Jack Evans Report

D.C. Gets a Clean Audit

As I wrote in my last article, around this time every year we conduct a performance analysis of the agencies within our committee purview and make recommendations regarding future programs and funding levels. Another crucial aspect of the oversight and budget process is the completion of our audit, the Comprehensive Annual Financial Report (“CAFR”), which was recently released.

The District of Columbia has a lot to be proud of. This is the 17th consecutive year in which the District has received a clean audit opinion on its annual financial statements. Once again, there are no reported material weaknesses, which is also commendable. Not only have we continued to maintain our strong bond ratings, and even achieved an upgrade by S&P from A+ to AA-, but we have also managed to increase our fund balance by $242 million to $1.75 billion.

In short, our finances today are a far cry from the desperate straits we faced in the mid-1990s. This is an encouraging outcome. I believe that we should use this opportunity to save our surplus until we attain the full two months of operating dollars in our reserves that the bond rating agencies prefer and our auditors recommend.

Our auditors also prepare a report, known as the Yellow Book, that discusses their analysis of the District’s internal controls over financial reporting and gives the results of their tests of the District’s compliance with certain laws, regulations, contracts, grant agreements and so on. With regard to these findings, we have good news and bad news. First, I want to recognize the Office of Tax and Revenue for resolving the issues that got them into the Yellow Book last year. This year, they are out of the Yellow Book. It’s a real achievement.

In other areas of the government, however, we have ongoing weaknesses that need to be addressed. Our information technology systems continue to have problems. Our procurement offices still fail to maintain and produce basic documentation needed for our auditors to verify that fraud is not present. Reconciliations aren’t happening in a timely manner. Something as large as a $14 million deposit can be made twice, and nobody gets to the bottom of it for months.

Maintaining our fiscal health has been no small accomplishment during the past few fiscal years, when so many governments have struggled financially. Our goal for the coming year must be to plan for our long-term needs, live within our means and not look to immediate fixes that have only a short-term impact.

We should think of the findings of the CAFR – which was completed on time, resulted in a clean audit and reflects a balanced budget – not as the end of a process, but as starting points for a renewed effort: to delve deeper into the reports, to continue to perform oversight on the identified areas of concern and to move forward with our budget for fiscal year 2015.

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Tue, 30 Sep 2014 13:50:51 -0400

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