Office of the Auditor | State of Hawai`i

Recent Reports

Airports Division Needs Clearer Guidance:

Follow-Up on Recommendations Made in Report No.13-04, Procurement Examination of the Department of Transportation

Our review focused on the 14 recommendations we made in Report No. 13-04. We found that the Department of Transportation has addressed or is in the process of addressing the majority of those audit recommendations; however, we also note that the Airports Division’s lack of clear guidance may affect its ability to fully implement the remaining recommendations.

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Still Not Measuring Up:

Follow-Up on Recommendations Made in Report No. 13-01, Management Audit of the Department of Agriculture’s Measurement Standards Branch

Our review focused on the Measurement Standards Branch’s (MSB) implementation of audit recommendations made in Report No. 13-01. We found that despite having secured state funding since 2012, the chairperson of the Board of Agriculture has neither re-established nor filled the branch’s program manager and inspector positions. As a result, MSB is still not carrying out its inspection duties or responsibilities.

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New HTA Management Continues to Improve Plans, Contract Oversight, and Reporting:

Follow-Up on Recommendations Made in Report No. 13-09, Audit of Major Contracts and Agreements of the Hawaiʻi Tourism Authority

Our follow-up of recommendations made in Report No. 13-09 found that shortly after the release of the report in 2013, HTA began re-evaluating its strategic plan and performance measures and augmenting its policies and procedures with internal controls. Subsequently, HTA has implemented, or is in the process of implementing all 14 of our audit recommendations.
Summary or Full Report

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DHHL’s Loan Administration Has Improved, but Lack of a Risk Ceiling Remains a Concern:

Report No, 16-04, Follow-Up on Recommendations Made in Report No. 13-02, Audit of the Department of Hawaiian Home Lands’ Homestead Services Division

We found the commission has yet to engage in any meaningful action to develop risk policies for DHHL’s direct loan program. In addition, DHHL still does not provide adequate loan delinquency information to the commission for members to make informed decisions affecting loan risk exposure.
Summary or Full Report

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2015 Annual Report

Our 2015 Annual Report summarizes and highlights our work, including 20 audits, analyses, and studies; 44 quick reviews of proposed special and revolving funds; and 19 financial statement audits—including the state’s Comprehensive Annual Financial Report—that we released last year.

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KIRC Now Relying Heavily on State Funding:

Report No. 16-03, Follow-Up on Recommendations Made in Report No. 13-06, Audit of the Kahoʻolawe Rehabilitation Trust Fund

Our follow-up of recommendations made in Report No. 13-06 found that the Kahoʻolawe Island Reserve Commission has not established a comprehensive and measureable restoration plan with meaningful performance measures. The commission has also not aligned its fundraising and spending plans, and has failed to ensure the financial sustainability of the Kahoʻolawe Rehabilitation Trust Fund, which will be depleted by FY2018.

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Report No. 16-02, Analyses of Proposed Special and Revolving Funds 2016

Legislation adopted to promote the efficient allocation of public funds between general fund and special, revolving, and trust funds seems to be having an impact. None of the 47 new special and revolving funds proposed during the 2016 legislative session met amended statutory criteria for establishing such funds. Only one fund in the past three years has met the criteria.
Summary or Full Report

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IT Reform Must Begin With Good Accounting Principles:

Report No. 16-01, Report on Selected Executive Branch Departments’ Information Technology Expenditures

The definition, categorization, and recording of IT expenditures varies widely throughout state government.  This lack of standardization makes it nearly impossible for the State to assemble an accurate inventory of its IT resources.
Summary or Full Report

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$155 Million KOLEA Project Does Not Achieve All ACA Goals:

Report No. 15-20, Audit of the Department of Human Services’ KOLEA System

We found DHS did not properly plan for or implement KOLEA. As a result, the department has been unable to achieve the Affordable Care Act’s goals of creating a simple, real-time eligibility and enrollment process that uses electronic data to ease the paperwork burden on applicants and state agencies while expediting an eligibility determination.
Summary or Full Report

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State-County Functions Working Group (Transient Accommodations Tax) Report

Report of the 13-person Working Group, which was established to consider the distribution of duties and responsibilities for public service between the State and counties, and to recommend to the Legislature a model for allocation of transient accommodations tax revenues in future years that properly reflects the division of those duties and responsibilities.

