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Chief Financial Officer Natwar Gandhi
CFO announces audit committee to review financial management and internal controls
December 5, 2007




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Wednesday, December 05, 2007
Contact: Maryann Young
202-727-0058 / 202-641-6024

Chief Financial Officer Announces Audit Committee to Review Financial Management and Internal Controls

District of Columbia Chief Financial Officer Natwar M. Gandhi today announced the establishment of the Audit Committee to Review Financial Management and Internal Controls as another important step toward strengthening the District’s financial operations for the long term following the recent changes in the Office of Tax and Revenue.

The Committee will assist the CFO in reviewing the internal control structures of the OCFO’s financial management operations, as well as its compliance with existing policies and procedures. The distinguished leadership of the Committee includes (biographical briefs follow below):

  • Sheldon Cohen, Chair (Director at Farr, Miller & Washington, LLP);
  • Donald H. Chapin (Retired, Director of Auditing, Arthur Young & Company);
  • John Hill (Chief Executive Officer of the Federal City Council);
  • James Hudson (Retired, Chairman of the JAH Development); and
  • Irving Pollack (Of Counsel, Fulbright & Jaworski).

The Committee’s overriding objective is to review the performance of the Office of the Chief Financial Officer and the OCFO function in each District agency. The Committee will provide quarterly reports on its findings and recommendations.

The Office of the Chief Financial Officer must rebuild the trust and credibility that has been damaged by the allegations of gross impropriety in the Office of Tax and Revenue,” said Gandhi, in unveiling the Committee members today. “I want this Committee to carefully and completely scrutinize our operations throughout the District. I very much appreciate the members’ willingness to serve, and I pledge them the OCFO’s full support.”

“We will give this committee our full cooperation and support,” said Mayor Adrian Fenty. “These individuals are committed to the District and we expect our financial management controls will benefit from their experience and diligence.”

“This is a step in the right direction,” said Finance and Revenue Committee chairman Jack Evans. “We have a long road ahead of us and the assistance of this committee will be invaluable.”

The Committee will be guided by the advice published in 1995 in OMB circular A-123, Management Accountability and Control, as well as the standards for reviewing the adequacy of internal controls contained in the Sarbanes-Oxley Act of 2002. The formation of an audit committee is also recommended to assist states and municipalities in complying with the GAO’s new Government Auditing Standards (The Yellow Book), issued in July 2007 for implementation in 2008, making the District among the first major jurisdictions to have an audit committee assisting in Yellow Book compliance.

The Executive Office of the Mayor, the District Council and the Inspector General will each have a liaison to the Audit Committee.

The Committee has agreed to begin its work by reviewing the financial operations of the Office of the Chief Financial Officer. Their work is expected to begin immediately.

A more detailed explanation of the Committee’s mission and principles follows, as well as the previously referenced biographies of Committee members.

Organizational Summary


Historically, the Chief Financial Officer (CFO) has appointed several advisory boards to advise the office on a variety of matters. These boards, such as the CFO Advisory Council, Business Advisory Council, Real Estate Advisory Council, Revenue Estimating Technical Review Committee, and Tax Advisory Council, provide substantive expertise and recommendations to the CFO on an ongoing basis.

Audit Committee Mission

The CFO is establishing a new advisory board, the Audit Committee to Review Financial Management and Internal Controls (Audit Committee), to assist the CFO in reviewing internal control structures and compliance with established policies and procedures for the District’s financial management operations.

Audit Committee Appointees

The CFO will be appointing the following individuals to serve on the Audit Committee, each for a threeyear term ending December 31, 2010 (see brief biographies, below):

  • Sheldon Cohen (Chair)
  • Donald H. Chapin
  • John Hill
  • James Hudson
  • Irving Pollack

The Executive Office of the Mayor, the District Council, and the Inspector General will each have a liaison to the Audit Committee:

  • Executive Office of the Mayor – Peter Nickles, General Counsel
  • District Council – TBD
  • Inspector General – TBD


The Audit Committee will be guided by the advice published in 1995 in OMB Circular A-123, Management Accountability and Control, which set forth eight principles for control standards in a mature organization:

(i) Compliance With Law;
(ii) Reasonable Assurance and Safeguards;
(iii) Integrity, Competence, and Attitude;
(iv) Delegation of Authority and Organization;
(v) Separation of Duties and Supervision;
(vi) Access to and Accountability for Resources; (vii) Recording and Documentation; and
(viii) Resolution of Audit Findings and Other Deficiencies.

These eight principles apply to management controls in general, in any sort of program. The Audit Committee will assist the CFO by reviewing its programs, processes, and systems for financial management and controls throughout the District, for their conformance with the eight principles, and will recommend corrective actions where needed.

The Audit Committee will also be guided by the section 404 of the Public Company Accounting Reform and Investor Act of 2002, also known as the “Sarbanes-Oxley Act of 2002,” which sets forth standards of review for the assessment of the adequacy of internal controls for financial reporting of publicly traded companies.

