LEGISLATIVE SUMMARY SHEET Tracking No. Ql50 - B

DATE: May 18,2013

TITLE OF RESOLUTION: PROPOSED STANDING COMMITTEE RESOLUTION, AN ACTION RELATING TO BUDGET AND FINANCE; ACCEPTING THE SPECIAL REVIEW OF THE 2012 - 101 ST NORTHERN NAVAJO NATION FAIR SUBMITTED BY THE OFFICE OF THE AUDITOR GENERAL AND APPROVING THE CORRECTIVE ACTION PLAN SUBMITTED BY THE NORTHERN NAVAJO NATION FAIR BOARD

PURPOSE: The purpose of the resolution is to accept "A Special Review of the 2012 - 101sl

Northern Navajo Nation Fair" submitted by the Office of the Auditor General and Approving a Corrective Action Plan submitted by the Northern Navajo Nation Fair Board.

This written summary does not address recommended amendments as may be provided by the standing committees. The Office of Legislative Counsel requests each Council Delegate to review each proposed

resolution in detail.

13-333-1

QAYBlL 1E/DATE: -fII' lNAlURt .~DOAl!

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Budget &Finance mmlttee

SED STANDING COMMITTEE RESOLUTION

220d NAVAJO NATION COUNCIL - Third Year, 2013

INTRODUCED BY

~ (Sponsor)

TRACKING NO. D(50-18 AN ACTION

RELATING TO BUDGET AND FINANCE; ACCEPTING THE SPECIAL REVIEW OF THE

2012 - 101 ST NORTHERN NAVAJO NATION FAIR SUBMITTED BY THE OFFICE OF THE

AUDITOR GENERAL AND APPROVING THE CORRECTIVE ACTION PLAN

SUBMITTED BY THE NORTHERN NAVAJO NATION FAIR BOARD

BE IT ENACTED:

1. The Navajo Nation hereby accepts the Audit Report No. 13-07 "A Special Review of th

2012 - 101 st Northern Navajo Nation Fair," attached hereto as Exhibit A, and approve

the Corrective Action Plan submitted by the Northern Navajo Nation Fair Board, attache

as Exhibit B.

2. The Navajo Nation hereby directs that copies of "A Special Review of the 2012 -lOIS

Northern Navajo Nation Fair" be provided to the Office of the President/Vice Presiden

as part of their oversight responsibility for the Northern Navajo Nation Fair Board.

3. The Navajo Nation hereby directs the Northern Navajo Nation Fair Board to submit

written status report on their progress in implementation of the corrective action plan t

the Office of the Auditor General six months after the approval of this resolution.

4. The Navajo Nation hereby directs the Office of the Auditor General to review the writte

status report to be submitted by the Northern Navajo Nation Fair Board and report to th

Resources and Development Committee, as well as the Budget and Finance Committee.

5. The Navajo Nation hereby directs the Office of the Auditor General to conduct a follow

up review twelve months after the approval of this resolution to verify the action

claimed to have been taken by the Northern Navajo Nation Fair Board, to issue a writte

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follow-up report indicating the Northern Navajo Nation Fair Board's progress

implementing the corrective action plan, and to make recommendations to the Resource

and Development Committee, as well as the Budget and Finance Committee.

Page 2 of2 13-333-1

EXHIBIT "A"

EXHIBIT

'--4­

OFFICE OF THE AUDITOR GENERAL

The Navajo Nation

A Special Review of the

2012 - 101st Northern Navajo Nation Fair

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March 29, 2013

Sophina Tyler, Chairperson SHIPROCK FAIR BOARD P.O. Box 4454 Shiprock, ~M 87420

Dear Ms. Tyler,

The Office of the Auditor General herewith transmits Report ~o. 13-07, A Special Review of the 2010 - 101 s1 Northern ~avajo ~ation Fair with findings and recommendations.

If you have any questions regarding this report, please call our office at (928) 871-6303.

Sincerely,

/~t2;:;:J~;;~ Auditor General

Enclosure

Chrono

P.O. BllX 70S / WinLh", ROLk,:\L 8ti515 / ['h. (928) 871-6303, 630-l / F..lX (Y28) 871-hU54;, E-mdil' dudilorgL'IWraliynavdjol)rg

TABLE OF CONTENTS

SUMMARY 1

FINDING I: Lack of Controls over Revenue

FINDING II: Lack of Adequate Management over Fair Events 10-14

INTRODUCTION AND BACKGROUND 2

OBJECTIVES, SCOPE AND METHODOLGY 4

and Expenses 5-9

CLIENT RESPONSE 15

SUMMARY

The Office of the Auditor General has conducted a special review of the 2012 - 101st Northern Navajo Nation Fair events managed by the Northern Navajo Nation Fair Board and the Navajo Nation Fair Office. This special review provides the results of the 2012 - 101st Northern Navajo Nation Fair. The review shows the Northern Navajo Nation Fair made a profit of $36,576. The profit indicates that the $428,230 revenues were sufficient to cover the $391,654 cost of operating the Fair. Although the Fair made a profit, we noted deficiencies in the Fair operations that need improvement.

Finding I: Lack of Controls over Revenue and Expenses

Controls over the Fair revenue and expenses were inadequate; as a result we identified the following deficiencies:

• The Fair Board did not capitalize on all revenue generating activities, resulting in $65,000 in lost revenue.

• Unpaid vendor rental fees and parade entry fees totaled $14,400. • Poor documentation of revenues resulted in no assurance that all revenues are

accounted for and reported to the Fair Board. • Lack of documentation to support the validity of Fair expenses, specifically an

$8,000 cash withdrawal from the bank account.

Finding II: Lack of Adequate Management over Fair Events

The Fair events were not adequately managed; as a result we identified the following deficiencies:

• Poorly supervised Indian Market resulted in frustrated vendors. • Disorganized and ill-planned parade resulted in angry and disappointed parade

participants. • Poor management of Rodeo and 4-H events resulted in incomplete

documentation and reporting of event activities. • The Fair Board did not verify the accuracy of the close-out report provided by

the Fair Office. • Key responsibilities specified in the Memorandum of Understanding were not

performed by the Fair Office. • The Fair Board did not report wages, stipends, prize monies, and contractual

payments as required by the Internal Revenue Service guidelines.

In addition to the findings summarized above, the audit report contains recommendations for improving future Fair operations.

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INTRODUCTION AND BACKGROUND

The Office of the Auditor General has conducted a special review of the 2012 -101st Northern Navajo Nation Fair (Fair) events managed by the Northern Navajo Nation Fair Board and Navajo Nation Fair Office. At the request of the Navajo Nation Budget and Finance Committee the special review of the Fair was initiated. This special review provides the financial results of the 2012 Fair events.

Purpose and Authority

The Fair was started over 100 year ago by the community people of the Northern Navajo Nation Agency and Bureau of Indian Affairs. Since its creation, it has operated in Shiprock, New Mexico, with the participation of all Navajo citizens of the Navajo Nation. Over the years, the annual event has grown and presently includes activities such as parade, concerts, carnival, rodeos, pow-wow, Indian market, and Yei Bi Chei ceremony. Most of the activities provide the promotion and preservation of the Navajo (or Dine') heritage by showcasing Dine' agriculture, arts and crafts, and cultural entertainment. The Fair is held the first weekend in October.

On August 21, 2012, the Northern Navajo Nation Fair Board's (Fair Board) amended Plan of Operation was approved by the Resources and Development Committee of the Navajo Nation Council via resolution number RDCAU-81-12. The Fair Board has ultimate authority, control and decisions relating to any Fair event. The Fair Board members consist of 19 registered members of the Northern Navajo Nation Agency chapters. The Fair Board meets at least once each quarter and members are paid a stipend of $150. The Fair Board is required to provide a financial report to the Northern Navajo Nation Agency Council and Resources and Development Committee on or before the 15th of January each year.

On September 26, 2012, the Fair Board and the NavajO Nation Executive Branch signed a Memorandum of Understanding and agreed on the administration, management and operation of activities related to the 2012 - 101st Northern Navajo Nation Fair. According to the agreement, the Navajo Nation Fair Office (Fair Office) is responsible for managing the Fair. The Fair Office would work closely with the Fair Board event coordinators on any fair event; however the Fair Board will have the overall responsibility in the production of the Northern Navajo Nation Fair. The Resources Committee of the Navajo Nation Council has legislative oversight over the Fair Board/Office.

Results of the 2012 -101st Northern Navajo Nation Fair

The Fair Board bank account had an ending cash balance of $62,182 as of December 14, 2012. Our review of the revenues and expenses for the 2012 - 101st Northern Navajo Nation Fair showed a net income of approximately $36,576. The profit indicates that the $428,230 revenues were sufficient to cover the $391,654 cost of operating the Fair.

Table Ion the following page illustrates the financial results of the 2012 -101st Northern Navajo Nation Fair.