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Report No. 15-19, Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Department of Human Services

Fourteen special funds, one revolving fund, three trust funds, and two trust accounts of the Department of Human Services and its administratively attached agency, the Hawaiʻi Public Housing Authority, did not meet criteria. In addition, the department and HPHA inconsistently adhered to statutory reporting requirements for non-general funds and administratively created funds and accounts.
Summary or Full Report

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Improved Oversight Is Needed to Ensure Savings:

Report No. 15-18, Audit of the Department of Transportation’s Energy Performance Contracts

The DOT-Airports Division’s energy performance contract, executed in December 2013 with Johnson Controls, Inc., promises to address a host of current and future energy needs, and could serve as a model for other agencies to follow. We found flaws in the design and implementation of the project, some of which are already being addressed by the department.
Summary or Full Report

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Report No. 15-17, Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Department of Health

Nineteen special funds and two trust funds of the Department of Health and its administratively attached agency, the Hawaiʻi Health Systems Corporation, did not meet criteria. Eight special funds and one trust fund, with balances totaling more than $385,000 as of June 30, 2015, had no activity during our review period.
Summary or Full Report

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Report No. 15-16, Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Judiciary

Our review of special funds, revolving funds, trust funds and trust accounts of the Judiciary found that one special fund and five trust funds did not meet criteria. We also noted inconsistent adherence by the Judiciary when filing statutorily required reports for non-general funds and for administratively created funds and accounts.
Summary or Full Report

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Report No. 15-15, Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Department of Hawaiian Home Lands

Two of the Department of Hawaiian Home Lands’ trust funds did not meet the definition of a trust fund. We also found 86 long-outstanding contract encumbrances, totaling almost $4.6 million at the end of FY2015.
Summary or Full Report

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Charter School Accountability System Remains a Work in Progress:

Report No. 15-14, Study of Public Charter Schools’ Governing Boards

The financial data schools currently submit to the State Public Charter School Commission are sufficient to provide indication of possible financial stress. However, human error and inexperienced commission staff contributed to the commission’s inability to recognize and interpret the data early enough to help avert the financial collapse of Hālau Lōkahi New Century Public Charter School earlier this year.
Summary or Full Report

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State Departmental Engineering Sections Vary Significantly in How They Manage CIPs:

Report No. 15-13, Study of State Departmental Engineering Sections That Manage Capital Improvement Projects

We found that at least 19 state engineering entities manage their own capital improvement projects in Hawaiʻi. Although departments and agencies generally believe they should maintain control over their own CIPs, there is a lack of consistency in how they manage their projects relative to areas of legislative concern (timelines, contract management, and end-user satisfaction).
Summary or Full Report

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Report No. 15-12, Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Department of Commerce and Consumer Affairs

Our review of special funds, trust funds and trust accounts of the Department of Commerce and Consumer Affairs found one trust fund did not meet the definition of a trust fund. We also noted that approximately $166 million used in FY2012 from the Hawaiʻi Hurricane Relief Fund did not serve the purpose for which the trust fund was originally established.
Summary or Full Report

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Credits Continue to Tax the State:

Report No. 15-11, Follow-Up on Recommendations Made in Report No. 12-05, Audit of the Department of Taxation’s Administrative Oversight of High-Technology Business Investment and Research Activities Tax Credits

DoTAX continues to struggle with its responsibilities created by a flawed high-technology tax credit law. DoTAX’s auditors mostly respond to complaints and inquiries about refunds for tax credits such as the high-technology business investment and renewable energy technologies credits rather than auditing tax credit applications or tax filings as a whole.

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A Multitude of Missteps:

Report No. 15-10, Audit of the Hawaiʻi Health Connector’s Mansha Contracts

We found that instead of taking steps to ensure it selected the most qualified vendor at the best price, the Connector awarded Mansha a multi-million dollar contract based on personal recommendations. In total, the Connector awarded $21.6 million in IT contracts to Mansha.
Summary or Full Report

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Lack of Procurement Controls Exposes Health Department to Waste and Abuse:

Report No. 15-09, Procurement Examination of the Department of Health

We found there is minimal oversight over department staff and no process to provide them with procurement service support. When a procurement issue arises, staff do not have clearly defined procedures for how they should obtain technical assistance.
Summary or Full Report

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Regulation of Respiratory Therapists Benefits Consumers But Program Could Be Improved:

Report No. 15-08, Sunset Evaluation—Respiratory Therapists

Continued state regulation of respiratory therapists is warranted because key statutory criteria have been fulfilled. Regulation of respiratory therapists is reasonably necessary to protect the health and safety of consumers. We also found the Department of Commerce and Consumer Affairs could make several improvements to the respiratory therapist program’s operations.
Summary or Full Report

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Weak Plans Limit Role, Reduce Accountability for Hiring and Procurement Exemptions:

