ANCs sit in an auditing blind spot, says GAO
Alaska Native Corporations have unclear financial reporting requirements and may not give the most relevant information to shareholders because of this ambiguity, says the General Accountability Office.
In a report (.pdf) dated Dc. 13 but published on Jan. 9, GAO notes that ANCs are exempt from most federal securities laws and while reporting requirements under the Alaska Native Claims Settlement Act require them to report "substantially all the information" required by publicly traded companies, the act failed to specify what that information is.
The settlement established 13 ANCs, one for each of the 12 geographic regions of the state and one for natives living outside of Alaska.
The Securities and Exchange Commission told GAO that the settlement requires ANCs to be audited under generally accepted auditing standards that have less supplemental information requirements than audits for SEC registrants.
The commission told GAO that most ANC financial reports "did not fully explain material uncertainties reasonably likely to affect future trends and prospects," but also said that the settlement act makes it unclear what disclosures are required by ANCs.
The report expresses concern that ANC requirements may further diverge from SEC registrant requirements, and that this may lead to corporation practices that diverge from what is required for SEC registrants.
The corporations are largely unmonitored since no federal body has authority to monitor their financial reports and state oversight is currently limited, and GAO says Congress should consider its role in aiding and monitoring ANCs in the future.
Rep. Edward J. Markey (D-Mass.), who requested the report, says the lack of oversight makes ANC shareholders vulnerable. Markey says the GAO report will be used to back upcoming legislation "to ensure Alaska Native Corporations are operating in the best interests of their Alaska Native shareholders."