oversight

Management of Land Owned by the District of Columbia

Published by the Government Accountability Office on 1971-09-15.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                       UNrTmSums             GENERALACCOUNT~IVGOFF~CE
                              WASHINGTON              REGIONAL    OFFiCE
                                               FIF-THFLOOR
                                        803WESTBROADSTREET                     r
                                FALLS      CHURCH,!/IRGINIA       22046        3



                                                                                   8EP 15 19n

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                                                                                                 LM092972

Dear Mr. Starobin:

        We have made a limited   review to determine whether the Department of
General Services was effectively       managing the District   of Columbia's land-
holdings which, according      to the June 30, 1970, financial    statements of the
District,    were valued at $40 million.

       We reviewed the Department of General Services'         policies and proce-
dures with respect to its management control          of land, examined inventory
records maintained     by the Department,   and viewed selected parcels of land
to verify    the accuracy of these records.       In addition,   we examined that
section of the District      of Columbia's  financial    statements pertaining    to
its landholdings     to determine whether these statements were in agreement
with inventory    records.

       We believe      there is a need for improved procedures and controls              to
insure that the District's          landholdings    are properly   managed.     Specifi-
cally,    effective      procedures and controls     are needed to assure that (1) inven-
tory records are accurate,          (2) landholdings    are reviewed periodically,          and
 (3) financial      statements include accurate information         on property    resources.

        These matters       are discussed          more fully      below.

NEED FOR ACCURATR
IXVENTORY RECORDS

      Inventory records of landholdings  must be accurate if they are to be
of maximum assistance   to management in the procurement,    utilization,    trans-
fer and disposal of property.    We found that the inventory       records maintained
by the Department of General Services were inaccurate.

       Perpetual      inventory   records of real property   owned, controlled,      or
under the jurisdiction          of the District  of Columbia are maintained      by the
Research and Documentation           Branch, Department of General Services.        The
inventory     records contain a brief description        of the property,    including
property    identification       numbers and information   as to whether the property
is vacant or has been improved.

       At the time of our review,   about 2,600 District-owned properties   were
listed   in the inventory.   We found that about 460 of these properties
should have been deleted from the inventory     because they were no longer


                                50 TH ANNIVERSARY                 1921-197 1

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available  for use. For example, properties   designated as lots 37 through
39 in square 352 should have been deleted from the inventory    because they
have been a part of 11th Street,   SW., since about March 1969. We also found
that about 150 properties were listed   in the inventory under erroneous iden-
tification  numbers.

      Our visual    inspection     of selected landholdings     disclosed    other instances
of inaccurate    inventory     records.    For example, two properties       were listed
in the inventory      as being vacant when, in fact, both properties            had been
improved and were being used. These properties              were the site    of the Seaton
Elementary School buildin g and a firehouse           for Engine Company     No. 15. Both
the school and the firehouse         were constructed     in 1969.

      We also found that two District-owned       properties       were not included  in
the Department's   inventory  listing.     These properties        were the sites of the
Grant Elementary School built       in 1882 and the Garfield        Elementary School
built  in 1909.

         In our opinion,     many of the inaccuracies        in inventory  records were
caused by clerical        errors.    Members of your staff informed us that the inven-
tory listings       were prepared by inexperienced          personnel working on a temporary
basis.       As far as we could determine,          the Department does not have formal
written      procedures   to guide personnel        in the preparation,   maintenance,  ant;
verification       of inventories.      Moreover,      the Department does not have written
procedures requiring         the submission of changes in the status of landholdings
to those responsible         for maintaining      inventory    records.

      We were informed that a program had been initiated        to correct and
update the Department's   inventory    and that landholdings   will be visually
inspected when possible.      We were also informed that one employee has been
given the responsibility    for maintaining    an accurate,  up-to-date   inventory.
                                                                                               I
       Although these are steps in the right direction,      we believe formal pro-
cedures and controls     are needed within the Department to assure that accurate
inventory     records are maintained and contain information    of maximum benefit
to management.

Recommendation

       We recommend that you establish      written     procedures    governing     the prc-   I
paration,    maintenance,  and verification      of inventory     records.      These proce-
dures should provide,     among other things,       that:

       --specific    information   necessary for proper      management be
          maintained    in the inventory    records, and

       --changes in the status of landholdings     be effectively
          communicated to all personnel responsible    for maintaining
          records of landholdings.


