FY 2016 Annual Report
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Government of the District of Columbia Office of the Chief Financial Officer Office of Financial Operations and Systems 1100 4th Street, S�W�, 8th Floor Washington, DC 20024 (202) 442-8200 (Fax) (202) 442-8201 January 25, 2017 Mr� Jeffrey S� DeWitt Chief Financial Officer override and collusion, internal control can only The Comprehensive Annual Financial Report (CAFR) provide reasonable assurance that management’s of the Government of the District of Columbia objectives will be achieved. However, routine periodic (District) for the fiscal year ended September 30, audits help management assess, on an on-going 2016, is herewith submitted. Responsibility for both basis, the adequacy of the District’s internal controls. the accuracy of the data and the completeness and In accordance with D.C. Code § 47-119, independent fairness of the presentation, including all disclosures, public accountants audited the District’s financial rests with District management and the Office of statements for the year ended September 30, the Chief Financial Officer (OCFO). To the best of 2016. The audit was conducted in accordance with my knowledge and belief, the enclosed financial auditing standards generally accepted in the United statements and schedules are accurate in all material States of America and the standards applicable to respects and are reported in a manner designed to financial audits contained in Government Auditing present fairly the financial position and results of Standards, issued by the Comptroller General of the operations of the various funds and component units United States. In addition to issuing an opinion on of the District� the District’s financial statements, the independent This report has been prepared in accordance with U.S. public accountants, SB & Company, LLC, prepared generally accepted accounting principles (GAAP) for a report, which was issued in conjunction with the state and local governments as promulgated by the CAFR, that discussed the independent public Governmental Accounting Standards Board (GASB) accountants’ consideration of the District’s internal and includes all disclosures necessary for readers control over financial reporting and the outcome of to gain an understanding of the District’s financial the auditor’s tests of the District’s compliance with activities� certain provisions of laws, regulations, contracts, grant agreements, and other related requirements. The ability to produce a timely and accurate CAFR This report is commonly referred to as the Yellow depends upon the adequacy of the District’s internal Book Report. controls. Internal control is defined as a process, effected by an entity’s governing board, management Moreover, an audit of compliance with the Federal and other personnel, designed to provide reasonable Single Audit Act Amendments of 1996 and the United assurance regarding the achievement of objectives States Office of Management and Budget’s (OMB) in the following categories: (a) efficiency and Uniform Administrative Requirements, Cost Principles, effectiveness of operations; (b) reliability of financial and Audit Requirements for Federal Awards, which reporting; and (c) compliance with applicable laws superseded OMB Circular A-133 and other related and regulations. Reasonable assurance is defined guidances, is also performed annually and a separate as a high, but not absolute, level of assurance report, often referred to as the Single Audit Report, about whether the financial statements are free of is issued by independent public accountants. The material misstatement. The District’s management District’s fiscal year 2016 Single Audit Report will be is responsible for establishing and maintaining issued at a later date. adequate internal controls. The greatest challenge This letter of transmittal is designed to complement in establishing and maintaining adequate internal the Management’s Discussion and Analysis (MD&A) controls is ensuring that the control framework and, therefore, does not discuss the District’s financial developed by management is comprehensive—that operations and results, which are fully discussed in is, broad enough to achieve its intended purpose. the MD&A. For that reason, this letter should be read Due to certain inherent limitations, such as prohibitive in conjunction with the MD&A in order to gain a better costs, judgment errors, or potential for management understanding of the District’s financial condition. FY 2016 CAFR District of Columbia 1 Introductory Section Letter of Transmittal PROFILE OF THE GOVERNMENT The Home Rule Act prohibits the taxing of federal property and the income of non-District residents who Overview: Historical Background of the work in the District� District In 1983, it was determined that the District could legally issue its own debt. On October 15, 1984, the President George Washington established District issued municipal debt for the first time, in the Washington, D.C. (herein after referred to as D.C., form of Tax Revenue Anticipation Notes (TRANs), the District of Columbia, or the District) in 1791 which totaled $150 million. from territory ceded by the State of Maryland and the Commonwealth of Virginia. The United States Although progress has been made on many fronts Congress assumed jurisdiction over the District throughout the city’s history, District of Columbia of Columbia, but citizens residing in the District residents still do not have voting representation in of Columbia did not have voting representation in Congress. However, in accordance with the District Congress� of Columbia Delegate Act of 1970, U.S. Public Law 91-405, the citizens of the District of Columbia are Significant dates in the history of the District of represented in the House of Representatives by a Columbia are presented in the timeline shown in Delegate, who is elected by the voters of the District Table T1� of Columbia� Consistent with the Act: The Delegate shall have a seat in the House Table T1 – Timeline: Key Dates in the History of of Representatives, with the right of debate, the District of Columbia but not of voting, shall have all the privileges February Congress enacted the Organic Act of 1801, granted a Representative by § 6 of Article I of the 1801 thereby dividing the capital district into Washington Constitution, and shall be subject to the same County (former Maryland area) and Alexandria restrictions and regulations as are imposed by County (former Virginia area)� law or rules on Representatives. The Delegate 1846 Congress passed a law allowing the City of shall be elected to serve during each Congress� Alexandria and Alexandria County to be returned to the Commonwealth of Virginia� The current D.C. Delegate, Congresswoman Eleanor 1871 Congress consolidated Georgetown, Washington Holmes Norton, has no voting power. However, City, and Washington County into one territorial despite her voting limitations, she has been able to government. The President appointed a territorial accomplish much on behalf of the District of Columbia� governor and council and an elected House of Some of her recent accomplishments include the Delegates. A non-voting delegate to Congress was following: also established. 1874 The territorial government of the District of ● Introduced the Flood Prevention Act of 2016 to Columbia was abolished and the provision for a amend the Coastal Zone Management Act of non-voting delegate to Congress was eliminated. 1972 (CZMA) in order to include the District of 1878 The power to elect a territorial governor and Columbia in the definition of a coastal state and to council was eliminated. Congress established a allow the District to receive Federal funding under three-member Board of Commissioners to govern such Act, and for other purposes. The CZMA was the District of Columbia� passed in 1972 before the District achieved home 1961 The 23rd Amendment to the U.S. Constitution was rule and therefore, was excluded from the coastal ratified. Citizens of the District of Columbia were state(s) which is comprised of the states and the granted the right to vote in a presidential election. U.S. territories. The CZMA provides planning and 1967 President Lyndon B. Johnson appointed Walter E. technical services to assist states in protecting, Washington Mayor of the District of Columbia� restoring, and developing coastal communities 1970 Congress passed the District of Columbia and resources. Once the federal government Delegate Act� approves a state’s coastal management plan, the 1971 Walter Fauntroy became the first Congressional Delegate to represent the District of Columbia� state becomes eligible for grants. Even though the District has substantial coastal flood risks and is 1973 Congress passed the District of Columbia Home Rule Act, which provides for a popularly elected under threat from rising sea levels, the District is mayor and a 13-member Council. omitted from the list of eligible states and territories in the CZMA. The Flood Prevention Act of 2016 Although Congress passed the Home Rule Act in intends to make the District eligible to receive 1973, Congress retained and continues to retain the federal funding and give the District oversight for right to review and overturn the legislative acts of federally issued permits/facilities/and actions that the Council if both houses of Congress vote within affect the coastal waters of the District� 30 legislative days to do so. In addition, the local ● Introduced two bills that were subsequently passed funds budget is reviewed and passively approved by the House