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District Gets Clean Audit for 14th Consecutive Year

Tuesday, February 1, 2011
The audit gives the District an unqualified “clean” audit and confirms that the city’s budget is balanced.

(Washington, DC) -  Chief Financial Officer Natwar M. Gandhi issued the District’s Comprehensive Annual Financial Report (CAFR) for FY2010 on Monday, January 31, 2011.  The audit, conducted by KPMG, gives the District an unqualified “clean” audit and confirms that the city’s budget is balanced for the 14th consecutive year. 

In his letter to Mayor Vincent C. Gray, Gandhi reported that, “Due to the District’s disciplined financial management practices, we have weathered the economic storm relatively well in comparison with many other jurisdictions.”

He noted that this result was due to, “…the collaborative efforts of the Mayor, Council, Agency Directors and other District managers and staff….”

Mayor Vincent Gray commented, “A balanced budget and a clean audit is what we have come to expect in the District and it is the responsibility of the Executive and Council to manage our budget to make certain that this record continues.”

Council Chair Kwame Brown said, “The CAFR shows that in 2010 the Council and the Mayor were able to keep the budget in balance despite the continuing economic difficulties we faced.  This year, our task is even greater and we will have to exercise the most rigid fiscal discipline to meet our residents’ needs and to maintain a balanced budget.”

Council Finance Committee Chair Jack Evans stated, “Maintaining our fiscal health was no small accomplishment in FY 2010 and now, for the coming year our goal must be to face our long term needs and not look to immediate fixes that have only a short term impact.”

Gandhi stated that the CAFR shows $5,456.1 billion in local revenues and $5,452.7 billion in local fund expenditures.  There is a $3.4 million surplus in local funds

Gandhi reported that the District continues to enjoy strong ratings on its General Obligation and Income tax bonds and said, “Maintaining strong bond ratings has never been more important as the District continues to be impacted by the economic decline of recent years.  Accordingly, the District should make every effort to limit the use of reserves to meet operational needs or close budget gaps. The District must be prudent in its use of available financial resources.”

Gandhi noted his ongoing concern about the continued use of the General Fund balance to meet the City’s expenses and its potential negative impact on the bond ratings.  He cited the most recent comment from Standard &Poor’s that stated:

“…the District’s financial position was, in our opinion, good but we expect it to weaken based on a trend of using reserves to offset revenue shortfalls.” 

Taking note of that language, Gandhi wrote, “It is imperative that the District adopts future budgets on the principle of current year spending not exceeding current year revenues.  The Sustained Capital Investment and Fund Balance Restoration Act of 2010, adopted last year, was an important step in replenishing General Fund balance.”

In conclusion, Gandhi stated, “…the District, as one government, was able to complete its fiscal year 2010 CAFR in four months instead of the six-month period allowed most jurisdictions.  This is no small accomplishment, and the District truly has much of which to be proud.”