report makes it clear that there is a push across Indian Country to launch new businesses that do not rely on gaming to generate economic activity that benefits both tribal and non-tribal citizens.
Tribes are growing and seeking opportunities in many different industries to better serve their tribal citizens, as such, accounting, tax and other financial services that address their needs can be lucrative and a technically challenging opportunity for many firms. Tribal governments need people with the technical knowledge to ensure that internal processes and financial reporting requirements are met. In addition, a specific niche knowledge inherent to the status of tribes as sovereign entities is limited. The nuances attributable to the sovereign status of tribes and the consistent changes in accounting requirements for governments is what keeps accountants and CPAs like me engaged with and excited by this type of work.
AN ELEVATED LEVEL OF SERVICE
Operating much like a state or local government, tribal governments follow the same reporting framework established by the Governmental Accounting Standards Board and are subject to the Single Audit Act, under the OMB Uniform Grant Guidance. Historically, accounting firms and their interactions with tribes are primarily due to these audit requirements. While there are many similarities, tribal governments differ from other entities from an accounting and auditing perspective. Many federal grant programs are specific to tribes and come with their own set of compliance requirements. In addition, unlike state and local governments, tribal governments often own multiple businesses in many industries, including hospitality, construction, healthcare, gaming and more.
Understanding the financial nuances of a tribal entity that has federal government reporting requirements, wholly owned versus jointly owned enterprises, and on-reservation and/or off-reservation businesses, is vital for accountants and CPAs. In healthcare, for example, this includes distinguishing between self-governing tribal entities (those that manage their own accounting or healthcare systems) and those that rely on the federal government to manage these and other services. There can be a steep learning curve when practicing in this field.
Just like other governmental entities, tribes often need help beyond client accounting and advisory services. Many firms, including ours, make themselves even more valuable to tribal governments by providing on-call CFO services, human resources consulting, software system sales and support, IT consulting and more – especially as tribes expand their influence outside their sovereign boundaries and increase partnerships with non-tribal entities. Depending on their constitutions, tribes can have taxing authority, as well. A firm with expertise and dedicated staff in any or all of these areas has a big advantage over those that don’t.
All these services require careful due diligence on the part of their advisors and as with any business relationship, trust is the key factor. Trust is strengthened through a specific understanding for a tribe’s culture and sovereignty. That’s why we need more Native CPAs, and non-Natives with the education, experience and temperament to serve tribal entities. According to the Association of International Certified Professional Accountants, just 0.3% of bachelor’s and master’s accounting graduates were American Indian or Alaskan Native. When you consider that Native Americans make up about 2 percent of the United States population, we’re definitely underrepresented in this industry.
INCREASING REPRESENTATION
Firms have an opportunity to increase Native representation in the industry, and not just by actively recruiting from the communities we serve. Given the recognized benefits of increased diversity in any profession, it’s simply good business to increase and elevate the services that accountants and CPAs provide to tribal entities. For example, we at REDW teach budgeting and financial literacy to underserved populations through organizations like the Phoenix Indian Center, and offer an informational and educational podcast, webinars and articles to Indian Country. We’ve developed a relationship with Arizona State University by promoting accounting to Native high school and college students as a field of opportunity. Each program is part of our holistic approach and commitment to increasing the number of Native American accountants and CPAs and the value we bring to current and prospective tribal clients. But only by going beyond the billable work can accounting firms demonstrate their ability to appropriately and professionally serve the needs of Indian Country.
Wesley Ryan Benally, CPA (Diné) is principal and National Tribal Practice leader at REDW. For over 30 years, REDW has specialized in providing accounting services to more than 200 tribal governments, healthcare facilities, gaming operations and enterprises.
References
Arizona Department of Gaming https://gaming.az.gov/tribal-gaming/tribal-contributions
High Country News “At the Crossroads” Report: https://www.hcn.org/articles/economy-how-the-economy-of-indian-country-impacts-local-communities
