REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Mayor and Members

of the Council of the District of Columbia:

January 25, 1980

We have examined the consolidated balance sheet of the DISTRICT OF COLUMBIA (the "District") as of September 30, 1979. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances, except as explained in the following paragraph.

During the past few years, the District has initiated a program to improve its accounting records, procedures and controls to make practical an examination of its financial statements by independent public accountants. This initial examination includes only the balance sheet to provide a starting point for examinations of operating results as well as the balance sheet in future years. As discussed in Note 2, a number of changes were made in preparing the 1979 financial statements and therefore they are not consistent with prior years. As planned, we did not extend our auditing procedures during this initial examination to enable us to express, and we do not express, an opinion on the consolidated statements of costs of services and revenues, comparison of actual to budgeted receipts and expenditures and reconciliation of consolidated costs of services and revenues to budget, changes in cash and investments, and changes in accumulated deficit for the year ended September 30, 1979.

Accounting principles and financial reporting for state and local governments are evolving to provide more meaningful reporting to citizens and other users of public sector financial statements. The accompanying financial statements have been prepared using a consolidated basis of reporting to facilitate an understanding of the overall financial position and financial activity of the District as a single entity. Exhibits accompanying the consolidated financial statements have been prepared using the "fund accounting" basis of reporting generally followed in the public sector and include information reconciling them to the amounts in the consolidated financial statements.

In our opinion, the consolidated balance sheet presents fairly the consolidated financial position of the District as of September 30, 1979, in conformity with generally accepted accounting principles.

Arthur Anderson &C. Lucas, Tucker & Co.

ARTHUR ANDERSEN & CO.

1666 K Street, N.W.

Washington, D.C.

20006

LUCAS, TUCKER & CO.

1019 19th Street, N.W.
Washington, D. C.

20036

2

COSTS OF SERVICES IN EXCESS OF REVENUES (1979 DEFICIT) (see statement of reconciliation to budget)

The accompanying Summary of Major Accounting Principles, Notes and Exhibits are an integral part of this financial statement.

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Expenditures in Excess of Receipts (Actual
excludes impact of prior year available
cash balances of $40,095 at September 30,
1978, and other adjustments which result
in a $33,617 net cash balance on a budget
basis at September 30, 1979)

1,353,099

Expenditures in excess of receipts on budget accounting

$

(41,729)

-4

The accompanying Summary of Major Accounting Principles, Notes and
Exhibits are an integral part of this financial statement.