Report No. 15-07, Audit of the Research Corporation of the University of Hawaiʻi

RCUH was formed to play a proactive role in promoting the welfare of Hawaiʻi’s people by initiating, stimulating, conducting, and coordinating research and training statewide, and commercializing inventions and discoveries. We found, however, that RCUH acts primarily as a provider of services to UH, which constituted $9 out of every $10 in RCUH business in FY2014.
Summary or Full Report

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Getting on Board:

Report No. 15-06, Follow-up on Recommendations Made in Report No. 12-07, Management Audit of the Department of Education’s School Bus Transportation Services

This report follows up on the recommendations we made in
Report No. 12-07. It details each recommendation, its status, and actions taken related to the recommendation. We deemed eight recommendations closed (40 percent) and nine open but in progress (45 percent) one open and not likely to be pursued (5 percent), and two were not assessed (10 percent).
Summary or Full Report

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Pushing Boundaries:

Report No. 15-05, Follow-up on Recommendations Made in
Report No. 12-02, Investigation of the Stadium Authority’s Swap Meet Operations

This report follows up on the recommendations we made in
Report No. 12-02. It details each recommendation, its status, and actions taken related to the recommendation. We deemed seven recommendations closed (70 percent) and three open but in progress (30 percent).
Summary or Full Report

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Progress, But Transparency Issues Persist:

Report No. 15-04, Follow-up on Recommendations Made in Report No. 12-03, Management Audit of the Natural Energy Laboratory of Hawaiʻi

This report follows up on the recommendations we made in
Report No. 12-03. It details each recommendation, its status, and actions taken on the recommendation. We deemed 17 of the 28 closed (63 percent), five open (19 percent), three open but in progress (11 percent), and two no longer applicable (7 percent). One recommendation was not assessed.
Summary or Full Report

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Program In Place:

Report No. 15-03, Follow-up on Recommendation Made in Report No. 12-04, Study of the Transfer of Non-General Funds to the General Fund

This report follows up on the recommendation we made to the Department of the Attorney General in Report No. 12-04, which reviewed the AG’s process for determining the propriety of transfers of non-general funds to the general fund. We now find that, as we recommended, the department has developed a checklist to help determine the propriety of transfers. The department has also conducted training in the use of the checklist.

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Deposit Beverage Container Program Still Relies on Self-Reported Data, Still at Risk:

Report No. 15-02, Financial and Program Audit of the Deposit Beverage Container Program, June 30, 2014

This is our fifth audit of the Deposit Beverage Container Program. As in our previous audits, we found that the program relies on self-reported data from distributors that may be fraudulently or erroneously under-reporting beverage containers sold or distributed, and certified redemption centers that may be fraudulently or erroneously over-reporting beverage containers redeemed. This systemic flaw, coupled with the absence of a detailed audit function, exposed the program to abuse and risk of fraud since program inception.
Summary or Full Report

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A Mixed Bag:

Study of Proposed Special and Revolving Funds (2015)

Legislation adopted to promote the efficient allocation of public funds between general fund and special, revolving, and trust funds seems to be having an impact.  Only one of the 44 new special and revolving funds proposed during the 2015 legislative session met amended statutory criteria for establishing such funds.  In 2014, none of the 37 funds proposed met the criteria.
Summary or Full Report

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Inadequate Planning and Improper Procurement Led to an Unsustainable Health Connector:

Report No. 15-01, Audit of the Hawaiʻi Health Connector

We found the Hawaiʻi Health Connector’s Board of Directors should have noted numerous warning signs and exerted more vigorous effort in planning, oversight, and leadership. The Connector had problems with its procurement and administration of contracts, and noncompliance with federal regulations may put grant funds at risk.
Summary or Full Report

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Recent Financial Audits

State of Hawaiʻi Comprehensive Annual Financial Report – June 30, 2015

The State received an unmodified opinion that the financial statements were presented fairly, in all material respects, in accordance with generally accepted accounting principles.
Summary or Full Report

State of Hawaiʻi Single Audit Report – June 30, 2015

The auditors from Accuity LLP reported one material weakness and two significant deficiencies in internal control over financial reporting. They also found seven material weaknesses and 17 significant deficiencies in internal control over compliance.
Summary or Full Report

Department of Accounting and General Services, Stadium Authority – June 30, 2015 Financial Statements

The auditors from KKDLY LLC found no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Summary or Full Report

Department of Accounting and General Services, State Motor Pool Revolving Fund – June 30, 2015 Financial Statements

The auditors from Egami & Ichikawa CPAs, Inc., reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Summary or Full Report

Department of Accounting and General Services, State Parking Revolving Fund – June 30, 2015 Financial Statements

The auditors from Egami & Ichikawa CPAs, Inc., reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Summary or Full Report

Department of the Attorney General – June 30, 2015 Financial Statements and Single Audit Report

