The D.C. Office of Tax and Revenue will implement several new procedures by next month to protect the city’s computer-assisted property appraisal database, a system that internal auditors determined relies on weak internal controls.
The auditors found that a handful of managers — dubbed “superusers” — could change assessed values of property in the city without detection. The Washington Post obtained a draft of the audit and published the findings in August, prompting D.C. Council member David A. Catania (I-At Large) to request more information about a system auditors described as “significantly flawed” in the draft report. The document had not been made public before then.
This week, the Office of the Chief Financial Officer, which oversees the tax office, provided council members with a revised final audit and response to the auditors dated Sept. 12 that promises to implement several of the audit’s recommendations by Nov. 1. Some of the new procedures include tighter and frequent reviews of the city’s assessment rolls.
The D.C. Council Committee on Finance and Revenue will hold an oversight hearing Wednesday on the division within the tax office that handles assessments. Council member Jack Evans (D-Ward 2) said he is withholding judgment about issues in the tax office until the hearing. The Post found that the office, led by chief appraiser Tony L. George, lowered the proposed taxable value on 500 commercial properties this year through settlements with property owners. One staff appraiser filed an anonymous complaint about the settlements, spurring investigations by the FBI, a congressional committee and internal auditors.
The Post also found that George was terminated from a previous job, in Fulton County, Ga., for lowering assessments without explanation, which he did not disclose on his D.C. job application.
Catania said in a letter to Chief Financial Officer Natwar M. Gandhi this week that he still needs more information about how the tax office secures the database. “Your responses did not relieve my concern over the sufficiency and integrity of internal controls,” Catania wrote.
The agency has a Tuesday deadline imposed by Catania to respond to more questions.
Evans said he has not thoroughly reviewed Gandhi’s responses or the procedures that are to be put in place by Nov. 1.
The division that handles assessments, known as the Real Property Tax Administration, will request by Nov. 1 daily reports of detailed transactions that are entered into the computer system. The tax administration “will also be responsible for reconciling the reports, documenting the reconciliation and reviewing and resolving any discrepancies,” Stephen M. Cordi, who heads the tax office, and David Shive, acting chief information officer, wrote in the Sept. 12 response to the director of the internal affairs office.
Also, a systems accountant will conduct quarterly reviews of assessment roll changes. The tax office will also develop written filing procedures. The auditors recommended written procedures to “allow the system to be reviewed on an ongoing basis by management and to quickly make only the changes necessary to meet operating conditions.”
The tax office’s latest response with promises to implement changes soon appears to be a different posture from the one in August, when the agency disputed the auditors’ findings in a Post article about the document.
Since then, however, council members have voiced concern about Gandhi’s operation, which was rocked in 2007 when federal investigators uncovered a $48 million embezzlement of city funds through a refund scam.
“Doesn’t the CFO have an audit unit? Someone is not watching the store adequately,” council member Mary M. Cheh (D-Ward 3) said in an interview.