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HomeMy WebLinkAboutCOM 0029.000 2000-2002 . d. AL KONISHI DONALD IKEDA ! au,p C lerh Depun C Dunn Clerk CONSTANCE R KIRIU Lrgrslarrve 4udno, OFFICE OF THE COUNTY CLERK County of Haw m ! Il.n: a! ! Coanlt Buddutx aupunl Slree! lhln llawm ! 9h'.o Tel,~hnne B08/ 961-,Y.55 Fm sun Jr BfIRi 96/->:9!_' December 8, 2000 To Council Members From Conroe Ktntl_' 1 Legislative Auditor RE Single Audit Report for Fiscal Year Ending June 30, 2000 A copy of the Single Audu Report of the County o(Hawar't (or Fiscal Year Ending June 30, 2000, is distributed for your mfoimation and review The Single Audn Report .vas prepared by KPMG, LLP as part of the Council's overall audit contract The Single Audit Report is prepared for federal awarded programs to meet reporting and auditing requirements Specifically, subrecipients in receipt of a minimum threshold amount of funds are audited for the purpose of identifying material weakness of mtemal controls and testing compliance with certain provisions of laws, regulations, contracts and grants, which could have a direct and material effect on the financial statement amounts A list of all county programs that have received federal funds can be found on pages 7-14 ("Schedule of Expenditures of Federal Awards") Another separate memorandum received on December 4, 2000 from the Finance Duector Dixie Kaetsu submrttmg a "Corrective Action Plan" and a "Summary Schedule of Prior Audrt Findings" should be kept wrth the Sing/e Audu Report The auditors found that their testing disclosed no instances of noncompliance that are required to be reported under Governmem Audttuig Standards The auditors also noted no matters mvoh~ing the mtemal control over financial reporting and its operation that ' would be considered to be material weakness Additionally, the auditors found that the County complied, in all material respect, with the audit requirements applicable to each of its mayor federal programs Should you have any yuestions, please feel free [o contact me Eric ^ t:,... liar DEC 0 8 znnn ~ F~~+~~• 1 I ~ ry(1]'~j~~/j~~ COUNTY OF HAWAII STATE OF HAWAII Single Audit of Federal Financial Assistance Programs Year ended June 30, ?000 ~`i/FC OFFICE 0~- THE LEGISL~?I,'~ = ~.Ii.~ITCR CORRECTIVE ACTION PLAN 00 DEC -4 APf 10~ 45 Dcpartmeut of Agriculture Water and Waste Disposal S}•stems for Rural Communities CFDA No. 10.760 Department of Housing and Lrban Development Community Development Block Grant/Small Cities Program CFDA No. 14.219 Federal Award No. B-93-DH-15-0002, B-94-DH-15-002, B-96-DH-15-0002 and B-97-DH-15-0002 Finding 00-01 Subrecipient lVlortitoring Recoaunendation: We recommend that the County closely monitor its subrecrprents to ensure that the County receives audrted financral statements m a timely manirer Adnrii:islration's Co~nurenr: The County acknowledges the rmporlance of subrecrprents' audit reports to evaluate the adnunistratrou of the program m accordance with federal regwrements In the srtuahon aced m this finding, the subrecrprent, Hamakua Housing Corporation, has mdrealed that, once again, rt rs not possible for them to meet the 150-Jay audit deadline due to accounting complexrues and staffing lurutatrons The audit report for the year ended December 31, 1999 rs expected to be completed by November 30, 2000 Due to a similar finding last year for the same subrecrprent, the Office of Housing and Community Development has unplemented new• procedures to mfor~n subrecrprents about audit report deadlines In addition to wntten notification sent unmedralely aRer the end of the fiscal year, penodre telephone calls are made requesting the audrted financral statements For future projects, subrecrprents will be nwnrtored more closely to ensure that audrted financral statements are received m a trmely manner Anticipated Conrplehar Dafe: This will be an ongoing effort Contact Persons: Edwin S Taira, Assistant Housing Admuustralor Office of Housing and Commundy Development Richard Tsunoda, Walenvorks Controller Department of Water Supply SUMMARY SCHEDULE OF PRIOR ACIDIT FINDINGS Environmental Protection Agency Capitalization Grants for State Revolving Funds Eroding 98-05: We +ecommend that the Drvtston monitor the contractor's compltance with the Davts-Bacon Act (and other labor requtremenls) and ensure that adequate documentation +s mauttamed The Drv+s+on should regmre that rt be provided w+th a copy of the appropriate cert+ficatron(s) as part of the proper monthly progress billing Corrective action taken: The payroll ce+trfications a+e beutg mauttained by the Construction Manager (CM) for the duration of a project The CM provides an affidavit each month that certified payroll records have been rev+ewed a+e mamtauted m their offices The County has continued to make peuodic inspections of the records to ensure compliance Such peuodre mspectrons wrll conhttue Contact person: Peter Boucher Wastewater Drvtsron Chref Department of Agriculture Water and Waste Disposal Systems for Rural Communities Deparhneut of Housing and Community Development Community Development Block Crant/Small Cities Program Finding 99-01: We recommend that the County closely monitor its subrecrptents to ensure that the reywrcd audit reports are completed nr a lonely manner Corrective action taken: fhe audit report for the subrecrpient, Hantakua Housing Cotporatron, for the year ending December 31, 1998 was received ut December 1999 In addrhon, the Office of Housing and Communrty Development sent out letters to reinutd subrecrprents of their conUac[ual obligations to submit flterr audited financial statements within GO days of fiscal year end On April 14, 2000, a letter was sent to the project coordinator for the program m question mdreatrng that the audit rcpmt was due by May 29, 2000 The project coordinator responded that the audit would not be ready by May 29 due to accounting complexitres of the program Arrtrcrpa[ed completion date rs the end of October, 2000 Contact persons: Edwin S Tau-a Housing Adnunistrator Kick Sumada Departrnent of Water Supply Assistant Controller Finding 99-02: We noted that the County and the subreciptent are currently m the process