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Table 1 2012 -101SINorthem Navajo Nation Fair

Revenue, Expenses, and Net Income

Revenues

Ticket $ 184,919

Carnival 75,000

Indian Market 60,680

Rodeo 41,879

Sponsorsl 29,100

Parade 27,112

Horticulture 4,425

Poster Sales2 2,443

Baby Pageant 1,800

4-H 872

Total Revenues: $ 428,230

Expenses,

Prizes-Rodeo, Pow-wow, Other3 $ 100,344

Workers4 63,356

Sanitation/ Utilities 39,233

Contractors 33,717

Advertising/Gifts/ Awards 26,299

Indian Rodeos 26,271

Security 34,025

Equipment Rentals 15,931

Building/Trailer/Fair Ground 14,618

Supplies/Insurance 16,302

Food/Carering/Lodging 7,924

Unidentified Expense 8,050

Other Activities/Events 5,225

Undeposited Monies 359

Total Expenses5: $ 391,654

Net Income: $ 36,576

SOllrce: office of tile Auditor General Compilation of 2012 - 101 5' Nortllern NllVajo Nation Fair revel/ue and expenses from Nortllenl NllVajo Nation Fair Board CIlecking account, FMIS, premium book, cash receipt tickets, and Rodeo clerk reports.

Note 1: The $29,100 sponsors include $8,500 contributions from Navajo Nation departments. Note 2: The $2,443 poster sales include 2011 Poster sales totaling $315, Note ]: The breakdown of the $99,844 prize monies includes Rodeo-$56,089; Pow-wow-$27,505; and Other-$16,750. Note ~: The $63,356 wages paid to workers includes $20,577 stipends paid to the Fair Board members, Note 5: The $391,654 in expenses does not include outstanding payables (i.e. Waste Management). If the payables are recognized as expenses, it will reduce the net income.

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Objectives, Scope and Methodology

The following objectives were established for this special review:

1. To determine the financial results of the 2012-101 s1 Northern Navajo Nation Fair. 2. To determine whether the Fair Board/Office fully accounted for the Fair revenues and

expenses. 3. To determine whether the Fair Board/Office adequately managed the Fair events.

In meeting our objectives, we performed the following procedures:

1. Reviewed Fair Board plan of operation and meeting minutes. 2. Reviewed Fair Board/Office Memorandum of Understanding. 3. Reviewed the Fair Office records to compile revenues and expenses. 4. Reviewed Fair Board/Office procedures in collecting, recording and reporting of revenues. 5. Reviewed Fair Board/Office procedures in classifying and reporting of expenses. 6. Selected a sample of expenses to verify proper approval, supporting documents, and two

signatures on checks. Samples were selected by judgmental sampling. 7. Interviewed Fair Office staff and Fair Board members. 8. Interviewed Northern Navajo Nation Fair event coordinators. 9. Observed Northern Navajo Nation Fair operations. 10. Reviewed the Carnival agreement. 11. Obtained documentation from the Carnival contractor, Fair Board, and Navajo Nation

Accounts Payable Section. 12. Identified payments recorded in the Navajo Nation accounting system (FMIS) to the

Northern Navajo Nation Fair.

Government Auditing Standards

This special review was conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States. The standards require that we plan and perform the audit to afford a reasonable basis for our judgments and findings regarding the entity under audit. An audit includes assessments of applicable internal controls and compliance with requirements of laws and regulations when necessary to satisfy the audit objectives. We believe our audit provides a reasonable basis for our findings.

The Office of the Auditor General and staff express their appreciation to the Fair Board members and Fair Office staff and all other entities who contributed to this audit for their cooperation and assistance throughout the audit.

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FINDING I

Lack of Controls over Revenue and Expenses

Controls over the Fair revenue and expenses were inadequate. The Fair Board did not capitalize on all revenue generating activities, resulting in approximately $65,000 in lost revenue. Also, we identified unpaid vendor rental fees and parade entry fees totaling $14,400. In addition, the Fair Board/Office did not ensure revenues are fully documented. There is no assurance that all revenues are accounted for and reported to the Fair Board. Lastly, we could not verify the propriety of expenses that lacked documentation. The validity of these undocumented expenses, specifically an $8,000 cash withdrawal from the bank account is questionable.

Approximately $65,000 in lost revenue

Criteria The Fair Board should capitalize on all revenue generating activities during the Fair. For example, the Indian Market coordinator should ensure all available vendors spaces are rented out during the Fair. The sale of Fair posters should be publicized and the posters adequately displayed to attract buyers. Issuance of passes should be limited to reduce loss revenues.

Condition The Fair Board did not capitalize on all revenue generating activities during the Fair. We found the following deficiencies:

• Indian Market-315 spaces were available for rent, ranging from $300 to $500 depending on the type of space. We calculated that the Indian Market should have generated $104,600 in revenue, if all vendor spaces were rented. During the Fair, we noted vendors looking for available spaces. We also observed available spaces for rent on Saturday and Sunday. However, a sign was posted in the Fair Office mid-Saturday stating all vendor spaces were sold out. Furthermore, the Indian Market coordinator was unreachable to assist vendors looking for available spaces. Our compilation of vendor applications and cash receipt tickets found $60,680 revenue generated from the Indian Market. This amount translated to 183 spaces rented out. As a result, 132 vendor spaces were not sold or approximately $43,920 loss revenue.

• Fair posters-2,500 Fair posters were ordered during the Fair. 2,000 Fair posters were available for sale and 500 posters were given to the Fair poster designer free of charge. Our compilation showed 304 posters were sold at $7/ poster which translated to $2,128 revenue. We calculated 1,696 posters were not sold, which translated to $11,872 loss revenue. We observed the only place the Fair posters were being sold was at the Fair Office, not easily accessible to the public. The posters could have been sold at the entrances, exhibit halls and on the fairground where they were readily available to the public.

• Fair Passes-The Fair Office reported the following free passes issued for the Fair: 456 walk-in passes at $10/each, 117 parking passes at $20/each, 20 VIP passes at $50 each, and 32 4-day Walk-in passes. We calculated 625 free passes issued during the Fair, which translated to approximately $9,000 loss revenue.

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Cause • The sign posted at the Fair Office that all spaces were sold out although there were

available spaces misled prospective vendors wanting to rent space. • The Fair Board did not ensure fair posters were properly displayed to the public. The

posters were only displayed at the fair office, which was located inside the fairgrounds and not easily accessible to the general public. Further, poster sales were not advertised to inform the public.

• The Fair Board did not have guidelines in place to limit the issuance of free passes. The free passes were arbitrarily issued as requested by the Fair Board.

Effect The inability of the Fair Board to capitalize on all revenue generating activities led to approximately $65,000 in lost revenue.

Recommendations 1. An office should be set up at the Indian Market for the event coordinator who should be

available during the duration of the Fair to assist vendors wanting to rent space. 2. The Fair Board should advertise and sell posters in key locations inside and out of the

fairgrounds. For example, at the entrance gates, Indian Market, Parade route, etc. 3. The Fair Board should establish guidelines to limit the issuance of free passes.

$14,400 in uncollected revenue

Criteria Prudent management ensures collections are reconciled to recorded sales to identify outstanding receivables and initiate collection efforts in a timely manner.

Condition The Indian Market event coordinator did not reconcile recorded vendor spaces rented out against vendor fees collected. The Parade event coordinator did not reconcile parade entries to the parade entry fees collected. The lack of reconciliation resulted in the following:

• $7,400 of unpaid Indian Market vendor space fees was not collected. • $7,000 of unpaid Parade entry fees was not collected.

Cause • Indian Market event coordinator did not maintain adequate records to enable

reconciliation of vendor space applications against actual fees collected. We identified approximately 40 vendors did not pay the full amount of the space fee. Nevertheless, the vendors were allowed to occupy the space for the duration of the Fair.

• Parade event coordinator did not properly document and collect parade fees. We identified 12 floats in the parade line-up that had no record of application or payment (12x$250=$3,OOO). In addition, we identified 8 political candidate entries that had no record of payment (8X$500=4,000).

Effect The uncollected revenue led to loss of income of approximately $14,400 for the Fair Board. The possibility of collecting the unpaid fees from the vendors and parade participants is remote.

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Recommendations 1. The Fair Board should ensure the Indian Market and Parade event coordinators develop

an organized method, such as a spreadsheet, to keep track of vendor/parade records and related data (applications, cash receipt tickets, reconciliation forms, etc.).

2. The Indian Market and Parade event coordinators should ensure collections are reconciled daily to recorded cash receipt tickets and applications to timely identify unpaid fees.

3. The Indian Market and Parade event coordinators should ensure full payment is received from vendors/parade participants prior to the start of the Fair.

Poor documentation ofrevenue

Criteria Proper accountability of revenues requires complete accounting of transactions such as documenting sponsorship (Gold, Silver, and Bronze) on a packet (name/business, type, amount, payment received, and event sponsored). Tickets to be issued for the carnival, entrance, and parking should be inventoried prior to the start of the Fair. Cash receipt ticket books should be assigned by revenue source for easier compilation of revenue.

Condition The Fair Board/Office did not ensure Fair revenues are fully documented. We found the following deficiencies:

• Sponsors were not fully documented. Records show $24,100 in sponsorship monies were deposited into the Fair Board bank account. However, there was no assurance all sponsors were identified and sponsorship monies were deposited due to lack of documentation.

• Carnival tickets were not inventoried at the beginning and end of Fair. Consequently, we cannot verify the accuracy of the reported ticket sales by the carnival contractor. Entrance tickets sales could not be verified. Our compilation of tickets sales based on documentation provided by the Fair Office showed a lower amount than the report provided by the finance manager.

• Rodeo cash receipt tickets were torn out of the cash receipt books. • Cash receipt ticket books issued were not documented and segregated by revenue

source, making it difficult to compile revenue.

