Tax Suspect's Guidance on Software Left D.C. at Risk

The charges in the Wright case include creating a false $40,000 refund in March 2007. Even though the check had been cashed, Wright used the Integrated Tax System to issue a replacement check on the grounds that the first check had been lost, according to the charges. Then she issued a second replacement check. Then she issued a third replacement check. At that time, the Integrated Tax System added $33.03 of interest to the check to compensate for the long delay in issuing the refund.

"Wright thus exploited a deficiency that allowed a check to be 'reissued' even without any action being taken to cancel the first check or confirm that the first check had not already been negotiated," according to the charging papers.

The $40,000 checks fell below the threshold for requiring a supervisor's approval, said David Umansky, spokesman for Gandhi. He said 77 personal refunds of at least $40,000 were issued last year.

"Our system has got a plethora of internal controls on it," said tax office head Stephen M. Cordi, hired this year to replace managers cleared out when the Walters embezzlement scandal broke. "On top of that, we have manual controls. But you're always vulnerable to an enterprising employee who knows how the controls work."

In the Walters case, tax managers were fired because refund checks for hundreds of thousands of dollars apiece were issued for years without the required supervisor sign-offs. At the time, Gandhi expressed a sentiment similar to Cordi's, saying, "The most sophisticated audits won't be able to find this kind of corruption."

Some observers, however, have said outside auditors are responsible for detecting when anti-fraud policies are not being followed. It might be impossible to stop an inside person from stealing, but thieves can be deterred if they think someone will detect what they did, said Alan B. Morrison, a former District attorney general who has helped nonprofit groups implement fraud prevention.

The District's pursuit of a new tax system has exposed a rocky relationship between the current generation of tax managers and Accenture. In addition to the $105 million paid to create the system, the consulting firm has been paid at least $5 million a year to help run it, totaling $135 million so far.

Sherryl Hobbs Newman, who took over the tax office after the Integrated Tax System was installed, commissioned a $200,000 report in 2006 to review the software. The report by the Wendell Group, a technology consulting firm, called the system a "failure," blaming Accenture and District managers who made bad choices. The report suggested that Accenture should have to upgrade the system at no additional cost to the city.

Accenture denied all of the Wendell Group's findings. It repeatedly pointed out that Accenture provided the systems chosen by District managers at the time.

The Wendell report held that Accenture's role as the experienced expert gave it greater responsibility for failures.

But Teller disagreed.

"Ultimately, it's the responsibility of the customer -- the government -- to make the decision," he said.

Teller and his staff concluded in their own written analysis that the system needs to be replaced.

Teller said previous managers had to make difficult decisions under pressing circumstances in the midst of changing technologies in the late 1990s.

He expects that putting newer technology in place will eliminate the need to pay a consultant such as Accenture $5 million a year to run it.

Customer service managers who help taxpayers with problems find the system clumsy and hard to use, Cordi said.

Accenture program manager J. Christian Stauffer said the system was state-of-the-art when installed and is far easier to use than Wendell described. He said training provided in 2000 or 2001 needs to be repeated to make sure that newer employees appreciate the software's flexibility.