Financial Audit:

District of Columbia Highway Trust Fund's Fiscal Years 1998 and 1997 Financial Statements

AIMD-99-263: Published: Sep 28, 1999. Publicly Released: Sep 28, 1999.

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Pursuant to a legislative requirement, GAO presented the results of its audit of the District of Columbia's Highway Trust Fund, focusing on: (1) GAO's opinion on the effectiveness of the District's internal control related to the Fund as of September 30, 1998; and (2) the results of GAO's evaluation of the District's fiscal year 1998 compliance with laws and regulations as they relate to the Fund.

GAO noted that: (1) the financial statements for 1998 and 1997 were fairly presented, in all material respects; (2) the District did not maintain effective internal control related to the Fund as of September 30, 1998; (3) GAO found material weaknesses related to accounting for revenue, cashier operations, and computer system general controls; (4) there was a reportable noncompliance with one of the laws GAO tested relating to the licensing and bonding of motor vehicle fuel wholesalers/businesses; and (5) the underlying assumptions made and methodology used to develop the Fund's revised forecasted statements provided a reasonable basis for such statements, and the statements were presented in conformity with guidelines established by the American Institute of Certified Public Accountants.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Office of Finance and Treasury prepared written procedures for its cashiers in April 1999. During fiscal year 1999 audit testing, GAO found no instances of inadequate segregation of duties or the lack of independent review of teller reconciliations after April 1999.

    Recommendation: To address the weakness in procedures governing cashier operations, the DCFO for the Office of Finance and Treasury should establish written procedures to require that a supervisor independently review all teller reconciliations.

    Agency Affected: District of Columbia: Office of Finance and Treasury: Office of the Deputy Chief Financial Officer

  2. Status: Closed - Implemented

    Comments: The Office of Finance and Treasury prepared written procedures for its cashiers in April 1999. During fiscal year 1999 audit testing, GAO found no instances of inadequate segregation of duties or the lack of independent review of teller reconciliations after April 1999.

    Recommendation: To address the weakness in procedures governing cashier operations, the DCFO for the Office of Finance and Treasury should establish written procedures to enforce the segregation of duties between the preparer of daily reconciliations and the reviewer.

    Agency Affected: District of Columbia: Office of Finance and Treasury: Office of the Deputy Chief Financial Officer

  3. Status: Closed - Implemented

    Comments: According to a District of Columbia Inspector General Office official, who directed the Highway Trust Fund's fiscal year 2000 financial statement audit, there were no more instances of incorrect calculations by OTR staff. He stated that for fiscal year 2000, OTR changed its formula for calculating the bond amount by using the proper denominator for calculating averages.

    Recommendation: To address newly reported revenue-related weaknesses, the DCFO for the Office of Tax and Revenue should enforce implementation of the licensing requirement for a bond in the approximate sum of three times the average monthly motor fuel tax due from each wholesaler during the preceding 12 months or an estimate of the succeeding 12 months.

    Agency Affected: District of Columbia: Office of Tax and Revenue: Office of the Deputy Chief Financial Officer

  4. Status: Closed - Implemented

    Comments: Based on the fiscal year 1999 review, the transfers occurred, on average, 1.25 months after the receipts were posted to the System of Accounting and Reporting (SOAR). During the first four months of the fiscal year, GAO noted that transfers occurred, on average, two months after receipts were posted to SOAR. However, after implementing its new procedures, the remaining transfers averaged less than one-half month after posting to SOAR.

    Recommendation: To address newly reported revenue-related weaknesses, the Deputy Chief Financial Officer (DCFO) for the Office of Tax and Revenue should enforce procedures to require monthly transfers of motor fuel receipts from the General Fund to the Highway Trust Fund and require the District of Columbia to reimburse the Fund for potential lost interest if the receipts are transferred after 30 days.

    Agency Affected: District of Columbia: Office of Tax and Revenue: Office of the Deputy Chief Financial Officer

  5. Status: Closed - Implemented

    Comments: GAO's review and examination of the fiscal year 1999 forecast revealed that draft procedures were developed for preparing, coordinating, and approving the financial forecasts. The draft procedures were followed throughout the fiscal year 1999 submission of the forecasts.

    Recommendation: To address the weakness identified in the District's preparation and submission of its forecasted statements to Congress, the District of Columbia's Chief Financial Officer should establish written procedures governing the processes for preparing, coordinating, and approving the financial forecasts prior to submission to Congress. These procedures should identify the parties responsible and timeframes for: (1) development of the underlying assumptions and methodologies for each line item; and (2) overall preparation and presentation of the financial forecasts.

    Agency Affected: District of Columbia: Office of the Chief Financial Officer

 

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