More than three years ago, District taxpayers learned Harriette Walters, a midlevel manager in the Office of Tax and Revenue, had embezzled $50 million using the simplest scheme. Chief Financial Officer Natwar Gandhi and his team pledged to institute regular audits and install important controls to prevent a reoccurrence. Yet, in letter dated Jan. 27, 2011, auditors with KMPG, LLP found conditions at OTR remain ripe for theft. There were no appropriate policies “to prevent a single employee from being able to prepare, review and approve [computerized] cash receipt vouchers.” Further, management hadn’t restricted access “appropriately to prevent compliance division personnel from having inappropriate access.” “These deficiencies increase the risk that inappropriate refunds may be issued,” auditors added in the letter — commonly called the yellow book — that accompanied the city’s Comprehensive Annual Financial Report.
CFO spokesman David Umansky seemed to pooh-pooh the auditors’ statement. He said “OTR’s systems are replete with redundant controls, aimed at preventing fraud before it occurs and detecting it after it occurs. ” But, he added, scrutiny of OTR sometimes “pinpoints areas for additional improvement such as those included in this year’s yellow book.”
