Friday, May 1, 2009

Atlanta's CFO Responds to Internal Audit

City of Atlanta Chief Financial Officer James Glass today released the following statement regarding the Performance Review of the Department of Watershed Management conducted by the City’s internal auditor and KPMG at the request of the City Council:

“I am grateful for the hard work and dedicated effort that is evident in the Performance Review of the Department of Watershed Management. The Performance Review offers many sound recommendations, a significant feat given the demands of creating this important review in a relatively short time period.

However, I believe the final analysis as it relates to rate setting and budgeting to be flawed because of a lack of understanding about what is happening in the credit and financial markets and the environment in which the City of Atlanta is currently operating. Additionally, the auditors have not anticipated some serious risk factors and what they mean in relation to the Department’s debt coverage.

These risk factors could pose a significant threat to interest rates, the amount of debt the Department is carrying and termination costs and would require the Department to make drastic cuts to its capital program, potentially falling out of compliance with Federal Consent Decree mandates.

Many variables impact the Department’s financial picture. It is my belief that the Performance Review seriously understates the impact of the international credit crisis on the City’s borrowing ability and has made assumptions about budgeting that cannot be supported in this current economic climate.

Therefore, I would recommend that, with the exception of implementing some of the operational recommendations set forth in the Performance Review, the City defer taking action on any financial recommendations for six months.

This would give the Department sufficient time to determine the direction the international financial markets are taking and make judgments that will allow it to continue to meet federal requirements as it provides the exceptional water and wastewater services that are, after all, the reason the Department exists.”
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