Cause • Fair Board/Office did not maintain complete records of sponsors; sponsorship packets

were not on file. • Fair Board did not assign a coordinator to ensure carnival tickets were inventoried. • The inventory list of tickets for sale is incomplete. In addition, the Fair Office ran out of

tickets during the Fair but continued to collect entrance fees without issuing tickets. • The rodeo clerk tore out cash receipt tickets from the book without regard to pre­

numbered tickets. • The Fair Board haphazardly issued cash receipt books to temporary workers without

documenting the names of the workers and cash receipt book numbers issued.

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Effect We were unable to categorize the type of sponsors, the amounts and events sponsored. In addition, we could not verify the accuracy of reported sponsorship monies, carnival ticket sales, entry ticket sales, and rodeo entry fees. Furthermore, there is no assurance that undocumented cash receipts were turned into the Fair Office. There is a risk that not all revenues are accounted for.

Recommendations 1. The Fair Board/Office should maintain complete records of sponsors. Sponsorship

packets should be on file and a summary list should be developed to compile all sponsors by type of sponsors, the amounts and events sponsored.

2. The Fair Board should assign a coordinator to ensure carnival tickets are inventoried prior to the start and the end of the Fair.

3. The Fair Board should consider using a computerized ticketing system to eliminate running out of tickets in the middle of the Fair event. Computerized ticketing system will also eliminate the inventory of tickets.

4. The rodeo clerk should not tear out cash receipt tickets from the book. All cash receipt tickets should stay in the book.

5. The Fair Board should issue cash receipt books based on revenue source and document the issuance of the book.

Inadequate controls over expenses

Criteria The Fair Board plan of operation requires all Fair expenses be properly approved by the board, have appropriate documentation (i.e. invoice and/or contract), and two signatories (Board/Fair) on each check. Direct cash withdrawals from the Fair Board's bank account are prohibited.

Condition The Fair Board/Office did not exercise adequate controls over Fair expenses as follows:

• $4,620 rodeo expenses did not have documentation to support the expenses. • $35,806 operation expenses selected for review did not have proper documentation to

support the expenses. • 9 out of 11 checks amounting to $45,646 were not co-signed by the Fair Board/Office. • $8,000 cash withdrawal did not have documentation to support the withdrawal.

Cause The Fair Board/Office did not ensure all expenses are adequately documented and checks have two signatories. Further, the Fair Board disregarded policies prohibiting cash withdrawals.

Effect We could not verify the propriety of expenses that lacked documentation. Consequently, we question the validity of these undocumented expenses specifically the $8,000 cash withdrawal from the bank account.

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Recommendations 1. The Fair Board/Office should ensure all expenses are adequately documented prior to

signing the check. 2. The Fair Board/Office should ensure all checks have two signatures. 3. The Fair Board should not allow cash withdrawals from its bank account.

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FINDING II

Lack of Adequate Management Over Fair Events

The Fair events were not adequately managed. The Indian Market was poorly supervised resulting in frustrated vendors. The parade was disorganized and ill-planned resulting in angry and disappointed parade participants. In addition, the Fair Office did not remit approximately $16,500 of Fair revenues due to the Fair Board. Also, key responsibilities specified in the Memorandum of Understanding were not performed by the Fair Office. Lastly, the Fair Board did not report wages, prize monies, stipends, and contractual payments as required by the Internal Revenue Service guidelines.

Poor supervision of the Indian Market event

Criteria Proper supervision for the Indian Market event includes developing a clear, properly scaled Fair map for all rental spaces (i.e. fairgrounds, Indian Market and Yei Bi Chei areas), general vendor map posted at rental space sites for directory purposes, and vendor information cards (i.e. vendor, days rented, space number, etc.) displayed on spaces. In addition, vendor applications should be uniform to avoid inconsistency of vendor information and payment. Further, vendors should be required to sign the waiver forms to avoid liability if damage or accident should occur.

Condition The Indian Market event was poorly supervised that led to the following:

• There were no clear measurements that dictated space allocation with respect to the other events such as the carnival. The carnival was allowed to take up more space than initially allocated thereby reducing the space allocated to vendors of the Indian Market event.

• There was no clear indication of the measurement of each space on the Indian Market area. Initially there were 20x25 and 12x20 spaces marked on the map; however we observed various sizes of spaces throughout the grounds.

• Two poster board maps were developed for the fairground and Indian Market vendor spaces; however a map for the Yei Bi Chei was not created.

• Poster board maps were utilized to document all rented spaces. However, this practice became unmanageable when vendor space became available on days not rented.

• The Indian Market utilized three different versions of vendor applications. The information documented on the applications resulted in varying due dates, duplicate space rental, and different payments and food/ product safety requirements.

• No monitoring of temporary workers who assisted the vendors with the application, payment, and space rental.

• No on-site help to direct the vendors to the assigned space or to help with vendor related problems.

• No waiver forms were signed by the Indian Market vendors.

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Cause • The Indian Market event coordinator was not experienced in planning an event as

complex as the Indian Market event. • The Indian Market event coordinator was also assigned to coordinate the Entertainment

Tent. All indications were the Entertainment Tent was a priority rather than assisting the vendors.

• The Indian Market event coordinator did not ensure applications and waiver forms were complete and accurate.

Effect Overall, poor supervision of space rentals resulted in a chaotic vendor space layout that led to irate vendors. Further, lack of monitoring over temporary workers contributed to mishandled payments and applications. Lastly, the lack of a signed waiver form poses a risk of liability to the Fair Board in the event of accidents in the Indian Market.

Recommendations 1. The Fair Board should assign an experienced Indian Market event coordinator to

supervise the event. 2. The Fair Board should not assign other events, like the Entertainment Tent, to the Indian

Market event coordinator. 3. The Indian Market event coordinator should be readily available to guide vendors as

they are setting up their area. 4. The Indian Market event coordinator should ensure vendor applications, payments, and

waiver forms are complete and accurate.

Disorganized Parade event

Criteria An organized Parade event includes taping off the parade route and identifying the starting point of the parade to properly line up the participants. In addition, assigning numbers and categorizing participants by commercial, marching band, business, royalty and political entries. Furthermore, judges should be provided judging sheets in advance of the event.

Condition People were allowed to camp out where the parade line up was supposed to start. The plan to line the participants by assigned numbers and categories at 4 a.m. did not materialize. Rather, the parade number assignments were mixed up and participants were not lined up by categories. The Parade event coordinator did not show up on time and parade judges were not properly instructed on their tasks. The judging sheets were misplaced and the plan to have

2nd"Best of Show" and 1st, , 3rd and 4th place awards in various categories such as commercial, marching band, business, royalty and political entries were not awarded.

Cause The Parade event coordinator was not trained, lacked experience and was not given enough time to plan the event. According to the parade assistant, due to the fair office being ill equipped with office equipment, copies of the waiver forms for Parade participants, judging sheets and the Parade line up plan were not made.

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Effect Parade participants expressed frustrations over the disorganized parade line up. Also, participants were disappointed that only 1st, 2nd and 3rd place ribbons were given considering the high fees charged to the Parade participants.

Recommendations The Fair Board should:

1. Pre-plan the event route and tape off the Parade line-up. 2. Pre-print all necessary documents such as applications, plans, judging sheets and

liability waivers. 3. Pre-number the applications and use the application number as a tool to categorize

and line up the Parade participants. 4. Make sure all applications are complete; liability waivers are signed, and verified by

the Fair Office staff. 5. Choose a Parade event coordinator that is experienced and will dedicate the time to

plan the Parade event. 6. Order prizes early for the Parade event.

Poor management ofRodeo and 4-H events resulted in incomplete reporting ofevent activities

Criteria Rodeo and 4-H events are required to provide accurate and complete documents and reports of event activities as prescribed in the Fair Board Plan of Operation. Also, the Rodeo contestants should be required to sign waiver forms to avoid liability in the event if an accident occurs. Furthermore, the 4-H event should remit all revenues to the Fair Board to properly account for all revenues collected from the event.

Condition • Rodeo applications and/ or cash receipt tickets were not provided by the Rodeo event

coordinator for the Bull riding, Sr. Rodeo, Women's Rodeo, Open Show Rodeo and Junior Rodeo events. We found the Jr. Rodeo event used $4,299 in entry fees to pay its winners. The cash receipt tickets for the $4,299 entry fees were not provided for our review. As a result, we could not verify the accuracy of entry fees collected from Rodeo contestants.

• The rodeo clerk did not provide reports for the Bull riding, Sr., and Women's Rodeo events.

• Waiver forms were not signed by Rodeo contestants. • The 4-H event generated $872 entry and parking fees, however the 4-H event

coordinator did not provide documentation to the Fair Board. As a result, the Fair Board does not have an accounting of revenues generated by the 4-H event.

Cause • The Rodeo event coordinator and rodeo clerk disregarded the Fair Board Plan of

Operation requiring accurate and complete documents and reports of Rodeo activities. • The Rodeo event coordinator and rodeo clerk did not ensure waiver forms were signed. • The 4-H event coordinator collected and deposited revenues into a separate 4-H bank

account.

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The Fair Board did not receive documents and reports from the Rodeo and 4-H events. There is a risk that revenues from entry fees are not fully accounted for. Further, the lack of a signed waiver form for Rodeo events poses a risk of liability to the Fair Board if an accident occurs.

Recommendations 1. The Rodeo event coordinator and rodeo clerk should provide the Fair Board accurate

and complete documents and reports of rodeo activities. 2. The Rodeo event coordinator and rodeo clerk should ensure waiver forms are signed. 3. The 4-H event coordinator should provide reports and tum in collected revenues to the

Fair Board.