The auditors from Akamine, Oyadomari & Kosaki, CPAs reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses. However, they identified a deficiency in internal controls over financial reporting that is considered to be a significant deficiency. There were no findings that were considered to be material weaknesses in internal control over compliance. In other matters, the auditors found that the deficit fund balance of $2.5 million in the CSEA agency funds needs to be resolved.
Summary or Full Report

Department of Hawaiian Home Lands – June 30, 2015 Financial Statements

The auditors from Accuity LLP reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.  There were no findings that were considered to be material weaknesses in internal control over compliance.
Summary or Full Report

Department of Health – June 30, 2015 Financial Statements and Single Audit Report

The auditors from N&K CPAs, Inc. identified two significant deficiencies and no material weaknesses in internal control over financial reporting. They also reported one material weakness and four significant deficiencies in internal controls over compliance.
Summary or Full Report

Department of Health, Drinking Water Treatment Revolving Loan Fund – June 30, 2015 Financial Statements

The auditors from N&K CPAs, Inc. identified one significant deficiency and no material weaknesses in internal control over financial reporting. There were no findings that were considered to be material weaknesses in internal control over compliance.

Department of Health, Water Pollution Control Revolving Fund – June 30, 2015 Financial Statements

The auditors from N&K CPAs, Inc. reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. There were no findings that were considered to be material weaknesses in internal control over compliance.

Department of Human Services – June 30, 2015 Financial Statements and Single Audit Report

The auditors from KMH LLP reported no deficiencies in internal controls over financial reporting that were considered to be material weaknesses and required to be reported under Government Auditing Standards. However, the auditors identified twenty-two material weaknesses and one significant deficiency in internal controls over compliance.
Summary or Full Report

Department of Human Services, Hawaiʻi Public Housing Authority – June 30, 2015 Financial Statements and Single Audit Report

The auditors from KMH LLP reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses that are required to be reported under Government Auditing Standards.  The auditors reported one material weakness and one significant deficiency in internal control over compliance.
Summary or Full Report

Department of Transportation, Administration Division – June 30, 2015 Financial Statements and Single Audit Report

The auditors from CW Associates, A Hawaiʻi Corporation reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. There were no findings that were considered to be material weaknesses in internal control over compliance.
Summary or Full Report

Department of Transportation, Airports Division – June 30, 2015 Financial Statements

The auditors from KPMG LLP reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. There were no findings that were considered to be material weaknesses in internal control over compliance.
Summary or Full Report

Department of Transportation, Airports Division – June 30, 2015 Single Audit Report

 

Department of Transportation, Harbors Division – June 30, 2015 Financial Statements

The auditors from KKDLY LLC reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Summary or Full Report

Department of Transportation Highways Division – June 30, 2015 Financial Statements

The auditors from KKDLY LLC reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instance of noncompliance or other matters that are required to be reported under Government Auditing Standards.  There were two significant deficiencies in internal control over compliance.
Summary or Full Report

Department of Transportation Highways Division – June 30, 2015 Single Audit Report

 

Department of Transportation Oahu Metropolitan Planning Organization – June 30, 2015 Financial Statements and Single Audit Report

The auditors from Gilford Sato & Associates, CPAs, Inc. reported seven significant deficiencies in internal control over financial reporting  that are required to be reported under Government Auditing Standards. They also found one material weakness in internal control over compliance.
Summary or Full Report

Hawaiʻi Community Development Authority – June 30, 2015 Financial Statements

The auditors from Ohata Chun Yuen LLP reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Summary or Full Report

Hawaiʻi Employer-Union Health Benefits Trust Fund – June 30, 2015 Financial Statements

The auditors from KKDLY LLC found no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Summary or Full Report

Hawaiʻi Tourism Authority – June 30, 2015 Financial Statements

The auditors from KPMG LLP reported no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Summary or Full Report

Hawaiʻi Convention Center – December 31, 2015 Financial Statements

The auditors from KPMG LLP gave an unmodified opinion that the financial statements were presented fairly, in all material respects, in accordance with the management agreement between the Hawaiʻi Tourism Authority and AEG.
Summary or Full Report

 Employees’ Retirement System – June 30, 2014 Financial Statements

The auditors from KMPG LLP found no deficiencies in internal control over financial reporting that were considered to be material weaknesses and no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Summary or Full Report

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Other Recent Publications

• 2015 Annual Report
• 2016 Peer Review of the State of Hawaiʻi Office of the Auditor
• Office of the Auditor June 30, 2015 Financial Statements
• Letter to the President of the Senate and Speaker of the House of Representatives on Act 97 SLH 2013

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