Does the DC Auditor have power to audit the DC Retirement Board, or does the federal Retirement Reform Act block that?

Plain-English summary

The DC Retirement Board was created by an act of Congress in 1979 (the DC Retirement Reform Act). That Act required the Board to engage an independent qualified public accountant to examine its financial statements.

In 1983, DC Auditor Otis Troupe wanted to audit the Retirement Board too. The Board pushed back. Its position: Congress created the Board as an independent fiduciary entity with its own audit machinery, and that displaced any role for the DC Auditor. The DC Appropriations Acts for 1982 and 1983 specified the Board's reporting channels, which the Board read as exclusive.

Corporation Counsel Inez Smith Reid sided with the Auditor. The DC Home Rule Act of 1973 (specifically D.C. Code § 47-117) created the office of DC Auditor and gave it sweeping authority to audit "the accounts and operations of the government of the District" and access to "all books, accounts, records, reports, findings and all other papers, things, or property" of any DC government agency or instrumentality. The legislative history is explicit that this authority was meant to be comprehensive. The Retirement Reform Act passed six years later does not mention the DC Auditor at all, neither to expand nor to restrict its authority. Implied repeal of an earlier statute requires clear congressional intent, which is missing here.

The opinion identified other independent DC agencies with independent accountant audit requirements, including the Housing Finance Agency and the Hospital Commission, as agencies within the DC Auditor's statutory reach. It found the separate audit requirements compatible.

The Auditor's audit power covers the Board's accounts and operations. It does not let the Auditor override the Board's investment or management decisions. The Retirement Board has "exclusive authority and discretion" to manage and control the retirement funds (D.C. Code § 1-711(a)). If the Auditor recommends changes after an audit, the Board can accept or reject those recommendations. The Auditor reports findings; the Board governs.

Currency note

This opinion was issued in 1983. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Can the DC Auditor audit anything inside the Retirement Board? A: The Auditor can audit the Board's accounts and operations, including the various retirement funds the Board manages. The Auditor does not have authority to direct the Board's investment or management decisions. The Auditor reports findings; the Board decides whether to act on them.

Q: Why does the Retirement Reform Act require an independent CPA audit if the Auditor can audit too? A: They are different audits. The CPA audit is a financial-statement audit for fiduciary purposes (what the participants and beneficiaries see in the annual report). The Auditor's audit is a broader review of accounts and operations for the Council's oversight purposes. Multiple-layer audit is consistent with congressional policy on DC finances, as Congressman Diggs explained on the House floor in 1973.

Q: What if the Auditor recommends a change and the Retirement Board disagrees? A: The Board has "exclusive authority and discretion" under D.C. Code § 1-711(a) to manage and control the funds. The Board can reject the recommendation. The Auditor's role is reporting, not directing.

Q: Does this opinion establish who audits the Retirement Board today? A: No. It interpreted the statutes as they stood in 1983. The opinion does not establish current law or describe later audit practice.

Q: Did independent status alone exempt a DC agency from the Auditor's review? A: No. The opinion read § 47-117 to cover agencies of the District government, including independent agencies. It cited the Housing Finance Agency, Hospital Commission, and Public Defender as other examples.

Q: What's the connection between this opinion and the DC pension takeover? A: The DC Retirement Reform Act of 1979 was part of Congress's resolution of the District's federal pension obligations during home rule. Congress wanted the Board to be financially independent and fiduciary in nature, but it did not write anything to limit the DC Auditor's pre-existing audit power. This opinion confirms that the Auditor's role survived the 1979 restructuring.

Background and statutory framework

The DC Auditor is an officer of the DC Council, modeled on the Government Accountability Office's relationship with Congress. Section 455 of the DC Self-Government and Governmental Reorganization Act of 1973 (the Home Rule Act, Pub. L. 93-198) created the office and authorized comprehensive audit authority. The legislative history (H.R. Rept. 93-703, 93rd Cong., 1st Sess. 79 (1973); remarks of Congressman Diggs on December 7, 1973) explicitly described the audit authority as "comprehensive" and "ongoing."

Section 455 was codified at D.C. Code §§ 47-117(b) and (c). Subsection (b) directs the Auditor to "each year conduct a thorough audit of the accounts and operations of the government of the District." Subsection (c) gives the Auditor "access to all books, accounts, records, reports, findings and all other papers, things, or property belonging to or in use by any department, agency, or other instrumentality of the District government and necessary to facilitate the audit." The phrase "any department, agency, or other instrumentality of the District government" is broadly worded.