Fair Office Close-Out Report was not verified

Criteria The Fair Board is required to verify the close-out report by the Fair Office at the end of the Fair to ensure revenues generated and expenses incurred is accurately reported.

Condition The Fair Board simply accepted the Fair Office financial report listing revenues collected and expenses paid without verifying the accuracy of the report.

Cause The Fair Board trusted that the Fair Office provided accurate close-out report after the receipt of $73,830 check from the Fair Office.

Effect The Fair Board was not aware of the underpayment by the Fair Office of approximately $2,800 net revenue.

Recommendations 1. The Fair Board should verify the accuracy of the Fair Office financial reports. 2. Request the Fair Office to remit approximately $2,800 underpayment to the Fair Board.

Key responsibilities specified in the Memorandum of Understanding were not performed

Criteria The Memorandum of Understanding (MOU) calls for the Fair Office to be exclusively responsible for overseeing and managing the following activities: a) operating as a central point of contact, b) making and contracting for infrastructure improvements, c) contracting with all vendors including security and police, d) hiring of temporary employees by contract, e) managing and coordinating the parade, f) managing and coordinating the Indian Market, g) managing and coordinating the Rodeo, h) fundraising activities with sponsors and providing exclusivity agreements, i) collecting gate receipts and parking fees, and j) accounting for all receipts and expenses from Fair event activities.

Condition Based on our observation of the Fair Office's management of the Fair, the Fair Office did not perform key activities required by the MOU such as: contracting with all vendors, hiring of

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temporary employees, managing and coordinating the parade, the Indian Market, the Rodeo, fundraising activities with sponsors, and accounting for all receipts and expenses.

Cause The Fair Office stated the activities they were required to perform already occurred before the MOD was signed, therefore their responsibilities were already completed by the Fair Board and event coordinators.

Effect The Fair Office did not fully oversee and manage all Fair events that contributed to the lack of controls over revenue and expenses and ill-planned events.

Recommendation The Fair Office should ensure the terms of the MOD are implemented.

Non-compliance with Internal Revenue Service guidelines

Criteria Internal Revenue Service (IRS) guidelines state that wages and stipends paid should be reported on the IRS Form W-2. In addition, payments over $600 to contractors and monetary prizes over $600 paid to winning contestants should be reported on the IRS Form 1099.

Condition The Fair Board did not comply with IRS guidelines. IRS Forms W-2 and/or 1099 were not issued by January 31, 2013. We identified 35 winners that each received prize monies over $600, 35 workers that were paid wages and stipends, and 18 contractors that were paid over $600 were not issued IRS Forms W-2 and/ or 1099.

Cause • The Fair Board and event coordinators did not require winners, workers, and

contractors to fill out IRS Form W-9. Consequently, there is no tax information to issue IRS Forms W-2 and/ or 1099.

• The Fair Board did not compile a list of winners and contractors that were paid over $600 in order to issue IRS Form 1099.

• The Fair Board did not compile a list of workers that were paid wages and stipends in order to issue the IRS Form W-2.

Effect There is a risk that the Fair Board will be penalized for non-compliance with IRS guidelines.

Recommendations 1. The Fair Board and event coordinators should ensure IRS Form W-9 is filled out by

winners, workers, and contractors. 2. The Fair Board should compile a list of winners and contractors to identify those that

were paid over $600 and issue IRS Form 1099 by January 31st•

3. The Fair Board should compile a list of workers that were paid wages and stipends then issue IRS Form W-2 by January 31st•

14

-----------------------_.._._.

CLIENT RESPONSE

1. Manuelito Wheeler, Director, Navajo Nation Museum 2. Sophina A. Tyler, M.B.A., Chairperson, Northern Navajo Nation Fair Board

15

BEN SHELLY PRESIDENTTHE NAVAJO NATION REx LEE JIM VICf PRESIDEN'r

Navajo Natioll Mltseum - p.o. Box 1840 - Window Rock, AZ 86515 - Phone: (928) 871-7941- Fax: (928) 871-7942

March 28,2013

MEMORANDUM :,' "

. , , , 1, j

TO: Elizabeth Begay, Auditor General Office of the it r General MAR 2 8 2013

\ i , , I '­FROM: ..-, ._.. ,-,..,., ,,,-~)

Manuelito Whee DirectorI

Navajo Nation Museum Division of Natural Resources

SUBJECT: Response to Audit Findings RE: 2012 Northern Navajo Nation Fair

Attached is the response of the Navajo Nation Museum, on behalf of the Navajo Nation Special Events Section, regarding the audit findings of the 2012 Northern Navajo Nation Fair.

Should you require additional clarification, please contact me directly at (928) 871-7941. Thank you.

XC,' Department Files

Page 1 of6

Although the Special Events Section (aka... Fair Office) under the Navajo Nation Museum was given full authority (through an official Memorandum of Agreement) to manage all aspects of the 2012 Northern Navajo Nation Fair, we felt that imposing drastic measures (such as replacing all coordinators and eliminating established procedures) would only create further confusion and dissention among all affiliates. As the annual event is governed by an official board, our intent was to provide technical assistance and support for improvement purposes. We offered recommendations and solutions. We also introduced specific procedures for accountability and reporting requirements. The Fair Office personnel made every reasonable attempt to effectively coordinate and communicate with board members, event coordinators, production staff and the general public, however; we encountered resistance from a few, which complicated our purpose. Nonetheless, we completed our last minute assignment with honesty, professionalism and integrity.

FINDING 1

Lack of Controls over Revenue and Expenses

*Approximately $65,000 in lost revenue.

Select members of the board were designated to coordinate certain events/tasks and we trusted that each would perform to the best of their ability to ensure a successful and profitable production.

• Therefore; we accepted the coordinator's verbal confirmation that all spaces were "full" on a given day. There were instances where spaces were paid for, however; due to unknown reasons, the vendor did not occupy the space, which may have led to the appearance that it was available for rent. Further, the coordinator was constantly tending to customerslvending matters, which caused the delay of services to others. We do agree with the recommendation of establishing an on-site office to better accommodate customers. Budget permitting, we also suggest additional personnel to address all inquiries/issues as efficiently as possible.

• The fair poster logistics were developed and approved prior to us getting involved, therefore; we had no choice but to proceed with the commitment. The tasks to sell and market the posters were assumed by the board president and opted not to intervene. To our understanding, posters were sold in various public locations such as Chapter locations, convenience stores and local offices. The Fair Office was granted a certain quantity and those were sold only at the Fair Office to ensure that posters and proceeds were accounted for. Unfortunately we did not have extra personnel to assign the task of selling posters throughout the fair grounds. We agree with the recommendation of selling posters at the ticket booths/entrance gates, which needs to be coordinated with the Finance and Payouts Manager prior to the start of event.

• Fair passes were distributed to select individuals and organizations for various purposes (such as land owners who were apparently promised free entrance to any events held on the fairgrounds for an x number of years, board members for distribution at their discretion, dignitaries and special guests). However; we do agree that too many passes were freely distributed. We recommend that a specific number of passes be identified and set aside for such purposes and that the number is not exceeded for any reason.

Page 2 of6

*$14,400 in uncollected revenue

Again both revenue generating events (Indian Market and Parade) were coordinated by board members. As we recommended/instructed, we trusted that each would fulfill their obligation of reconciling applications and payments to ensure that all possible revenue was collected.

• On the final day of the event and during a board meeting, where the official exit report was presented to the fair board, the Indian Market coordinator was informed that an official event exit report was necessary to account for all leased spaces. Since we would no longer be involved in the NNNF production logistics, we encouraged the fair board to seek the reports and any unpaid fees to be absolutely certain that all possible revenues were collected. We agree with the recommendation of implementing an automated financial spreadsheet to maintain all space rental details and payments, which should be reconciled frequently (more than once a day if necessary). Further, allowing vendors to occupy a space without securing a full payment should be strictly prohibited and enforced.

• Again, during the final day of the event and when the official exit report was presented, the fair board was encouraged to seek a close-out report from the event coordinator including any unpaid fees to be absolutely certain that all possible revenues were collected. We agree with the recommendation of implementing an automated financial spreadsheet to maintain parade entry details and payments, which should be reconciled frequently (more than once a day if necessary). Further, an individual(s) should be designated to verify the credentials of every vehicle at the start of the parade route.

*$2,050 unaccounted cash revenue

This is the first time that we have received notice of missing funds. We are uncertain as to how this figure was determined. Further, all event coordinators were instructed by the Fair Office personnel to submit any and all cash to the Finance and Payouts Manager (Alta Bowman), which is the normal practice. The services provided by Finance and Payouts are completely separate from the financing tasks conducted by the Fair Office Accounting personnel. Ms. Bowman has always verified and documented funds received from each event coordinator, therefore; we are surprised by this finding. The auditors indicate that an exchange of funds was observed and we may be able offer a better explanation if a specific situation is identified. We agree that all funds received (cash, checks, money orders, etc) should be verified and documented for reporting purposes.

*Poor documentation of revenue

The Fair Office personnel did their best to document and account for all revenue, however; there were instances where certain details/documents were not shared with our office, which could indeed translate to loss revenue.

