Local
Price tag doubles for auditor’s review of D.C.’s books
By: Michael Neibauer
Examiner Staff Writer
December 18, 2008
The District’s outside auditor has more than doubled its bill for reviewing the city’s books for the recently ended fiscal year, a now-$4.2 million price tag of which a significant percentage will fund a continuing review of the scandal-plagued tax office.
BDO Seidman is seeking an additional $2.2 million on top of the $2 million base price for the ongoing fiscal 2008 Comprehensive Annual Financial Report, or CAFR. Of the amended bill, $500,000 is for a review of the city’s new payroll system and $671,000 is for additional work in the Office of Tax and Revenue, home to the costliest scandal in D.C. government history — which BDO missed in earlier audits.
The CAFR contract goes through the D.C. Office of the Inspector General.
“They expand everything when you have a big fraud like that,” said William DiVello, assistant IG for audits. “They drill down much deeper.”
BDO audited D.C.’s books and internal controls in 2005, 2006 and 2007 — the years when the tax office’s Harriette Walters was falsifying increasingly large property tax refund checks at an astounding rate. Walters faces 15 to 18 years in prison for stealing $48 million over 20 years in her midlevel post under Chief Financial Officer Natwar Gandhi.
Neither BDO, nor its predecessor KPMG, spotted the scam. BDO’s audit team concluded in fiscal years 2005 and 2006 that “the critical controls for refund processing within the real property unit are operating effectively,” an audit conducted for the D.C. Council by firms WilmerHale and PricewaterhouseCoopers found.
“WilmerHale and PwC also noted in the review of the work papers that several of Walters’ fraudulent refunds were in the samples the auditors used for certain limited audit procedures,” the council review states. “We found no evidence that the auditors recognized that these refunds were improper.”
BDO’s “audit team has performed at all times in accordance with professional standards,” the firm said Wednesday in a statement. And nobody, the D.C. Council included, “has ever suggested otherwise.”
“Surely that’s a question that’s lying on the table still; why they weren’t able to pick up on the fraud?” asked Ward 3 Councilwoman Mary Cheh. “I suppose you can say if the numbers add up, money in and money out, and it’s all kept according to general accounting principles. But it’s certainly a question I have.”
BDO’s roughly 50 auditors are paid $165 an hour on average, according to the Inspector General’s Office. The Comprehensive Annual Financial Report is due by Feb. 1.
BDO Seidman is seeking an additional $2.2 million on top of the $2 million base price for the ongoing fiscal 2008 Comprehensive Annual Financial Report, or CAFR. Of the amended bill, $500,000 is for a review of the city’s new payroll system and $671,000 is for additional work in the Office of Tax and Revenue, home to the costliest scandal in D.C. government history — which BDO missed in earlier audits.
The CAFR contract goes through the D.C. Office of the Inspector General.
“They expand everything when you have a big fraud like that,” said William DiVello, assistant IG for audits. “They drill down much deeper.”
BDO audited D.C.’s books and internal controls in 2005, 2006 and 2007 — the years when the tax office’s Harriette Walters was falsifying increasingly large property tax refund checks at an astounding rate. Walters faces 15 to 18 years in prison for stealing $48 million over 20 years in her midlevel post under Chief Financial Officer Natwar Gandhi.
Neither BDO, nor its predecessor KPMG, spotted the scam. BDO’s audit team concluded in fiscal years 2005 and 2006 that “the critical controls for refund processing within the real property unit are operating effectively,” an audit conducted for the D.C. Council by firms WilmerHale and PricewaterhouseCoopers found.
“WilmerHale and PwC also noted in the review of the work papers that several of Walters’ fraudulent refunds were in the samples the auditors used for certain limited audit procedures,” the council review states. “We found no evidence that the auditors recognized that these refunds were improper.”
BDO’s “audit team has performed at all times in accordance with professional standards,” the firm said Wednesday in a statement. And nobody, the D.C. Council included, “has ever suggested otherwise.”
“Surely that’s a question that’s lying on the table still; why they weren’t able to pick up on the fraud?” asked Ward 3 Councilwoman Mary Cheh. “I suppose you can say if the numbers add up, money in and money out, and it’s all kept according to general accounting principles. But it’s certainly a question I have.”
BDO’s roughly 50 auditors are paid $165 an hour on average, according to the Inspector General’s Office. The Comprehensive Annual Financial Report is due by Feb. 1.