In 1979, Congress enacted the District of Columbia Retirement Reform Act (Pub. L. 96-122, 93 Stat. 866, codified at D.C. Code §§ 1-701 et seq.). The Act created the DC Retirement Board as "an independent agency of the government of the District of Columbia" (D.C. Code § 1-711(a)) to administer the District's police, firefighter, teacher, and judicial retirement systems. The Act required the Board to engage an independent qualified public accountant to audit the funds annually (D.C. Code § 1-732(a)(3)(A)). Nowhere did the Act mention the DC Auditor.

The Retirement Board's argument was implied repeal: the comprehensive new audit framework in DCRRA, combined with the Board's "independent agency" status and its statutory CPA-audit requirement, must mean Congress intended to displace the DC Auditor's role. The Board pointed to the FY 1982 and FY 1983 DC Appropriations Acts (Pub. L. 97-91 and Pub. L. 97-378), which prescribed quarterly reports to Congress and itemized accounting submissions to the Mayor and Council, suggesting Congress had laid out the exclusive reporting channels.

The Corporation Counsel rejected the implied-repeal argument under Morton v. Mancari, 417 U.S. 535, 551 (1974), which holds that "when two statutes are capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective." The intent to repeal "must be clear and manifest" (quoting United States v. Borden Co., 308 U.S. 188, 198 (1939)). The DC Court of Appeals applies the same approach (District of Columbia v. Smith, 329 A.2d 128, 130 (D.C. 1974); Myers v. Hollister, 96 U.S. App. D.C. 388 (1955)).

§ 47-117 and DCRRA were "manifestly capable of coexistence." The independent-agency designation does not exempt the Board from § 47-117, because § 47-117 applies to any agency "of the District government" and DCRRA itself describes the Board as "an independent agency of the government of the District of Columbia." The CPA-audit requirement does not displace the Auditor; multiple-layer audits are common (cf. § 47-119, the GAO annual audit; § 47-118.1, the Comptroller General audit). Other independent DC agencies with their own CPA audit requirements (Housing Finance Agency, Hospital Commission, Public Defender) are not exempt from Auditor review either.

The Retirement Board retains "exclusive authority and discretion" over fund management (§ 1-711(a)), so the Auditor's role is limited to reporting findings, not directing investment decisions. If the Auditor recommends changes, the Board decides whether to accept or reject them.

Citations and references

Statutes:

• D.C. Code §§ 47-117(b), (c) (DC Auditor authority)
• DC Self-Government Act § 455, Pub. L. 93-198, 87 Stat. 774
• DC Retirement Reform Act, Pub. L. 96-122, codified at D.C. Code §§ 1-701 et seq., 1-711(a), 1-732(a)(3)(A)
• D.C. Code §§ 47-118.1 (Comptroller General audit), 47-119 (GAO audit)
• D.C. Code §§ 45-2111, 45-2145, 32-211, 32-243(c), 1-2703, 1-2706 (other independent DC agencies with CPA audits)
• DC Appropriations Acts for FY 1982 and FY 1983 (Pub. L. 97-91, 97-378)

Cases:

• Morton v. Mancari, 417 U.S. 535 (1974), coexistence canon and presumption against implied repeal
• United States v. Borden Co., 308 U.S. 188 (1939), implied repeal must be clear and manifest
• District of Columbia v. Smith, 329 A.2d 128 (D.C. 1974), duty to reconcile allegedly conflicting statutes
• Myers v. Hollister, 96 U.S. App. D.C. 388, 226 F.2d 346 (1955), same

License

This opinion is published by the Office of the Attorney General for the District of Columbia. Per the DC.gov terms of use, content is licensed under Creative Commons Attribution 3.0, which permits commercial use, redistribution, and modification with attribution.

Source

• Original PDF: https://oag.dc.gov/sites/default/files/2018-02/Opinion-July-2014-DC-Retirement-Board.pdf

Original opinion text

~nuerumeut of t4e mistrirt of Qlnlumhia
OF.FICE OF THE CORPORATION COUNSEL
DISTRICT BUILDING

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WASHINGTON.
,

D. C.

20004

• IN REPLY REFER TO:

LCD:L&O: LNG: ps
;
(83-388)
December 23, 1983

OPINION OF WE OORPORATIOO OOUNSEL

SUBJECI':

;

Whether the District of Columbia Auditor
has the authority to audit the cperations
of and funds managed by the District of
Columbia Retirement Board.