Page 3 of 6

• The Fair Office personnel were never informed of a $4,299 sponsorship for the Junior Rodeo event. In fact, hardly any information relating to this event was disclosed. Although we made multiple requests for various documents, they were not provided. Sponsorship funds that were deposited by the Fair Office were documented and are on file. Those that were deposited prior to our arrival and by other board members during the event were not confirmed by the Fair Office. This was conveyed during the official exit report. We recommend that before an event coordinator is selected, guidelines of what is expected/required should be conveyed and acknowledged with a signature. Further, all sponsorship initiatives should be handled solely by the sponsorship coordinator for accountability purposes.

• It is true that carnival tickets were not inventoried at the beginning and end of the event. This was an unintentional oversight on our part. We believed that the contract terms were fully discussed with the board president and did not realize that the carnival ticket numbers were not included. We recommend that a specific carnival coordinator be designated to monitor those logistics.

• ALL entrance tickets were inventoried by the Finance and Payouts Manger (Alta Bowman) prior to distribution. We are assuming that the ending report provided by Ms. Bowman is more than what the Fair Office's documentation confirmed, as the number of tickets that were initially ordered was exceeded by sales during one evening of the event, causing the ticket sellers to manually record each type of sale, after all tickets had been sold. We recommend that an additional 25% be added to the number of tickets being ordered in case of unanticipated sales. Otherwise, budget permitting, a computerized ticketing system would be beneficial.

• We have no explanation of why receipts were torn out of the rodeo cash receipt books. These books are issued by the Finance and Payouts Manager to the event coordinator, therefore; he and/or the rodeo secretary should be consulted for clarification on the purpose of removing pre-numbered receipts.

• We agree that the cash receipt books issued by the fair board were not clearly labeled and contained multiple types of transactions, which was indeed confusing. We recommend that separate and clearly labeled receipt books be issued for each event. Further, the practice of documenting the beginning and ending receipt numbers from each book should be enforced for accountability purposes.

*Inadequate controls over expenses

The Fair Office Accounting personnel did their best to obtain supporting documentation for all expenses. We are surprised with most of the findings and if possible, would like the opportunity to review and clarify each expense that was sampled for the audit.

• We are unclear of the unsupported expenses totaling $4,620 for the rodeo event. If given the opportunity to review the audit samples, we may be able to provide additional clarification.

• Again, we are surprised at the large figure of unsupported expenses. We felt that we were stringent in making sure that support documents were provided before checks were written.

Page 4 of 6

• The Fair Office was not aware of the stipulation in the NNNFB Plan of Operation, which states that all two signatories were required on each check. We apologize to all concerned for the inadvertent oversight. We support this security measure and had we realized the proper procedure, we would have acted accordingly.

• The Fair Office was not aware that cash with drawls were prohibited. Given the opportunity, we are certain that the $8,000 with drawl can be accounted for. The Fair Office no longer has access to the NNNF board checking account, therefore; would require the assistance of the current account manager(s)/board members to research the matter for clarification purposes.

FINDING 2

Lack of Adequate Management over Fair Events

*Poor supervision of the Indian Market event

The Indian MarkeWending Coordinator, also serving as a board member, was designated prior to our involvement. We agree that certain aspects of the event were poorly executed, however; we did not intervene to avoid further confusion and discord among all involved. Instead the Fair Office personnel did their best to assist the coordinator with the neglected logistics that were brought to our attention.

• The exact carnival area should be determined and clearly identified/outlined prior to their arrival. The remaining area intended for vending should also be measured and divided appropriately with clear markings and numbers.

• We agree that vending spaces/area should be thoroughly prepared prior to the start of the event. Each space should be clearly outlined and numbered.

• Poster board maps were created for all areas, however; they were destroyed or vandalized, which was repeatedly reported to the on-site security personnel.

• The poster board maps used to document the rented spaces did indeed become unmanageable. The suggestion to automate the information was conveyed to the coordinator, but there was simply no time as the event was in full production. We again, recommend that the vending layout be automated to eliminate confusion when changes occur.

• The "vending application" was developed and implemented prior to our involvement. We did not want create additional confusion, therefore; we did initiate any changes. Further, we were not aware that multiple versions of the application were accepted. We agree that only "1" version of the application should be approved and disseminated.

• The temporary workers were selected by the event coordinator. He was informed that it was his responsibility to manage each individual. We trusted that he would fulfill his obligations without incident, however, we too observed occasions when they were left unattended for a long duration of time. The Fair Office personnel assisted as necessary.

• There were occasions where all vending personnel were occupied tending to the numerous customers causing others to wait, which may have caused the appearance that there was no on-site assistance. Again, the Fair Office personnel assisted as necessary and all concerns were addressed.

~. • Page 5 of 6

• The Fair Office was under the assumption that waiver forms were included with the application packet. We agree that this is a necessary measure that should be strictly enforced.

• Coordinating an event as involved as the Indian Market requires extensive planning and preparation. Unfortunately, we agree that the designated coordinator did not possess the necessary experience to manage an event of this magnitude, as there were numerous deficiencies identified. We recommend that a qualified individual be selected early on to allow adequate preparation time. Further, this individual should be thoroughly orientated on the expectations and requirements of the position.

• It is true that the Indian Market coordinator was also given the responsibility to coordinate the Entertainment event, which definitely proved to be a challenge, as he was being pulled in separate directions, causing certain aspects of each event to be neglected. Therefore; in the best interest of each event, we recommend a different coordinator for each event.

• Prior to our departure and during the official exit report, we encouraged the fair board to seek close-out reports from all event coordinators for accountability purposes. We stressed the fact that the revenue generating events should be a priority, as we felt that all revenues were not collected. Further, we conveyed the importance organizing and reconciling all application packets to avoid additional audit findings.

*Disorganized Parade event

The Parade event coordinator, also serving as board member, accepted the assignment as the event was fast approaching and a coordinator had not yet been identified. Although he was not experienced in organizing an event such as the Parade, he felt obligated to assist as needed. Unfortunately, there were some concerns with how the event was arranged and executed. Coordinating an event of this magnitude requires a vast amount of planning and commitment. Therefore; in the best interest of the event, it is crucial that an individual with experience is selected to address the numerous details involved.

*Poor management of Rodeo and 4-H events resulted in incomplete reporting of event activities

Although the Fair Office management made every reasonable attempt to communicate and collaborate with each event coordinator, certain details/instructions were disregarded. We did not want cause any animosity, which would negatively affect the outcome of the event, therefore; we did not aggressively press the issue.

• Repeated requests were made to the Rodeo event coordinator to provide documentation relating to all aspects of the event. Some documents were provided and others remain outstanding to date. The fair board was informed during the exit report that the event "books" had not been submitted and verified. We also advised that an official close-out report be sought from the event coordinator, who was also serving as a board member. Without the report, it would be impossible to determine the actual expenses and revenues of all rodeo events.

Page GofG

• Again, the event coordinator was asked to retrieve all pertinent documents from the Rodeo Secretary, however; we did not receive the requested information prior to our departure.

• The Fair Office announced on more than one occasion that waiver forms were absolutely necessary and required for liability purposes. Why some coordinators chose not to enforce this policy is beyond us.

• Although all event coordinators were informed of the proper procedures, as related to revenues, not all complied with our instructions. Revenues from the 4-H event parking were not verified by the Fair Office, as we were unaware of the event coordinators intentions of collecting parking fees. Further, we had no knowledge of a separate bank account for the 4-H event. We recommend that all event coordinators be subjected to submit close-out reports prior to any compensation for services rendered.

*Approximately $16,500 was not remitted to the Fair Board

Upon conclusion of the production, the Fair Office remitted revenue (a check) in the amount of $73,829.85 to the NNNF board, after all expenses were accounted for. The auditors were not aware of expenses (totaling $15,398.89) that were charged to the Fair Office Accounts on behalf of the NNNF. After providing copies all supporting documents, we determined that the correct amount owed to the fair board is actually $2,853.11. This is the remaining balance from a $7,000 Purchase Order that was issued to Home Depot of Farmington during the event. The Fair Office will initiate the necessary measures to revert the remaining balance to the NNNF board as efficiently as possible.

*Key responsibilities specified in the Memorandum of Understanding was not performed

The audit findings indicate that the key responsibilities in the MOA were not performed, however; we strongly disagree. The Fair Office was given a very last minute assignment, by the NN President, to assist with the planning and execution of the 2012 NNN Fair. Under the circumstances, we feel that we did our best to circumvent all issues and concerns that were imposed upon us. We went in with the intention of helping make this event a reality for the benefit of the Navajo people. Staff went above and beyond to ensure that all production logistics were addressed. Although we provided technical assistance and guidance in all areas, we encountered some opposition, leading to discrepancies in certain events. Indeed the Fair Office could have interjected on many matters, however; we did not want to create conflict, which would ultimately compromise the success of the fair. The Navajo Nation Museum, out of good faith, invested manpower, travel costs, operational materials and personal time. Further, we put our normal responsibilities/duties aside to help make this event happen. Such sacrifices should be recognized and rewarded, rather than being scrutinized for situations beyond our control.

*Non-compliance with Internal Revenue Service guidelines

During the exit report, the fair board was informed of the IRS reporting requirements. The fair board treasurer was later reminded that 1099 Forms were necessary for all individuals (including but not limited to; event winners, temporary employees and board members) that received funds in excess of $200. We indicated that this task had to be completed before January 31, 2013. We have no explanation as to why this was not done.

