Article
Key financial statement items your tribal council should review
March 16, 2023 · Authored by Anita Shah
Individuals are elected to a Tribal council, Tribal board of directors, or equivalent positions because of a variety of skill sets that bring different viewpoints to the table and add value to a Tribal government or Tribal organization. However, those skill sets don’t always include an accounting or finance background.
Tribal councils must know the difference between their restricted resources and unrestricted resources. Funding from grants and contracts must be used for specific purposes, but there are other sources of funding used based on strategic decisions made by the Tribal council.
The following guidance is provided for Tribal council members to consider when reviewing their Tribe’s financial statements.
Your financial position
The amount of cash in the Tribe’s bank account isn’t a true indicator of your Tribe’s financial position.
Ask your chief financial officer, controller, or equivalent, to show you the Tribe’s month-to-date or year-to-date financial statements. It’s best to review the current period and prior period financials side-by-side to easily identify and inquire about any significant fluctuations.
Specifically for revenues and expenses, seeing a trend of the past three to five or even 10 years will tell you the story of the direction of the Tribe’s financial position.
Know your resources
When you’re reading through the financial statements, you’ll see your Tribe’s financial resources are primarily split between the following:
- Unearned revenues
- Unrestricted net position
- Revenues
Unearned revenues
Tribes typically have unearned — or deferred — revenues, which is advanced cash received by granting and contracting agencies. If there are large, advanced cash balances that haven’t been spent year-over-year, also referred to as carryover balances, you’ll want to find out whether there are projects planned for that funding to ensure your Tribe is seizing opportunities with the available funding.
Unrestricted net position
Related sections
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