Mr. Otis H. Troupe

District of Columbia Auditor
415 12th Street, N. W., Roan 210
nnt-nn, D.C. 20004
Dear Mr. Troupe:

This is in respcose to yoor letter of August 23, 1983 requesting an opinion as to whether you have the authority to conduct an audit of the District of Columbia Retirement Board. You note that the Retirement Board has taken exception to your position that yoo do have such authority. '!he Retirenent Board's position has been stated in two letters, dated July 28, 1983 and August 15, 1983, addressed to yoo fran Mr. Frank A. Higgins, Chatrman of the Retirement Board. In the first letter Chairman Higgins stated in pertinent part: Please be advised that the Board is of the <::pinion that your office lacks the authority to conduct the contemplated audit. As you know, the Board was established by the District pf Columbia Retirement Reform Act [DCRRA], an Act of Congress which post-dates your enabling legislation. That Act nowhere makes prOYision for an audit of the Board's activities, books or records by your office. 1-'lore importantly, SUdl an audit is inCCllpatible with the specific procedures established by Congress for review of the Board's affairs. In this regard, the Act requires the

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Board to engage an independent qualified public accountant to oonduct an annual audit of the Fund. '!be results of the independent accountant's audit are included in the annual report of the Board which is filed with the Mayor, the City Cooncil, and the Congress, as well as made available to the Fund's participants and beneficiaries. '!be Mayor, City Cooncil, or Congress, of course, may reject this report and, ultimately, require an additional audit of the Board to be conducted. However, even if the Mayor or City Council were to take this step, the statute does not envision that such an audit would be conducted by yoor office. Rather, it specifically requires that the Mayor or City Cooncil also retain an independent qualified public accountant to perfonn the audit.
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In our view, the statutory prO'Visions noted abOve make clear that the Board is not subject to audit by the Office of the District of Columbia auditor, but only by an independent third party. MoreO'Ver, this view is consistent with the O'Verall design of the statute which contenplates that the Board is to operate as an independent entity, free fran the direction a~d control of the City Go'lerrnrent. Because we believe that this independence is essential if we are to discharge the broad fiduciary responsibilities iaposed on us by the Act in. the manner Coogress envisioned, we must take exception to ycur attempt to subject the Board to the City's normal au~it process. And in the second letter, Chairman Higgins stated in pertinent part: In oor view, the carprehensive audit procedures contained in the DCRRA evidence an intent of Congress to exenpt the Retirement Board fran the C~ty's noma1 audit process. Further support for this view is frond in the D.C. Appropriations Act for the Fiscal Years 1982 and 1983, Public Law Nos. 97-91 and 97-378, which establish specific procedures enccnpassing the Board's reporting requirenents to Congress and the City Go'lerrnrent. An analysis of the question properly begins with an examination of the statutory proVisions relating to the Auditor's authority to conduct audits. In this· regard D.C. Code 1981, §§47-ll7(b) and (c) provide:

(b) The District of Columbia Auditor shall each year conduct a thorough audit of the accounts and operations of the govemment of the District in accordance with such principles and procedures and under such rules and regul;::ctions as he may prescdbe. In the determination of the auditing procedures to be followed and the extent of the examination of voochers and other documents and records, the District of Columbia Auditor shall give due regard to geQerally accepted principles of auditing including the effectiveness of the accounting organizations and 'systems, internal audit and control, and related

administrative practices.

-3(c) The District of Columbia Auditor shall have access to all books, accounts, re.cords, reports, findings and all other papers, things, or property belonging to or in use by any department, agency, or other instrunentali ty of the District government and necessary to facilitate the audit. [Emphasis added.] These broadly phrased provisions have their origin in section 455 of the District of Columbia Self-Government and Governmental Reorganization Act of 1973, Public Law 93-198, 87 Stat. 774, 803-04 (hereinafter "Harne Rule Act"). The legislative history of section 4~5 confirms what the statutory language facially indicates, narrely that the audit authorIty of the District of Columbia Auditor was intended to be comPrehensive. In the Conference Report on S. 1435, 93rd Cong. 1st Sess., the following is stated in this regard: The House arrendlrent included. provisions, not in the Senate bill, which established the office of District of Columbia Auditor, appointed by the Chairman of the Council, subject to Council approval, for a six-year term, who would conduct a yearly review of all accounts and operations of the D.C. goverrment ~ sutmit his reports and recamendations to the COngress, the Mayor, and the Council. The Conference substitute (section 455) conforms to the

House anendnwant.

[Enphasis added.] .