Initially, the Audit Committee will be charged with review of the financial operations of Office of the Chief Financial Officer (OCFO). It will then move on to the financial operations of all other District government agencies, including the financial operations of the Office of Contracts and Procurement, the Department of Health, and, if it is enacted, the proposed Department of Health Care Finance.

The Audit Committee will meet on a monthly basis, commencing in December, 2007, and concluding in December, 2010, subject to renewal by the Chief Financial Officer. It will hire staff and, if necessary, contract with an accounting firm to carry out its mission, supported from the budget of the OCFO.

The Audit Committee will report to the CFO on a quarterly basis, with its final report due no later than March 31, 2011. The quarterly and final reports will be posted timely on the CFO’s website. The Audit Committee will also provide quarterly briefings on its findings for the Mayor and the Council.


Sheldon Cohen, Chairman

The Honorable Sheldon S. Cohen, Esq. is currently a Director at Farr, Miller & Washington, LLP and a professional lecturer at the George Washington Law School. Mr. Cohen retired as a partner in the law firm of Morgan, Lewis & Bockius in 2005. Mr. Cohen served in the Internal Revenue Service on several different occasions. During the period 1952-1956, he served as a legislative draftsperson during the drafting of the 1954 Code and Regulations. In the period from January 1964 through January 1969, Mr. Cohen served as Chief Counsel for one year and then as Commissioner of the Internal Revenue Service for four years. He was the youngest person to ever serve in that position. He has also served as an officer and Trustee of the National Academy of Public Administration and has served as a panel member of several studies dealing with the administrative aspects of the Internal Revenue Service. He served as a consultant to the United Nations Development Program assisting developing countries with tax administration. He is the Chair of the Audit Advisory Committee of the GAO.

Donald H. Chapin

Mr. Chapin has been a consultant on accounting, auditing, and financial management issues from 1997 to date. He is a member of the Audit and Review Committee of the Smithsonian. He has advised the New York City District Attorney on Tyco related auditing issues and law firms on Enron related accounting issues, auditor independence issues and the application of accounting standards in a dispute. He evaluated the external and internal audit functions of a major telecommunications company and advised on related financial management issues. He also aided a law firm to evaluate an audit failure by a major accounting firm. He is a recent former member of the Standing Advisory Group (SAG) of the Public Company Accounting Oversight Board (PCAOB) and prior to his appointment consulted with the PCAOB staff. He served on the NASDAQ Listing and Hearing Review Council where he was Chairman of its committee on Accounting and Audit Committees. He also served on the Federal Accounting Standards Advisory Board, the Government Auditing Standards Advisory Council, the Loan Loss Accounting Task Force of the AICPA and the Public Sector Committee of the International Federation of Accountants. From 1989 to September 30, 1996, Mr. Chapin was employed by the GAO, ending his service as the Assistant Comptroller General for Accounting and Information Management responsible for GAO’s financial and systems audits of federal agencies and corporations and for its reports and Congressional testimonies on financial management issues.

John Hill

Mr. Hill is Chief Executive Officer of the Federal City Council, with more than 28 years of experience in federal, state, local, and private sector entities. He formerly served as director of state and local government consulting services for Arthur Andersen, LLP, and was the founding executive director of the Washington, D.C. Financial Control Board. Mr. Hill has also served as a director in the U.S. General Accounting Office, director of audits with the Marriott Corporation, and audit manager for Coopers and Lybrand and Price Waterhouse.

James L. Hudson

Mr. Hudson served as the Vice-Chair of the National Capitol Revitalization Corporation and is currently involved in real estate and venture capital development. He was the Special Legislative Counsel for the cities of Detroit, New Orleans, Oakland and Kansas City where he provided legal and executive department support on city finance and economic development plans. In addition, he served as principal liaison with the U.S. Congress and the U.S. Departments of Housing and Urban Development, Labor and Transportation. Mr. Hudson also served as Finance Counsel for the District of Columbia government from 1974 to 1982.

Irving Pollack

Mr. Pollack was a former Commissioner and Director of the Divisions of Enforcement and Market Regulation for the U.S. Securities and Exchange Commission, Mr. Pollack is serving as Of Counsel to Fulbright & Jaworski L.L.P. He has consulted for numerous governmental and private institutions, including the World Bank, the International Finance Corporation (World Bank affiliate), the International Organization of Securities Commissions (IOSCO), the National Association of Securities Dealers, the Ontario and Quebec Securities Commissions and Merrill Lynch Pierce Fenner & Smith, Inc., Edward Jones, and the U.S. Synthetic Fuels Corporation. Mr. Pollack has rendered expert services for Dow Jones, the New York Stock Exchange, and other organizations. He recently served as a Director of ML Life Insurance Co. of New York and a member of its Audit & Compensation Committee.

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