The internal affairs chief at the D.C. Office of the Chief Financial Officer said he resigned on the spot this week because he felt pressured to keep critical audits in draft format, which makes them exempt from public disclosure.

William J. DiVello said Friday that he was told senior managers would not make public an updated version of a controversial audit about the tax office in advance of a D.C. Council hearing next week. DiVello, a former assistant inspector general for the city, said he resigned Thursday after months of tension came to a head.

“I felt pressure to leave reports in draft,” said DiVello, 65, who had been in the job for two years. “I said that’s a non-starter. My ethics don’t allow me to do that. Put the audits out there. Let the people know . . . if there’s something wrong. It’s okay. You’re finding the problems yourself. But they quarantined the audits.”

David Umansky, the spokesman for the chief financial officer, defended the agency. “It is not true that the OCFO keeps reports in draft to keep them from disclosure,” he said. The agency “does not routinely make the reports public because the information contained in them could provide a guide for someone who wants to use the information for nefarious purposes.”

The audit in question, delivered to Chief Financial Officer Natwar M. Gandhi in March, found that supervisors in the city’s embattled tax office could change property values without detection. The report was not made public until shortly before The Washington Post obtained a copy and prepared to publish an article on it in August.

Read the controversial report

City Council members have scheduled an oversight hearing for Wednesday to delve into the matter. DiVello said that in recent weeks, auditors have made changes to the report and included additional findings and recommendations.

But at a heated meeting Thursday afternoon with Gandhi’s chief of staff, general counsel, tax office director and others to prepare for the council hearing, DiVello said he was told that the agency would not finalize the revised audit prior to the council hearing.

“I said: ‘Clear the air. There’s going to be a hearing. What are we hiding?’ ” DiVello recounted. “ ‘Let’s sign it before the hearing.’ They said, ‘No. No. No. It’s still in draft.’ ”

The agency has said that draft reports are not subject to public disclosure.

The latest version of the audit, obtained by The Post, is dated Sept. 19 and includes additional recommendations to improve the tax office’s oversight of the city’s main repository of property-value information, known as the computer-assisted mass appraisal system (or CAMA) and used to calculate tax bills.

Report recently received

Aides for council members Jack Evans (D-Ward 2) and David A. Catania (I-At Large) said they received the September document late Friday afternoon, hours after The Post posed questions about it to Gandhi’s office. Evans is chairman of the Committee on Finance and Revenue, which is holding next week’s hearing; Catania serves on the committee and has voiced concerns about operations and transparency in Gandhi’s office.

Umansky, Gandhi’s spokesman, said in a written statement Friday that the report is still incomplete and does not include the tax office’s response to the additional recommendations made by auditors.

“In fact, in the report DiVello gives [the tax office] until October 22 to respond.  Once those responses have been received, the report will be finalized,” Umansky said.

The Post first obtained a copy of the March audit this summer. The agency said that the report had actually been approved, finalized and available for public review in March — ever since auditors delivered it Gandhi and his senior staff.

Gandhi’s office, however, did not disclose the report when The Post, through the Freedom of Information Act, sought in June to review all of the agency’s audits from 2002 to 2012.

On Friday, DiVello said that the March report was still in draft.

“I read in the paper that the report was approved. I said, ‘Huh? News to me,’ ” said DiVello, who as head of the internal-affairs unit signed off on all final reports after they were returned by Gandhi’s senior staff.

Umansky, however, said, “The sign off is an administrative formality that does not change the substance of the audit report or its practical usefulness.”

The March audit found that a handful of managers in the tax office had the ability to alter the assessed values of property by essentially writing over the assessment data that had been entered by staff appraisers.

Supervisors could lower the assessed value of a property, for example, or change how it was classified under the city’s tax tiers, which could reduce an owner’s tax bill.

The findings raised new concerns about continuing vulnerabilities in the tax office, where in 2007 manager Harriette Walters was caught stealing $4 8 million through phony refunds. The scheme, considered the largest embezzlement in city government history, spanned two decades. Gandhi at the time vowed sweeping reforms.

In a written response to the March audit, tax office chief Stephen Cordi initially told auditors that changes would be made. The tax office, he said, “recently modified its procedures and processes to ensure better separation of duties. These new procedures include an additional level of approval to ensure that no one person can modify a record and then act as the approver of the change.”

In a statement to The Post in August, however, the agency disputed auditors’ findings that in the past supervisors could make untracked changes in the system. “The change does leave an audit trail,” an agency spokeswoman said. “The individual who made the change would be identified.”

DiVello said the agency’s argument about the existence of an audit trail is off point. The system does have an audit trail, which was initially not disclosed to auditors, he said.

The problem, he said, is that supervisors weren’t using it. The September version of the audit found that “Responsible officials informed us that they do not use the audit log as a monitoring tool to assess and evaluate assessment changes made in CAMA, nor to check for exception items, errors, or irregular changes in the assessment data.”

The larger issue, DiVello said, was that the March audit also found missing documents, math errors and inconsistent supervisory approval of changes in the database.

On Friday, Catania questioned why he had not received the September version of the audit earlier and why it took several months for the council to receive any version of the audit in the first place. He said that in the past, Gandhi’s general counsel had told him that the office would provide audits if the council requested them.

“I’m not clairvoyant. . . . I have to know there’s an audit to request it,” said Catania, who added that he would likely introduce emergency legislation requiring that Gandhi’s office submit completed audits to the council without request.

‘Poor policies’

Catania said that Gandhi should have made the audit public and included plans to fix any problems.

“That would and should have been it,” Catania said. “Somehow, we’ve slipped into assessment-gate. The coverup is worse than the crime, and there’s not even a crime, just poor policies and procedures.”

DiVello said that Gandhi’s agency started keeping audits in draft earlier this year after auditors found continued “internal-control weaknesses” in the tax adjustment and refund process. DiVello said senior staff told him at the time that Gandhi was unhappy DiVello had signed off on the Nov. 2011 report.

“I felt that they were trying to get me to agree to say, ‘It’s okay just to issue draft reports,’ ” Di­Vello said. “But if that’s what you want, I’m the wrong man for the job.”

DiVello said he believes that five or six other audits about various aspects of Gandhi’s agency are still in draft form.

DiVello said that Evans called him Friday and asked him to testify at next week’s hearing. DiVello said he accepted the request.