The D.C. auditor, who three times this summer forecast multimillion-dollar deficits for the city this fiscal year, reversed himself yesterday and predicted the budget will balance.

In a brief report, Auditor Otis Troupe said the city's program to cut spending appears to be working. The report said that based on an analysis of city expenditures through July, "it now appears" that $11.1 million in overspending that he had earlier predicted "has been avoided."

However, Ronald Gaskins, the financial analyst who prepared the report for Troupe, said yesterday he could not specify in which specific areas money had been saved, or how much the overall spending rate may have slowed.

Mayor Marion Barry and officials of his administration have insisted since July that controls on spending would bring the city to the end of the fiscal year Sept. 30 not only without a deficit, but with a $3.1 million surplus.

In July the city officials said revenues appeared to be falling about $5 million short of the city's initial expectations, and they imposed an $8.1 million austerity program that they predicted would make up that shortfall and leave the $3.1 million surplus.

Budget director Gladys Mack stuck by that forecast as, in one report in July and two in August, Troupe predicted that revenue shortfalls would combine with overspending by agencies to produce deficits of $10 million to $17 million. The auditor called for an austerity program almost double the size of the one imposed by Barry.

Yesterday, Mack hailed the latest report as a victory. "They did another report, rolled up the flag and it was white," she said. "Finally, they have agreed with us."

Yesterday's report said it appears that expenditures have been reduced to the extent that any shortfall in revenues "may be absorbed. If this is accomplished," the report says, "the District of Columbia will have a balanced budget at the end of the fiscal year."