Financial Controls Faulted in Schools, Medicaid, Tax Office
The D.C. government has serious flaws in its handling of finances in the public schools, Medicaid and the Office of Tax and Revenue, according to an independent audit to be released tomorrow.</br></br>In its recently completed Comprehensive Annual Financial Report, BDO Seidman cited each of those areas as a "material weakness" in the District's internal financial controls, according to city officials who were briefed yesterday.</br></br>Overall, BDO auditors gave the city a "clean" audit for fiscal 2007, D.C. Chief Financial Officer Natwar M. Gandhi said. But the three material weakness citations -- the most serious level of concern below an "unclean" audit -- are part of a disturbing trend and could pose a threat to the city's good standing on Wall Street if the problems remain uncorrected.</br></br>In the audit for fiscal 2006, only the school system's financial controls were cited for material weakness, and the District received no citations in the two previous years. Furthermore, the 2007 audit found six "reportable conditions" -- one step removed from a material weakness.</br></br>Among the reportable conditions were problems with the city's handling of federal grant money, its payment of unemployment and disability compensation, its system for approving overtime pay and the financial management of two now-defunct planning agencies.