District asked to explain controls over appraisal database

August 30, 2012

A D.C. Council member requested this week that the city’s chief financial officer explain what internal controls are in place to protect a computer-
assisted mass appraisal database — the subject of an internal audit that warned that a handful of managers could change property values without detection.

The 25-page audit described a “significantly flawed” system where managers known as
“super-users” could write over data to potentially lower the value or change the classification of property. The audit was delivered to Chief Financial Officer Natwar M. Gandhi in March and made public last week in an article in The Washington Post.

In a letter to Gandhi this week, D.C. Council member David A. Catania (I-At Large) requested that the finance office answer more than a dozen questions about the system by Sept. 14.

Catania wrote that the system “creates a breeding ground for mischief and fraud.” He said he found it “especially disconcerting” that such weaknesses continue in the agency’s Office of Tax and Revenue, which was rocked in 2007 by a $48 million embezzlement scheme masterminded by a manager.

“Both the Post article and the [internal] audit question the management and operations of OTR and bolster my concern about the existence of proper functional and systematic internal controls in that office,” Catania wrote.

Natalie Wilson, a spokeswoman for the tax office, said in an e-mail that the office is responding to Catania.

The council member said in an interview that The Post’s story was the first time he learned of the audit. Catania said he could understand if Gandhi wanted to review the findings, come up with some recommendations and present them to the council. “That just didn’t happen in this case,” he said. “This is pretty important stuff. I don’t understand why the CFO wouldn’t want to get ahead of this story, instead of behind it.”

Catania said he thought that as a member of the council’s Committee on Finance and Revenue it was his duty to seek more information. “I’ve had an interest in the integrity of the systems since I joined the committee,” he said.

Earlier this month, Council Chairman Phil Mendelson (D) said the council should hold a hearing on the tax-appeals process after The Post published an article showing that officials had cut $2.6 billion from the proposed taxable value of more than 500 commercial properties through settlements with owners.

Council member Jack Evans (D-Ward 2), chairman of the Finance and Revenue Committee, said he has not decided whether he will hold a hearing. The council returns from summer recess in mid-September.

Evans said he has not read the audit of the appraisal system but has spoken with Gandhi about it. “He told me they implemented [auditors’ recommendations] or were in the process of implementing them,” Evans said.

Evans said he would also await answers to Catania’s letter. “We’ll see what information he gets,” he said. “That’s something my staff and I will be taking a look at.”

Catania asked how many assessment roll corrections and tax-refund transactions were made by super-users over the past year. He also asked who was responsible for overseeing such changes.

“There have been some very high-visibility problems with the office,” Catania said. “I’m not suggesting nefarious or illegal activity, but we have a system without internal controls. In the absence of an audit trail, we don’t know if something nefarious or improper happened.”

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