The District was warned more than once that employees could alter records used to calculate tax bills and refunds, leaving the system vulnerable to manipulation.
Just as internal auditors this year found flaws in the database used to calculate D.C. property tax assessments, external auditors found problems of a similar nature in another database used to process bills and refunds.
The District’s Office of Tax and Revenue did not restrict the access of employees who were able to make “improper adjustments” in the Integrated Tax System (ITS), the billing and refund collection system, according to a Jan. 25 report by the private firm KPMG.
That finding was echoed in a March internal audit that found that a handful of tax office managers could adjust property value assessments without detection in the database that calculates property tax assessments, known as the computer-assisted mass appraisal system. The Office of the Chief Financial Officer, which oversees the tax office, disputed some of the findings.
The internal audit is set to be the subject of a D.C. Council committee oversight hearing Wednesday on tax office issues.
The external KPMG audit found several “deficiencies” as part of an annual review of the city’s financial statements by the Office of the Inspector General, which was submitted in May to Mayor Vincent C. Gray, Chief Financial Officer Natwar M. Gandhi and other city officials. It was also made public on the inspector general’s Web site.
A spokeswoman for the tax office did not respond to a request for comment about the report. The inspector general’s office did not return calls seeking comment.
In its response contained in the KPMG report, the tax office agreed with the findings, adding that it had established controls in 2009 and 2011 to address the issue. Changes had been made so that only certain employees would have “the systemic ability to adjust taxpayer accounts,” the tax office said.
The report said there was no “segregation of duties” between a person who prepares a change to an audit assessment and one who puts the information into the ITS. “As a result,” it said, “audit assessment changes may be erroneously input into the ITS system without proper review and approval.”