H.R. Rept. 93-703, 93rd ecng. 1st Sess. 79 (1973). See also Harne Rule for the District of Columbia, 1973-1974. Background and Legislative History of H.R. 9056, H.R. 9682 and Related Bills culminating in the District of Columbia Self-GoYerrtIrent and GoverrtIrental Reorganization Act, p. 3017 (hereinafter "H~ Rule Act Legislative History"). In his remarks on the House floor on D:!cember 7, 1973, Congressman Charles C. Diggs, Jr. stated in pertinent part: Legal and proper expenditure of all District funds is also safeguarded. through three separate audits in the House-passed version and retained in Conference. First, the Mayor's office conducts an internal audit of all accounts, operations and agency records to verify that bills paid are in fact legal transactions. Second, there is created an Office of the District of COlunbia Auditor. '!he Auditor is selected and approved by the Council and conducts on an ongoing basis a thorough review of all tho. citv's accounts and opera.tions. The Auditor/council relationship is modeled after the GAOl Congress relationship. 'Ihird, the report authorizes an independent annual audit by the General AcCOUnting Office of the accounts and operations of the District to determine if programs are being conducted in an efficient

-4and effective manner and in line with the purposes for which the rroneys were apprq>riated. such an audit by Gro .would, of course, include the prq>er expenditure of the Federal payment to the District. Gro will subnit its audit reports to the Congress, the Mayor, and the Council and the Mayor is required within a 90-day time limit to respond to this report. In the program performance statement of the budget the Mayor is also required annually to indicate progress being made to canply with audit reports. [Hare Rule Act Legislative History, 3037~ emphasis added.] As noted, supra, the Retirement Board takes the position that in enacting in 1979 the District of Columbia Retirement Reform Act, Public Law 96-122, 93 stat. 866, D.C. Code 1981, 5 1-701 et seg., Congress intended to circumscribe the comprehensive audit authority conferred upon the District of Columbia Auditor in the Hare Rule Act. HCMever it is inpossible, as the Retirement Board appears to recognize, to discern such an intention directly fran the language of the Retirement Reform Act or fran its legislative history. For nCMhere in either is the District of Columbia Auditor ever mentioned. The Retirenent l30ard asserts that such an intention can and must be ~nferred (1) fran the fact that the Retirement Board is an "independent" agency and (2) fran the fact that its financial statenents nust be examined by "an independent qualified [i.e., certified] public accountant." See D.C. Code 1981, 551-711(a) and 1-732(a) (3) (A). This argument is not persuasive.

First, D.C. Code 1981, 547-117 makes no distinction between agencies subject to direction by the Mayor and independent agencies. The relevant question with regard to whether an agency is within the purview of 547-117 is whether the agency is an agency "of the District government." D.C. Code 1981, 547-117(c). In this regard the Retirenent Board's statute states that the Board is "an independent agency of. the government of the District of Colunbia , " D.C. Code 1981, 51-711(a), emphasis added. Second, .the fact that Congress has required the Retirement Board to engage an independent certified public accountant to examine its financial statements cannot be said to indicate that Congress thereby intended to restrict the audit authority of the District of Columbia Auditor vis-a-vis the Retirement Board. A system of multiple audits is not inconsistent· with congressional policy. see remarks of Congressman Diggs, quoted above. See also Pub. Law 94-399, 90 stat. 1208, D.C. Code 1981, §47-119 (independent annual audit), and Pub. Law 97-258, 96 Stat. 877, D.C. Code 1983 CUm. Supp., 547-118.1· (annual audit by Cotptrol1er General). Moreover, other independent agencies or instrumentalities of the District of Columbia governnent, which are within the scope of 547-117, are, like the Retirenent Board, required or (nt.."::ci:,:(';G to nctB in l.nde~ndent o=rt.ified public cccountants to audit their operations and accounts. See D.C. Code 1981, 5§45-2111 and 45-2145 relating to the District of Columbia Housing Finance Agency; D.C. Code 1981, 55 32-211 arid· 32-243(c) relating to the District of Colunbia Hospital CannissionJ D.C. Code

1981, 551-2703 and 1-2706 relating to the District of Columbia Public Defender
• Moreover, ~ Auditor, as an arm of the Council of the District