                                                                                   -2-
NEED FOR PERIODIC REVIEW
OF LANDHOLDINGS

        Effective     management of real property       cannot be achieved without          the
systematic and thorough review of property              holdings    to identify     unneeded
or uneconomically        used properties.      We found that the Department of General
Services had not established          procedures    for periodically      reviewing    District
landholdings        to ascertain  which properties     were no longer needed or for
offering      unneeded land for sale.       Generally,     the Department offers        to sell
land it no longer needs only when an interest                is expressed by a potential
buyer.      Failure    to offer  to sell unneeded land at the earliest            opportunity
can result       in a loss of sales and tax revenues to the District.

      During our review,    we visually inspected 56 sites.     Of the sites
inspected,    16 were vacant and appeared salable.     The inventory  records              for
these 16 properties    did not indicate   an intention  to use or to dispose               of
the properties.

       We requested the Department's      views on the salability      of these 16
vacant sites.      We were   advised that   only  one  site,  with an  assessed   value
of about $75,000, was no longer needed and would be offered             for sale.
Department officials      provided us with what appeared to be valid reasons
for not placing the other sites on the market.             For excample, one large
parcel of land was to be transferred         to the Washington Metropolitan       Area
Transit Authority.      Department officials     pointed out also that a number
of other sites were of such a size or shape as to make them unmarketable.

       The Office of Management and Budget          Circular    No. A-2, revised,   pro-
vides guidelines    to Federal agencies that         include a requirement      for
periodic   reviews to identify   land that is        no longer needed.      While the
circular   is not applicable   to the District,         we believe   that the Department's
management of land can be improved by the            adoption of this principle.

        We discussed the need for periodic        reviews of landholdings    with a
member of your staff,         who was of the opinion that the adverse effects       Of
not reviewing      landholdings    for salability     (as disclosed by our limited
review)    are not significant       enough to warrant corrective    action.    He gave
us no indication       that any action would be taken.

Recommendation

        We recommend that you establish      procedures  for periodically          reviewing
the District's     landholdings    to assure that properties   no longer          needed are
identified     and offered    for sale.

FINANCIAL STATEXJJNTS HAVE
BEEN I~UUXXJIUTE

       To be of use to management in exercising     financial   control  over its
resources and of use to the Congress,    the   data   presented  in  the District's
financial   statements must be accurate.

                                                                                     -3-
        We found that in fiscal     year 1970 the District     had acquired land valued
in excess of $7 million        and had disposed of land valued at about $500,000.
We also found that the District         had acquired and disposed of land in fiscal
year 1969. Despite substantial          changes in the District's    landholdings,  the
District's     financial  statements for fiscal     years 196S, 1969, and 1970 con-
sistently     showed landholdings    valued at $39,759,298.

       The General Accounting     Office Policy and Procedures ?lanual for Guidance
of Federal Agencies requires       accurate and reliable   financial    information     on
property   resources for use by management and for financial         reports.       In addi-
tion, we believe      good management practices    require that financial     records be
reconciled    periodically   with inventory   records.
      We found that the District's    financial      statements were inaccurate
because procedures for transmitting      information      to the Department of Pinznce
and Revenue on the acquisition     and sales of land had not been followed.
Furthermore,   financial records were not reconciled         with inventory  records.

        This matter was brought to the attention         of a District     official     and
we were advised that, starting        with the financial     statements for fiscal
year 1972, changes in the District's         landholdings    will be appropriately
reflected    in the District's   financial     statements.     We believe,      however,
that more positive     steps should be taken to avoid recurrence             of this situa-
tion and that appropriate      controls    should be developed to assure that
financial    records are in agreement with inventory         records.
Recommendations
        We recommend that the existing      procedures for reporting         changes in
 inventory    of landholdings    to the Department of Finance and Revenue be brought
 to the attention      of personnel responsible    for transmitting       this information.
Ide also recommend that financial       records be reconciled       periodically     with
inventory     records.


      We wish to acknowledge the courtesies             and cooperation  extended to our
representatives       during the review.         Copies of this report are being sent to
the District's       Director,     Department of Finance and Revenue; Associate Director,
Municipal     Audits;    and   Director,   Office of Budget and Executive Management.

      We shall appreciate your comments and advice                   as to any action   taken or          '
planned on the matters discussed in this report.
                                                                                                          I
                                                                                                          I
                                                      Sincerely      yours,




                                             .’   "   Acting      Regional    Manager

Mr. Sam D. Starobin,  Director
Department of General Services
District  of Columbia Government                                                          -4-


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