Post Office Box 2120· Shiprock. NM 87420' Website: northernnavajonationfair.org • Email: nnnfair@gmail.com

March 29, 2013 NNNF-2013-004

The Navajo Nation Office of the Auditor General Attn: Elizabeth O. Begay, CIA, CFE P.O. Box 708 Window Rock, AZ 86515

Dear Mrs. Begay,

On behalf of the Northern Navajo Nation Fair Board ("NNNFB"), I would like to thank you and your staff in conducting the Special Review Audit during the 2012 Northern Navajo Nation Fair, fonnally known as the Shiprock Navajo Fair. It is my understanding that this is the first time in history an audit has been conducted. I am truly appreciative of the hard work and dedication presented by your staff. Although the report identified deficiencies in the fair operations, the NNNFB accepted this report on a positive note with confidence that corrective actions will be executed. This report will be used as a tool to implement new strategies under my leadership that will further enhance the overall fair operations.

Please find the attached written response made by the NNNFB regarding the audit findings of the 2012 Northern Navajo Nation Fair event. If you have any questions, please feel free to contact me at (505)860-2577 or via email atsodatyler77@hotmaiI.com.

Sincerely,

Sophina A. Tyler, M.B.A., Chairperson Northern Navajo Nation Fair Board

cc: Northern Navajo Nation Fair Board Members

Northern Navajo Nation Fair Board Post Office Box 2120

Shiprock, New Mexico 87420

RESPONSE

to the

Special Review

ofthe

2012 -IOlst Northern Navajo Nation Fair

March 29, 2013

A. INTRODUCTIONIBACKGROUND

The Northern Navajo Nation Fair ("NNNF") is an annual event held during the Fall Season in Shiprock, New Mexico. It has successfully operated over 100 years of annual fair celebrations. It is managed by a board of nineteen (19) members representing the chapters within the Northern Navajo Nation Agency. The board is referred to as the Northern Navajo Nation Fair Board ("NNNFB"). They were established, created and confirmed by the Resources and Development Committee of the Navajo Nation Council as an entity of the Navajo Nation and the Northern Navajo Nation Agency Council. The nineteen (19) members consists of the following chapters: )00 Aneth )00 San Juan )00 Beclabito )00 Sanostee )00 Burnham )00 Sheepsprings )00 Cove )00 Shiprock )00 Gahii' ahi )00 Tolikan )00 Mexican Water )00 Teecnospos )00 Nenehnezad )00 Tse' Daa' Kaan )00 Newcomb )00 Two Grey Hills/Toadlena )00 Red Mesa )00 Upper Fruitland )00 Red Valley

The NNNF is the oldest and most traditional of all the Navajo fairs throughout the Navajo Reservation with attendance of more than 50,000 visitors, spectators and participants. This is the most popular fair where communities around the Four Corners area come to celebrate the year's harvest, culture and tradition.

B. SUMMARY

The NNNFB has reviewed and accepted the Special Review Report conducted by the Office of the Auditor General. According to our records, a Memorandum of Understanding was made and entered on September 28, 2012 between the Navajo Nation Executive Branch, primarily through the Special Event Section of the Navajo Nation Museum, known as the Navajo Nation Fair Office and the NNNFB. This agreement was developed to oversee and manage all activities and events of the 2012 NNNF by the Navajo Nation Fair Office. This agreement was finalized days prior to the 2012 fair activities causing deficiencies in the fair operations. Nonetheless, the Navajo Nation Fair Office completed their assignment effectively and efficiently considering the immediate adjustments made to successfully carry out the responsibilities of the fair operations.

The NNNFB is in the process of developing a Corrective Action Plan to improve future fair operations as recommended by the Office of the Auditor General. In addition, the Navajo Nation Fair Office also presented a Close-Out Report after the 20 I2 NNNF events took place. The report also provided recommendations to improve future fair activities.

Page 1

C. RESPONSE

Over the past two years, the NNNFB experienced disruptions to properly plan the 20 II and 2012 fair activities. The Plan of Operations for the NNNFB played a huge role in guiding the board to properly plan for the fair activities. On August 21, 2012, amendments to the Plan of Operation for the NNNFB were approved by the Resources and Development Committee of the Navajo Nation Council to carry out the responsibilities of the fair operations with no disruptions from the outside. Upon the final approval, the NNNFB began the initial planning and executed the fair operations to the best of their abilities. However, the NNNFB believes the deficiencies that were identified during the 2012 NNNF were caused from last minute planning and lack of funds.

According to our knowledge, Mr. Manuel Wheeler, Director of the Navajo Nation Museum has also included a written response to the findings of this review. His response is acceptable as it further clarifies the activities that took place under his direction. Furthermore, the NNNFB is addressing these findings to improve the upcoming 2013 fair activities by developing a Corrective Action Plan. In addition, the NNNFB will develop and implement a strategic plan to perform at the highest level in executing future fair events. The course of action to develop a strategic plan will help provide direction, focus on goals and objectives, and develop guidelines of the overall fair operations. The focus is to point to specific results that are to be achieved and establishes a course of action for achieving them.

The NNNFB can only take these findings as a learning method to properly plan for future fair events with honesty and integrity. Upon the review of this report, the goal is to improve the control over revenues and expenses and effectively manage all fair events. The next course of action for NNNFB is to develop a Corrective Action Plan which will be submitted to the Office of the Auditor General within the next thirty (30) days.

Additionally, The NNNFB recently selected a new chairperson who has demonstrated quality skills, commitment, goal oriented, educated and most importantly, an interest to accomplish the overall success of future fair activities. The chairperson was nominated and selected on February 25, 2013. Under this new leadership, the NNNFB has begun the plans and preparations for the upcoming 2013 Northern Navajo Nation Fair event to ensure proper planning is established. The Corrective Action Plan will also be developed under the guidance of the new chairperson. Furthermore, a new Fair Director was appointed on March 26, 2013 to perform the essential functions of planning, organizing and executing the annual fair activities and off-season events throughout the year. The goal for the NNNFB hopes to accomplish a trusting relationship once again with the surrounding communities and restore the reputation of the Northern Navajo Nation Fair in good faith, honesty and integrity.

Page 2

EXHIBIT "1M':

EXHIBIT

1-----6__

Post Office Box 2120 • Shiprock, NM 87420 • Website: nnnfair.com • Email: hdescheenie@hotmail.com

April 30, 2013 NNNF-2013-009

The Navajo Nation Office of the Auditor General Attn: Elizabeth O. Begay, CIA, CFE P.O. Box 708 Window Rock, AZ 86515

Dear Mrs. Begay,

According to the requirements of the Office of the Auditor General's Plan of Operation, audited programs are required to submit a Corrective Action Plan ("CAP") within 30 days after an audit is released. Therefore, on behalf ofthe Northern Navajo Nation Fair Board ("NNNFB"), I attached the CAP that specifies the methods and responsibilities of the l'JNNFB to resolve these audit deficiencies from the 2012 Special Review conducted during the 101 st Northern Navajo Nation Fair. The NNNFB will execute these corrective actions to the best of their abilities.

In addition, the NNNFB is in the process of revising the Plan of Operation to include quorum reduction requirements and strategies that will further enhance the implementation of the CAP to improve future fair operations.

If you have any questions, please feel free to contact me at (505)860-2577 or via email at sodatyler77@hotmail.com.

Sincerely,

Sophina A. Tyler, M.B.A., Chairperson Northern Navajo Nation Fair Board

cc: Mr. Harry Descheenie, Fair Director, Northern Navajo Nation Fair Northern Navajo Nation Fair Board Members

Post Office Box 2120· Shiprock, NM 87420· Website: nnnfair.com· Email: hdescheenie@hotmail.com

Northern Navajo Nation Fair Corrective Action Plan

April 30, 2013

Corrective Responsible Individual(s)/ Corrective Action Completion Actions Supervising Individual(s) Methods Date

~~$6~bt_~e_~~_ ....__. .._. . ....._. "__ ._._.._.~._ .. ._. a. Indian Market Office ~ Responsible Individual(s): Fair ~ Three quotes will be collected by Fair September 30, 2013

Director, Indian Market Director and Indian Market Coordinator Coordinator following the purchasing policies of the

~ Supervising Individual(s): Navajo Nation to rent office NNNFB will oversee and ~ Fair Director and Indian Market Coordinator supervise Fair Director will present to NNNFB for final approval to indirectly, but the NNNFB rent office for Indian Market Chairperson is the responsible ~ An Indian Market Office will be opened and individual to supervise the Fair available to the public during and throughout Director according to the Plan the fair within the premises of the Indian of Operation Market

~ All Event Coordinators including Indian Market Coordinator will sign ajob description and volunteer contract that requires them to be available during and throughout the.fair event

Page 1 of 10

~ Indian Market Coordinator will be required to follow-up with Fair Director on a daily basis of the operation

~ All major decisions require approval of the NNNFB

b. Fair Poster Sales ~ Responsible Individual(s): Fair ~ The Fair Director will be responsible for September 30,2013 Director, Coordinator for marketing and collaborating with various Publicity/Advertising, businesses/sites to sale fair posters Accountant, Treasurer ~ The Fair Director will develop an inventory

~ Supervising Individual(s): method for fair posters to effectively collect NNNFB will oversee and revenues supervise Fair Director ~ The Fair Director will identify locations indirectly, but the NNNFB within the fairgrounds and assign Chairperson is the responsible responsibility to sell fair posters individual to supervise the Fair ~ The Accountant with guidance of Fair Director according to the Plan Director will work with responsible of Operation individual(s) to apply basic accounting

method using daily cash receipt to reconcile cash received from sales

~ All major decisions require approval of the NNNFB

c. Guidelines for free passes ~ Responsible Individual(s): Fair ~ The NNNFB will schedule a work session to July 31, 2013 Director, NNNFB develop strategic planning which includes

~ Supervising Individual(s): development of by-laws, guidelines, policies, NNNFB will oversee and etc. to effectively and efficiently operate supervise Fair Director future fair events indirectly, but the NNNFB ~ The Fair Director will work with NNNFB to Chairperson is the responsible establish guidelines for free passes individual to supervise the Fair ~ The Fair Director will be responsible for Director according to the Plan enforcing the policies for free passes of Operation ~ All major decisions require approval of the

NNNFB

$U,41Jf!l#fI~etl~... ,,;",~~.,,:;>.,~

a. Tracking Method ~ Responsible Individual(s): Fair The Fair Director will develop a professional . September 30,2013 Director tracking system/method to track all incoming

~ §upervising Indivic:lual(s): .requests (applications, forms, vending, etc.)

