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CFO: Audit coming ‘soon,’ to show surplus

(Published April 10, 2000)

By KATHRYN SINZINGER

Staff Writer

Chief Financial Officer Valerie Holt — under fire for being tardy with the fiscal 1999 audit — is taking steps to correct problems with the city’s new computerized financial management system to ensure that agency financial managers can get the information they need to do their jobs in the current fiscal year.

Reconciling the city’s cash accounts has created the delay in producing the audit that was due to the city council by Feb. 1 but has not yet been completed. Holt said April 7 that the audit would be completed "soon" but declined to be more definite.

"The issue is whether we’re going to have a balanced budget, and we will definitely have a balanced budget and probably a significant surplus as well," said Lucy Murray, chief spokeswoman for the CFO’s office.

Holt has been holding weekly meetings with chief financial officers of all city agencies and departments, who have each been directed to produce by April 14 a list of 10 improvements they want made in the new system’s operation.

"We are committed to working through the problems and expect to have them worked out so that the next CAFR (comprehensive annual financial report) is produced on time, as I and others have done in past years," Holt said.

Murray said making the new system "user friendly" was apparently an afterthought in the rush to make sure the city’s computers wouldn’t crash due to the old system’s lack of proper recognition of the year 2000.

"Now we’re trying to make sure (agency financial managers) have the reports they need to do their jobs," Murray said.

"There probably wasn’t as much user input from agencies as there should have been in the implementation of this new system. It was one of the shortcuts that had to be taken to get the system up and running by Y2K," she said.

While Holt has come under heavy criticism for missing the audit deadline, similar problems reported in other cities and agencies — such as the National Aeronautics and Space Agency and some major universities — that have recently implemented new Y2K-compliant computer systems show that the District is not alone in experiencing serious difficulties with trying to rush implementation of a new financial system.

Holt said the District’s current audit problems largely resulted from "compressing a several year effort into one year." She said installing a new financial management system and working out all the problems normally is a two to four year process in other jurisdictions.

The System of Accounting and Reporting (SOAR) the D.C. government brought online at the start of fiscal 1999 — in October 1998 — is one of only two or three available financial systems that have the features needed by a municipal government. Murray said financial officers across the country have reported problems with implementing all of the systems.

Holt actually stepped into the CFO’s position rather late in the process of SOAR’s first year of implementation. While she was working within the CFO’s office, Holt didn’t take over the CFO’s job until June 1999 — the start of the last quarter of the fiscal year.

"This is the first audit under this system," Murray noted. "Nobody should have been surprised that there are problems."

Holt has been harshly criticized by D.C. City Council, a majority of whom recently urged control board Chairman Alice Rivlin to fire the CFO for missing the audit deadline. Rivlin has continued to express support for Holt, whom she is rumored to have urged Mayor Anthony A. Williams to appoint to the job. Williams’ support for the woman he appointed to fill the job he resigned in order to seek the mayor’s post has been known to be lukewarm. A majority of the city council expressed disapproval of Holt’s initial appointment, and much of their current criticism is now seen as an extension of that opposition.

Rivlin has told council members she will review Holt’s job performance after the fiscal 1999 audit is completed.

The independent CFO’s position was created by Congress as part of the process that gave blanket authority over the city government to a presidentially appointed control board in 1995.

While the mayor appoints the CFO, the chief financial officer can only be dismissed by the control board.

The city is required to post balanced budgets in four consecutive years in order for the control board’s authority to go dormant. The awaited audit is expected to confirm a third consecutive year the city has balanced its budget, meaning any serious lapse in financial management during the current fiscal year would force the city to endure another four years of the control board government. The current fiscal year ends Sept. 30.

Copyright 2000, The Common Denominator