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TESTIMONY OF DISTRICT OF COLUMBIA AUDITOR DEBORAH K.
NICHOLS
COMMITTEE OF THE WHOLE JOINT PUBLIC OVERSIGHT ROUNDTABLE ON THE OPERATIONS OF THE OFFICE OF TAX AND REVENUE November 15, 2007 - 1:00 PM CHAIRMAN GRAY, COUNCILMEMBER EVANS, AND MEMBERS OF THE COMMITTEE OF THE WHOLE AND COMMITTEE ON FINANCE AND REVENUE: Thank you for the opportunity to appear before you today to summarize the major findings and recommendations contained in District of Columbia Auditor reports on the operations of the Office of Tax and Revenue. I am Deborah K. Nichols, District of Columbia Auditor. Summary of Relevant D.C. Auditor Reports Issued on the Office of Tax and RevenueOver the past several years the Office of the District of Columbia Auditor has conducted several examinations of the operations of the Office of Tax and Revenue. In my testimony today, I will briefly summarize a few of these reports. I will begin with our reports entitled, "Comparative Analysis of Actual Cash Collections to Revised Revenue Estimates" in which we repeatedly noted the anomaly in real property tax refunds as follows: 1. In our July 16, 2004 report entitled, "Comparative Analysis of Actual Cash Collections to Revised Revenue Estimates Through the 1s` Quarter of Fiscal Year 2004", at Page 5, we stated:
2. In our July 30, 2004 report entitled, "Comparative Analysis of Actual Cash Collections to Revised Revenue Estimates Through the 2°d Quarter of Fiscal Year 2004", at Page 5, we stated:
3. In our September 7, 2004 report entitled, "Comparative Analysis of Actual Cash Collections to Revised Revenue Estimates Through the 3rd Quarter of Fiscal Year 2004", at Page 6, we stated:
4. In our August 17, 2006 report entitled, "Comparative Analysis of Actual Cash Collections to Revised Revenue Estimates Through the 1st Quarter of Fiscal Year 2006", at Page 6, we stated:
The Office of the District of Columbia Auditor also issued the following additional reports that contain findings and recommendations on the operations of the Office of Tax and Revenue: 1. November 19, 2001 report entitled, "Homestead Tax Deduction Program Deficiencies May Have Caused the District to Lose As Much As $44.7 Million During Fiscal Years 1998 Through 2000. 2. September 30, 2004 report entitled, "Analysis of the Office of the Chief Financial Officer's Exceptions Account for Fiscal Years 2003 and 2004, as of June 2004." The Exceptions Account was created primarily as a holding account for the deposit of sales and use tax return payments with problems. The Auditor reviewed deposits made to the Exceptions Account and found that during fiscal years 2002 and the 1st quarter of 2003, OTR officials did not always reconcile deposits timely. OTR's failure to do so delayed the transfer of dedicated tax revenues owed to the Washington Convention Center Authority. 3. August 25, 2006 report entitled, Auditor's Examination of the Escrow Account Established by Accenture and the Office of Tax and Revenue (OTR) in Connection with Contract Number DCFRA #99-C-004", also known as the Integrated Tax System contract. The Auditor's examination of the ITS contract retainage escrow account revealed several internal control weaknesses, operational inefficiencies, and issues of non-compliance. 4. August 28, 2006 report entitled, "Auditor's Performance Review of the Integrated Tax System's Processes Related to the Timeliness of Tax Refunds and Deposits of Tax Payments." This examination revealed several weaknesses in internal controls and instances of noncompliance with applicable District guidelines. These conditions resulted in inefficient ITS usage, presented opportunities for financial improprieties and, in some instances, facilitated the system's generation of inaccurate and unreliable information. 5. Soon to be released report entitled, "Auditor's Examination of Contract Cost and Administration for the Integrated Tax System," in which we report on significant weaknesses in internal controls and numerous deficiencies in the ITS contract management and administration process. The recently disclosed theft of District real property tax revenue is a travesty. More importantly, it soundly and inescapably brings to our attention the very high risk of loss and harm posed to our taxpayer funds by internal control, management accountability, and accounting inadequacies and deficiencies that are ignored or poorly addressed. These problems continue to exist within the District's tax collection and financial management accountability systems. Chairman Gray, Councilmember Evans, members of the Committee, thank you again for the opportunity to appear before you today. I am prepared to respond to any questions that you may have at this time. |
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