Page 2 of10

b. Daily Reconciliation

Pool·]l~'fd;ii~~J!!!I_e. a. Fair Sponsors

NNNFB will oversee supervise Fair Director indirectly, but the NNNFB Chairperson is the responsible individual to supervise the Fair Director according to the Plan of Operation

» Responsible Individual(s): Fair Director, Accountant, Treasurer, Event Coordinators

» Supervising Individual(s): NNNFB will oversee and supervise Fair Director indirectly, but the NNNFB Chairperson is the responsible individual to supervise the Fair Director according to the Plan of Operation

» Responsible Individual(s): Fair Director

» Supervising Individual(s): NNNFB will oversee and supervise Fair Director indirectly, but the NNNFB Chairperson is the responsible individual to supervise the Fair Director according to the Plan of Operation

using Microsoft word and excel (spreadsheet) to properly collect fees. Tracking method should identitY unpaid fees

» A confirmation letter upon payment received ' will be provided to all participants

» All major decisions require approval of the NNNFB

The Accountant with guidance of Fair Director will be responsible for keeping track of cash, payables, receivables, and records to effectively apply basic accounting methods and update appropriately using excel spreadsheet

» Basic accounting method will be applied daily by developing journals, daily cash receipts, cash disbursement sheets, etc. to alert shortage or surplus of cash transactions

» All Event Coordinators will be required to submit daily cash receipts to reconcile cash received from sales

» All major decisions require approval of the NNNFB

» The Fair will develop a fair sponsor package and present to the NNNFB for approval prior to requesting sponsorship

» A sponsorship letter will be developed and signed by the NNNFB Chairperson requesting sponsorship within the surrounding communities ofthe Northern Navajo Nation Agency. Only Chairperson and Fair Director will be authorized to request for sponsorship. A numbering system will be establish for memos and letters to maintain a filing system for all outgoing c0l1"t~sQol1c1ences

September 30,2013

July 31, 2013

Page 3 of 10

A database of sponsorship developed to properly distribute sponsorship package

> All major decisions require approval of the NNNFB

b. Carnival Tickets > Responsible Individual(s): Fair > The Coordinator for September 30, 2013 Director, Coordinator for Publicity/Advertising/Passes with guidance Publicity/Advertising/Passes, of Fair Director will develop an inventory Accountant, Treasurer method for carnival tickets to effectively

> Supervising Individual(s): collect revenues NNNFB will oversee and > The Accountant with guidance of Fair supervise Fair Director Director will work with Coordinator for indirectly, but the NNNFB Publicity/AdvertisinglPasses to apply basic Chairperson is the responsible accounting method using daily cash receipt individual to supervise the Fair to reconcile cash received from sales Director according to the Plan > All major decisions require approval of the ofOperation NNNFB

c. Ticketing System > Responsible Individual(s): Fair > The Coordinator for September 30, 2013 Director, Coordinator for Publicity/Advertising/Passes with guidance Publicity/AdvertisinglPasses, of Fair Director will obtain three quotes to Accountant, Treasurer purchase a computerized ticketing system to

> Supervising Individual(s): eliminate running out of entrance tickets NNNFB will oversee and > The Accountant with guidance of Fair supervise Fair Director Director will work with Coordinator for indirectly, but the NNNFB Publicity/Advertising/Passes and Finance to Chairperson is the responsible apply basic accounting method using daily individual to supervise the Fair cash receipt to reconcile cash received from Director according to the Plan sales of Operation > All major decisions require approval of the

NNNFB d. Cash Receipt Books > Responsible Individual(s): Fair > The Accountant with guidance of Fair September 30,2013

Director, Accountant, Director will be responsible for issuing cash Treasurer receipt books to coordinators for proper

> Supervising Individual(s): documentation NNNFB will oversee and > All Event Coordinators will be required to supervise Fair Director submit daily cash receipts to reconcile cash indirectly, but the NNNFB received from sales Chairperson is the responsible > AlIlTIaj()r decisions require approval of the

Page 4 of 10

individual to supervise the Fair NNNFB Director according to the Plan

~ ~ ~ ~~ ~ of Operation l~~~~c ..

~.""- . . .~

a. Accounting Requirements }­ Responsible Individual(s): Fair }­ The Fair Director will be responsible for (proper documentation for Director, Accountant, developing contracts with approval of purchasing, invoices, contracts, Treasurer NNNFB to initiate contract obligations bank account, etc.) }­ Supervising Individual(s): }­ The Fair Director will work with Accountant

NNNFB will oversee and and Treasurer to make sure all required supervise Fair Director documents (official quotes, invoices, etc.) are indirectly, but the NNNFB received before signing checks Chairperson is the responsible }­ The Fair Director will work with Treasurer to individual to supervise the Fair make sure all checks have two signatures Director according to the Plan according to Plan of Operation of Operation }­ The Treasurer will ensure cash withdrawals

are prohibited }­ All major decisions require approval ofthe

NNNFB

Corrective Responsible Individual(s)/ Corrective Action Actions Supervising Individual(s) Methods

Poor ~!lltMJ~.~~ne.J!I ~~ a. Indian Market Event }- Responsible Individual(s): Fair Job Descriptions for coordinators will be

Director, Indian Market developed, such as Indian Market Coordinator Coordinator and Entertainment Coordinator

}- Supervising Individual(s): }- Volunteers for coordinators will be NNNFB will oversee and advertised through local newspaper, website, supervise Fair Director radio announcements, email, chapter indirectly, but the NNNFB announcements and community collaboration Chairperson is the responsible }- Coordinators will be interviewed using individual to supervise the Fair interview score sheets to select experienced Director according to the Plan coordinators ofOperation }- Volunteer Contra(;ts willbe developedL

Page S of 10

September 30, 2013

Completion Date

September 30, 2013

rDi!~~~~_ a. Fair Parade

reviewed, signed and filed for all coordinators for proper documentation

> Entertainment Coordinator will be established and will be require to work with Indian Market Coordinator

> Updated forms will be developed for vending using a tracking method to ensure proper documentations are accurate for payments, waivers and sponsorship requirements

> All Event Coordinators will be required to submit daily cash receipts to reconcile cash received from sales

> Members ofthe NNNFB will not participate as coordinators due to conflict of interest to avoid mismanagement, lack of experience and audit deficiencies; NNNFB are welcome to assist with any event of interest

> All major decisions require approval of the NNNFB

> Responsible Individual(s): Fair > Job descriptions will be developed for all September 30,2013 Director, Parade Coordinator event coordinators

> Supervising Individual(s): > Volunteers for coordinators will be NNNFB will oversee and announced through local newspaper, website, supervise Fair Director radio announcements, email, chapter indirectly, but the NNNFB announcements and community collaboration . Chairperson is the responsible > Coordinators will be interviewed using individual to supervise the Fair interview score sheets to select experienced Director according to the Plan coordinators of Operation > Volunteer Contracts will be developed,

reviewed, signed and filed for all coordinators for proper documentation

> Updated forms (parade application, judging sheets, liability waivers, etc.) will be developed using a tracking method to ensure proper documentations are accurate for payments, waivers and sponsorship

Page 6 of 10

requirements )0 Fair Director will work closely with Parade

Coordinator to ensure all applications are completed (fees paid, waivers signed, application filed and parade number assigned)

)0 Fair Director will work with Parade Coordinator to ensure all required licenses, applications, permits, insurance and/or certification are obtained according to state, tribal, county or federal regulations

)0 Fair Director will work with Parade Coordinator to ensure prizes are ordered within a timely matter

)0 All Event Coordinators will be required to submit daily cash receipts to reconcile cash received from sales

)0 Members of the NNNFB will not participate as coordinators due to conflict of interest to avoid mismanagement, lack of experience and audit deficiencies; NNNFB are welcome to assist with any event of interest

)0 All major decisions require approval ofthe NNNFB

~~tiiii~_~·~iic-~~iJtB~~~il.~~;.m~9I~iit~~~~_ a. Fair Rodeo Event )0 Responsible Individual(s): Fair )0 Job descriptions will be developed for all September 30, 2013

Director, Rodeo Coordinator event coordinators )0 Supervising Individual(s): )0 Volunteers for coordinators will be

NNNFB will oversee and announced through local newspaper, website, supervise Fair Director radio announcements, email, chapter indirectly, but the NNNFB announcements and community collaboration Chairperson is the responsible )0 Coordinators will be interviewed using individual to supervise the Fair interview score sheets to select experienced Director according to the Plan coordinators of Operation )0 Volunteer Contracts will be developed,

reviewed, signed and filed for all (;oordinators for proQer documentation

Page 7of10

Updated fonns (application, liability waivers, etc.) will be developed using a tracking method to ensure proper documentations are accurate for reports, payments, waivers and collection of revenues

