FROM THE OFFICE OF PUBLIC AFFAIRS

The Department of the Treasury's Community Development Financial Institutions (CDFI) Fund today released its 1997 Annual Report, "New Direction for Community Development". The annual report includes an unqualified opinion of the CDFI Fund's financial statements from the independent accounting firm of KPMG Peat Marwick LLP.

The financial statements cover the period from the inception of the Fund (July 25, 1995) through fiscal year 1997 (September 30, 1997).

"This unqualified opinion is a very significant achievement for a new organization," said Treasury Under Secretary John D. Hawke, Jr. "Since its inception just over three years ago, the CDFI Fund has helped numerous communities leverage private funds for investment. The Fund is focused on strengthening its structure to ensure sound operation in the years ahead."

The annual report illustrates the year's activities, including the work undertaken by Community Development Financial Institutions and Bank Enterprise Awardees who received awards from the CDFI Fund. The report also notes that the CDFI Fund identified several material weaknesses in its own procedures, and the report details the steps being taken to correct these problems. For example, the Fund now has in place a new management team including a new Director, Deputy Director for Management/Chief Financial Officer and Deputy Director for Policy and Programs. Other new roles include an award manager and staff accountant.

The KPMG audit report recognizes several problems in the CDFI Fund's operations during 1997 including material weaknesses in the Fund's internal controls and noncompliance related to the lack of a formal Federal Managers Financial Integrity Act process and compliance with the Federal Managers Improvement Act. In general, the audit recommends that the Fund proceed with the steps it has been taking to strengthen management and procedures at the Fund.

"As we look at 1998, the CDFI Fund is well positioned to help communities across the country to recognize their economic potential," said Director Ellen Lazar. "As a new organization, we have a number of challenges to address, and I am confident that we now have in place a management structure and internal controls that will guarantee the integrity of this important program."

Copies of the CDFI Fund annual report are available on the department's website at www.treas.gov/press/releases/docs/cdfi97.htm.