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of Columbia, cannot be denied access to infonnation concerning funds managed by the Reitrement Board since the Cou~ci1 is involved in the appropriation process for such funds. FUrthermore, the conclusion that the District of Columbia Auditor has the authority to audit the Retirement Board is strongly, and indeed conclusively, buttressed by we11-estab1ished principles of statutory cOnstruction. The Retirement Board's position, in effect, asserts the existence of conflict between D.C. Code 1981, §47-117 and the provisions of the Retirement Reform Act. When two statutes are alleged to be in conflict, the prcper interpretive approach, as stated by the Supreme Court in Morton v. "lancari, 417 u.S. 535, 551 (1974), is:
.

a

t

The courts are not at liberty to pick and chooSe among

congressional enactments, and when two statutes are capable of co-existence, it is the duty of the :courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective. "When there are two acts upon the same subject, the rule is to give effect to both if possible • • • • The intention of the legislature to repeal 'must be clear and nanifest. '" United State~ v. Borden 00., 308 u.S. 188, 198 (1939).***
[Emphasis added.]
In this same vein, the District of Columbia Coort of Appeals stated in District of Oolumbia v. Smith, D.C~ App., 329 A.2d 128, 130 (1974):

we also have a duty to make "every effort" to reconcile allegedly conflicting statutes and to give effect to the language and intent of both, as long as doing so does not deprive roe of the statutes of its essential meaning. Myers v. Hollister, 96 U.S. App. D.C. 388, 390, 226 F.2d 346, 348 (1955), cert. denied, 350 u.S. 987, 76 S. Ct. 474, 100 L. Ed. 854 (1956)~*** D.C. Code 1981 §47-1l7 and the Retirement Reform Act are manifestly
. "capable of coexistence." Moreover, there is no "clearly expressed congressional intentioo to the contrary." Morton v. Mancari, supra. 'Ihe existence of authority in the District of Columbia Auditor to audit the "accoonts and operations" of the Retirement Board (see D.C. Code 1981,
§47-117(b» does not deprive the provisioos of the Retirement Reform Act of their "essential rreaning." District of 00lumbia v. Smith, supra. In this regard it should be noted that while the language of D.C. Code 1981, SS47-117(b) and (c) is sufficiently broad to include both the administrative onerations of the Retirem?nt Bo':\rd and the various retireITl2nt funds T!13na,o~d the Board, the Board nevertheless has "exclusive authority and discretion," subject to the requirements of the Retirement Reform Act, "to manage and control the funds established" by the Act. See D~C. Code 1981" §1-711(a). Thus if after an audit of these funds, the Auditor were to make recx::mrendations regarding their managerrent, the Retirement Board is vested with "ex",.., .. o ... ve authority and discretioo" in deciding whether such reOCl'l'ltendatioos will be accepted or rejected.

bY

-6As noted above, in his letter of August 15, 1983, Retirerrent Board Chairman Higgins relied upon Public Law Nos. 97-91 and 97-378. These are the District of Columbia Appropriation Acts for the fiscal years 1982 and 1983. Except for the amounts appropriated they contain s~ilar language insofar as they apply to the Retirerrent Board. Public Law 97-91, 95 Stat. 1174, for example, states in pertinent part:

*** Provided further, That notwithstanding any other provision of law, there is hereby appropriated $1,348,300 to pay legal, managerrent, investment and other fees and expenses of the District of Columbia Retirement Board of which $312,700 shall be derived fran the general fund and not to exceed $1,035,600 shall be derived fran the earnings of the applicable retirerrent funds: Provided further, That the District of Columbia Retirerrent Board shall provide to the Congress a quarterly report of the alloCations of charges by fund and of expenditures of all funds: Provided further, That the District of· Columbia Retirerrent Board shall provide the Mayor for transmittal to the Council of the District of Columbia an item accounting of the pla~d use of appropriated funds in tine for each annual budget sul:mission and the actual use of such funds in titre for each annual audited financial report. [Enphasis original.]

,

What has been stated, supra, about the relationship between D.C. Code 1981, §47-l17 and the Retirement Reform Act is equally applicable to the relationship between §47-117 and the provisions of Public Law Nos. 97-91 and 97~378 applicable to the Retirement Board. In sum, it is m¥ opinion that, under D.C. Code 1981, §47-1l7, the District of Columbia Auditor has the authority to conduct audits of the accounts and q;>erations of the Retirement Board subject to the exclusive authority and discretion of that Board to manage and control the retirerrent
. funds established by the 1979 Retirement Reform Act •

. Very truly yours,

~~c...;~
Inez Smith Reid
Corporation Counsel, D.C •

. cc:
, Chairman
D.C. Retirerrent Board
Il:lvid A. Clarke
,
«;9
Chairman .
Council of. the· District of Columbia