);> Fair Director will work closely with Rodeo Coordinator to ensure all applications are completed (fees paid, waivers signed, application filed and revenues collected)

);> Fair Director will work with Rodeo Coordinator to ensure prizes are ordered within a timely matter

);> All Event Coordinators will be required to submit daily cash receipts to reconcile cash received from sales

);> Members of the NNNFB will not participate as coordinators due to conflict of interest to avoid mismanagement, lack of experience and audit deficiencies; NNNFB are welcome to assist with any event of interest

);> All major decisions require approval of the NNNFB

b. 4-H Event Responsible Individual(s): Fair );> Job descriptions will be developed for all September 30,2013 Director, Exhibit Hall event coordinators Coordinator );> Volunteers for coordinators will be

);> Supervising Individual(s): announced through local newspaper, website, NNNFB will oversee and radio announcements, email, chapter supervise Fair Director announcements and community collaboration indirectly, but the NNNFB );> Coordinators will be interviewed using Chairperson is the responsible interview score sheets to select experienced individual to supervise the Fair coordinators Director according to the Plan );> Volunteer Contracts will be developed, of Operation reviewed, signed and filed for all

coordinators for proper documentation );> Updated fonns (application, liability waivers,

judging sheets, etc.) will be developed using a tracking methgQ !() {:I!sure proper

Page 8 of 10

i Ftlit~~."tJJ'J:"~}"'J..~tt4: a. Close-out Report » Responsible Individual(s): Fair

Director, Accountant, Treasurer

» Supervising Individual(s): NNNFB will oversee and supervise Fair Director indirectly, but the NNNFB Chairperson is the responsible individual to supervise the Fair Director according to the Plan of Operation

documentations are accurate for reports, payments, waivers, sponsorship requirements and collection of revenues

» Fair Director will work closely with Exhibit Coordinator to ensure all applications are completed (fees paid, waivers signed, application filed and revenues collected)

» Fair Director will work closely with Exhibit Coordinator to develop camping layout for proper revenue collection which should be paid to NNNFB

» Fair Director will work with Exhibit Coordinator to ensure prizes are ordered within a timely matter

» All Event Coordinators will be required to submit daily cash receipts to reconcile cash received from sales

» Members of the NNNFB will not participate as coordinators due to conflict of interest to avoid mismanagement, lack ofexperience and audit deficiencies; NNNFB are welcome to assist with any event of interest

» All major decisions require approval of the NNNFB

» Fair Director will provide Close-out Report October 31,2013 to NNNFB one week prior to a scheduled call meeting via email. This will allow members to review, develop comments and questions before final approval

» Close-out Report will include a spreadsheet of Revenue, Expenses, and Net LosslProfit

» All major decisions require approval of the NNNFB

LK~:.t.i(,iiMii.Jij:tljllj,,·~M~"4fV"~~·"lMI~ .__.. .J."_'~'_~~_C_'-'---'--------'--~ Page 9 of 10

a. Proposed Memorandum of Understanding (MOU) with any entity

....•~ ..•.~. . . .!'!~!If:8_~I_ a. IRS Requirement for

participants and workers

).> Responsible Individual(s): Fair ).> Fair Director will be responsible to ensure July 31, 2013 Director terms of any future MOU will be

).> Supervising Individual(s): implemented NNNFB will oversee and ).> All major decisions require approval ofthe supervise Fair Director NNNFB indirectly, but the NNNFB Chairperson is the responsible individual to supervise the Fair Director according to the Plan

ofOper~ti~ll .. ~Se.~.i":.~es __. _ _. .~ ~."._ __._._ ~.--.___r____-~ __

).> Responsible Individual(s): Fair ).> A professional filing system will be . October 06, 2013 Director, Event Coordinators, developed to properly file applications, Accountant, Treasurer resumes, contracts, interview score sheets,

).> Supervising Individuat(s): W-9 forms, etc. for paid employees, NNNFB will oversee and volunteers, NNNFB members, coordinators, supervise Fair Director etc. indirectly, but the NNNFB ).> Access to files will include: Fair Director, Chairperson is the responsible NNNFB Officers, Accountant, Auditors individual to supervise the Fair ).> All major decisions require approval of the Director according to the Plan NNNFB ofOperation

Page 10 of 10

i

Office of the Auditor General Elizabeth O. Begay, CIA, CFE The Navajo Nation Auditor General

M-E-M-O-R-A-N-D-U-M

TO Mariana Kahn, Acting Chief Legal Counsel OFFICE OF LEGISLATIVE COUNSEL

OFFICE OF LEGiSlATY: C(\U~:<"1 '--------,-••__J

FROM ~~~:A,CFE Auditor General OFFICE OF THE AUDITOR GENERAL

DATE May 17,2013

SUBJECT Request for Legislation -Northern Navajo Nation Fair

We request your office to prepare the legislation"An Action Relating to Finance; Accepting the Special Review of the 2012 - 101st Northern Navajo Nation Fair submitted by the Office of the Auditor General and approving the corrective action plan submitted by the Northern Navajo Nation Fair Board." The legislation sponsor will be Council Delegate Lorenzo Bates.

Attached as Exhibit "A" is Audit Report No. 13-07"A Special Review of the 2012 - 101st Northern Navajo Nation Fair" and Exhibit liB" is the Corrective Action Plan submitted by the Northern Navajo Nation Fair Board.

If you have any questions, please contact our office at extension 6303. Thank you.

Attachment

xc: Lorenzo Bates, Chairperson BUDGET AND FINANCE COMMITTEE

Chrono

P.O. Box 708/ Window Rock, AZ 86515 / Ph. (928) 871-6303,6304/ Fax (928) 871-6054 / E-mail: auditorgeneral@navajo.org

LEGISLATIVE BRANCH HONORABLEJOHNNY NAIZE Speaker, 22nd Navajo Nation CouncilNAVAJO NATION

May 30,2013

MEMORANDUM

TO Honorable Members Budget and Finance Committee

FROM

SUBJECT ASSIGNMENT OF LEGISLATION

Pursuant to 2 N.N.C § 164 (A)(4), this memorandum serves to inform and advise you that I assign the following legislation to the Budget and Finance Committee.

Legislation No. 0150-13

RELATING TO BUDGET AND FINANCE; ACCEPTING THE SPECIAL REVIEW OF THE 2012 - 101sT NORTHERN NAVAJO NATION FAIR SUBMITTED BY THE OFFICE OF THE AUDITOR GENERAL AND APPROVING THE CORRECTIVE ACTION PLAN SUBMITTED BY THE NORTHERN NAVAJO NATION FAIR BOARD.

As the Committee assigned to consider the legislation, Legislation No. 0150-13 must be placed on the Budget and Finance Committee's agenda at the next regular meeting for final consideration.

ATTACHMENT: Legislation No. 0150-13

xc: Hon. Ben Shelly, President, The Navajo Nation Harrison Tsosie, Attorney General, NNDOJ Mark Grant, Controller Dominic Beyal, Executive Director, OMB Honorable LoRenzo C. Bates, Council Delegate (Prime Sponsor)

OFFICE OF THE SPEAKER INA VAJO NATION LEGISLA TIVE BRANCH I POST OFFICE BOX 3390 I WINDOW ROCK, ARIZONA 86515 TELEPHONE (928) 871-7160 FAX (928) 871-7255

. .

Office ofLegislative Counsel t5/;

Johnny Naize Telephone: (928) 871-7166 Speaker ofthe NtWtzjo Nation Council Fax: (928) 871-7576 1111~iJt.t

rd-~7- ~_br

MEMORANDUM

To Honorable LoRenzo Bates Tiistoh Sikaad, Nenahnezah, Upper Fruitland, Tse'Daa'Kaan, Newcomb, San Juan Chapters

From LfWvl;L:nA ~~ Mariana Kahn, Attorney Office of Legislative Counsel

Date May 18,2013

Re PROPOSED STANDING COMMITTEE RESOLUTION, AN ACTION RELATING TO BUDGET AND FINANCE; ACCEPTING THE SPECIAL REVIEW OF THE 2012 - 101 sT NORTHERN NAVAJO NATION FAIR SUBMITTED BY THE OFFICE OF THE AUDITOR GENERAL AND APPROVING THE CORRECTIVE ACTION PLAN SUBMITTED BY THE NORTHERN NAVAJO NATION FAIR BOARD

As requested, I have prepared the above-referenced proposed resolution and associated legislative summary sheet pursuant to your request for legislative drafting. Based on existing law and review of documents submitted, the resolution drafted is legally sufficient. However, as with all legislation, it is subject to review by the courts in the event of challenge. You are encouraged to review the proposed resolution to ensure that it is drafted to your satisfaction.

If you are satisfied with the proposed resolution, please sign it as "sponsor" and submit it to the Office of Legislative Services where it will be given a tracking number and sent to the Office of the Speaker for assignment.

If the proposed resolution is unacceptable to you, please contact me at the Office of Legislative Counsel and advise me of the changes you would like made to the proposed resolution.

Thank you for your service to the Navajo Nation.

13-333-1

0tJiCC' ot'Legldiltiw COl/wei! The L(g/d,llil'" lImnch /I'list ()jfi, " BIIX J3')()! Hlilldozo Rocl<, AnzOilil 86515