• Examine and review the legal requirements for Federal appropriations, filings and reporting which apply to the District, and review the relevant District code regulations so that we could assess the adequacy of controls to assure compliance with such regulations.

Review the systems and the organization of the principal operating units, data processing resources and all manual accounting procedures and practices and the documentation thereof.

Analyze the financial planning and control procedures for cash management, budgeting and fund control.

Included in this would be a

determination of the basis for revenue and

expenditure projections and the development of cost estimates for claim reimbursements.

Define all accounting principles used by the
District and compare to those approved for
use by the District. In addition (1) compare
the principles to those generally accepted
in the private sector and other governmental
units, and (2) review for compliance with
requirements of the General Accounting Office
and the Department of Treasury.

Review internal auditing programs and evaluate the capabilities of the internal audit systems and other self-evaluation systems of the

District government.

Survey information flow from the several agencies and entities of the District government to the central budgeting and accounting office. Evaluate this information for its meaningfulness, accuracy, support, timeliness

and consistency.

Review and analyze the General Accounting
Office audit activities and reports and

define for your Senate Committee the future

role the General Accounting Office could

best carry out examining the District's

financial activities.

Determine specific requirements for subsequent work and the type of assistance needed from the District or the General Accounting Office to minimize the cost

and to effectively train the appropriate personnel.

Estimate the timetable and the cost for

the proposed subsequent work.

Prepare final report to the Senate Com-
mittee on the District of Columbia.

SECTION 2

OUR APPROACH

Preliminary Definition

and Resolution of Financial Problems

Our booklet "Sound Financial Re

porting in the Public Sector,"

makes several observations concerning the financial condition of various governmental units which, according to recent public commentary, appear to be particularly pertinent to the District. These are:

Several states, large cities and other municipalities appear to be in serious financial difficulty. This circumstance can produce a devastating financial crisis unless timely corrective action is taken. A basic problem has been that financial statements of government units have been less than adequate for providing the fundamental financial information necessary for governmental officials, investors and the public to be adequately informed. Problems are not identified on a timely basis, and when problems are uncovered the lack of adequate information leads to confusion and frustration in attempting to deal with them.

The Comptroller General, Mr. Elmer Staats, has stated the District's financial management system in its present state probably cannot be audited. The General

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