D.C. Council members are obsessed with process — except when Chief Financial Officer Natwar Gandhi is involved. They like him. Consequently, they ignore his methods and the less-than-stellar results those processes produce.
So, it wasn’t surprising to find legislators passing out accolades earlier this month to Gandhi for producing a “clean’ audit for fiscal 2009 — although beneath the surface of that report there’s sufficient cause for concern.
BDO Seidman auditors’ management letter commonly called the “yellow book” identified problems in three areas — D.C. Public Schools, Medicaid and the Office of Tax and Revenue; those same agencies were cited for weaknesses and deficiencies in 2008.
“Each of the significant deficiencies cited this year are areas in which the auditors observed/noted vast improvement — so much so that it is our expectation that we have a realistic chance of eliminating all three in FY ’10,” CFO spokesman David Umansky told me.
Don’t believe the hype. A similar promise was made last year.
Truth be told, the so-called progress hasn’t been significant. As The Examiner‘s Michael Neibauer first reported, the U.S. attorney is investigating a woman who accessed the tax records of several businesses. Even after someone walked away with $50 million of the public’s money, the Office of Tax and Revenue remains vulnerable to possible thefts.
Auditors also found “adequate controls do not exist over the release and re-issuances” of tax refunds that may have been sent to the wrong address but were returned to the OTR. “Approximately 258 employees within OTR have access rights to suppress, as well as release and re-issue refund checks. A risk exists that previous suppressed tax refund checks may be released for payment without adequate support or authorization,” they said.
Meanwhile, hundreds of individuals and businesses received tax credits for which they were ineligible; that “can result in lost revenue for the District.”
Umansky dismissed that concern, asserting there are “upwards of 90,000 residential properties with Homestead exemptions. There is nothing at all surprising about the fact that at any given time 353 properties — less than 1 percent of all Homesteads — may have their entitlement in question.” He said OTR will send out questionnaires and terminate exemptions where appropriate.
Help us. The CFO isn’t concerned about the loss of revenue during a recession that is squeezing the city?
That same cavalier financial management resulted in agencies overspending their budgets in 2009 — a violation of the federal Anti-Deficiency Act.
Those actions have carried over into fiscal 2010. Already, the city is looking at a potential deficit of $200 million. The council is expected to hold a hearing Friday to examine the problem. No doubt, legislators will point the finger at Mayor Adrian M. Fenty.
They should remember, however, that neither the mayor nor his agency directors have the authority to write one check. Only the CFO has that power.
Jonetta Rose Barras, host of WPFW’s “D.C. Politics With Jonetta,” can be reached at [email protected].
