Opportunities for Improving the District of Columbia Authority's Financial Statements

Pursuant to a congressional request, GAO reviewed the District of Columbia Financial Responsibility and Management Assistance Authority's audited financial statements for fiscal years (FY) 1995 and 1996 for completeness and adherence to generally accepted accounting principles.

GAO noted that: (1) the statements were prepared in accordance with generally accepted accounting principles used by state and local governmental entities; (2) GAO offered the following observations for the Authority's consideration in preparing its future financial statements: (a) including a Management Discussion and Analysis (MD&A) section could enhance the annual report by providing a brief and objective analysis of the Authority's performance and accomplishments during the reporting period; (b) both the Federal Accounting Standards Advisory Board and the Governmental Accounting Standards Board have recently issued exposure drafts that, if adopted, will require that an MD&A section be included in a reporting entity's financial statements; and (c) further, Office of Management and Budget Bulletin 97-01 requires an overview section, similar to an MD&A section, in the financial statements of federal agencies; (3) the Authority opted to present balances and activity relating to the District's Federal Payment, Federal Appropriation for the Police Department, and the District Bond Proceeds, for which it has fiduciary responsibility, in a separate statement; (4) GAO suggests that the Authority consider clearly labeling and describing in the notes to the financial statements: (a) why the information was presented in a separate statement; (b) what the information represents; and (c) how the combined statement of changes in assets and liabilities for "all agency funds" relates to the amounts reported for the Authority in its financial statements; (5) in its FY 1996 Combined Statement of Revenues, Expenditures and Changes in Fund Balance, the Authority reported its general fund revenues and expenditures using three reporting bases, actual, actual (budgetary basis), and budgeted; (6) the Statement could be enhanced by clearly labeling or noting the distinction between these reporting bases so a reader can readily determine, for each reporting basis, what the information means and how it can be used; and (7) GAO offered several observations for the Authority's consideration regarding disclosure in the notes to its FY 1996 financial statements.