; and (B) demonstrate to the satisfaction of the Secretary that the recipient has the capacity to spend Federal funds in an effective manner, which demonstration may include evidence of the timely expenditure of amounts previously distributed under this Act to the recipient. (b) Allocation amount Notwithstanding sections 301 and 302, the allocation for such fiscal year for a recipient described in subsection (a) shall be the amount initially calculated according to the formula minus the difference between the recipient’s total amount of undisbursed block grants in the Department’s line of credit control system on such January 1 and three times the initial formula amount for such fiscal year. (c) Reallocation Notwithstanding any other provision of law, any grant amounts not allocated to a recipient pursuant to subsection (b) shall be allocated under the need component of the formula proportionately amount all other Indian tribes not subject to such an adjustment. (d) Inapplicability Subsections (a) and (b) shall not apply to an Indian tribe with respect to any fiscal year for which the amount allocated for the tribe for block grants under this Act is less than $5,000,000. (e) Effectiveness This section shall not require the issuance of any regulation to take effect and shall not be construed to confer hearing rights under this or any other section of this Act. . (b) Clerical Amendment The table of contents in section 1(b) is amended by inserting after the item relating to section 302 the following new item: Sec. 303. Effect of undisbursed grant amounts on annual allocations. . IV AUDITS AND REPORTS 401. Review and audit by Secretary Section 405(c) ( 25 U.S.C. 4165(c) ) is amended, by adding at the end the following new paragraph: (3) Issuance of final report The Secretary shall issue a final report within 60 days after receiving comments under paragraph (1) from a recipient. . 402. Reports to Congress Section 407 ( 25 U.S.C. 4167 ) is amended— (1) in subsection (a), by striking Congress and inserting Committee on