of executing and amendment to the subrecipient agreement that wtll be effective Apnl 29, 1999 and extent the agreement to Apnl 28, 2000 The County should exerctse greater care m monttonng actrvittes under subrectp~ent agreements Corrective action taken: Due to the ongoing status of the last of the three projects covered under the agreement, a second amendment to the contract was executed to extend the subrec~pient agreement though December 31, 2000 All conslrucUon has been completed and the subrectptenl is awartmg processing of paperwork from the contractor before subnntgng a final claim for federal funds Contact person: Rtck Sumada Department of Water Supply Assistant Controller Department of Housing and Urban Development Community Development Block GranUSmall Cities Program Finding 99-03: We reconunend that the County exercise greeter care m ensuung that all procurement documentation is properly maintained Corrective action taken: The Office of Housing and Conununrly Development has Implemented procedures to ensure that procurement documentalton is properly maintained There have been no other instances of misplaced files Contact person: Edw•m S Taira Housing Admuus[rator SECTION I -INTRODUCTION PC 6~~x d15C Hercl,~o_ h 96812-4150 October 6, 2000 To [he Members of [he Counry Council of Haw'ai'i County of Hawai i Hilo, Hawaii We have completed our financial audit of the general purpose financial statements of the County of Hawaii, State of Hawaii (Count}), as of and for the year ended June 30, 2000 We have also audited the County's compliance with requirements applicable [o its maJor federal financial assistance programs We submit herein our reports on compliance and m[einal control over financial reporting and over federal awards, the schedule of expenditures of federal awards and a schedule of findings and questioned costs The audit obJectives and scope of the financial audit, as defined in our contract with the County, are as follows AUDIT OBJECTIVES I To provide a basis for an opinion on presentation of the general purpose financial statements of the County and all of its agencies, including the Department of Water Suppl. 2 To ascertain whether or not expenditures and other disbursements have been made, and revenues, receipts and receivables to which the County is entitled or is responsible for having collected and accounted for in accordance with the laws, rules and re¢ulatiotts, and policies and procedures of the County, the Slate of Hawaii and the federal government (where applicable) have been satisfied 3 To evaluate the accuracy, effectiveness, and efficiency of the systems and procedures for financial accounting, internal and operational controls of the County and of operations for which the Counry is responsible 4 To ascertain whether (I) the funds appropriated [o the agencies have been expended m accordance with the purposes for which the} were appropriated and m accordance with applicable laws, ordinances and regulations, (2) adequate accounting stis[ems and procedures have been established to safeguard [he public funds and property, (3) accurate and reliable fiscal records have been maintained, and (4) there has been efficiency m operations 5 To test, study, examine, evaluate and report on the general purpose financial statements, internal accounting and other control s}•stems, and other compliance reyuiremzn[s for federal financial assistance programs m accordance with the provisions of [he Single Audit Ac[ of 1984, the Single Audn Act Amendments of 1996, as may be amended. and U S Office of Management and Budget (OMB) Circular No A-133 6 To recommend improvements to the internal control, reporting and accounting systems and procedures of the County's agencies as appropriate I SCOPE OF AUDIT I W'e performed an audit of the general purpose financial statements as of and for [he year ended June 30, 2000 in accordance with generally accepted auditing standards, as adopted by the American Institute of Certified Public Accountants, and the standards applicable to governmental financial audits contained m Ciovernmenl Auditing Standards, issued by the Comptroller General of the United States 2 As part of the audit of the County's general purpose financial statements, we performed tests of the County's compliance with certain provisions of laws, regulations, contracts and grants W'e also evaluated the County's internal control over financial reporting, which included an assessment of the extent to which the internal control structure can be relied upon to ensure accurate information, to ensure compliance with laws and regulations, to provide for efficient and effective operations, and to ensure integrity m the County's receipt and expenditure of public funds 3 We performed an audit of the County's federal financial assistance programs for the year ended June 30, 2000 in accordance with generally accepted audrtmg standards, as adopted by [he American Institute of Certified Public Accountants, [he standards applicable to financial audits contained m Government Audumg Smndords, issued by the Comptroller General of the United States, certain provisions of OMB Circular A-133 and the applicable sections described m the D:'NB's Crrcu(ar A-1.33 Compliance Supp(emen! ORGANIZATION OF REPORT Our report is organized into three sections as follows I Section 1, entitled '`Introduction;' describes the obJectives and scope of our financral audit and the organization and contents of this report 2 Section 11, entitled "Compliance and Internal Control Over Financial Reporting," contains our report on the County's complrance and internal control over financral reporting based upon our audit of the County's general purpose financral statements 3 Section III, entitled "complrance and Internal Control Over Federal Awards;' contains our report on the County's compliance and internal control over federal awards m accordance with OMB Circular A-133, a schedule of expenditures of federal awards and a schedule of findings and questioned costs Our report on the general purpose financial statements of the County as of and for the year ended June 30, 2000 rs included under a separate cover A separate management letter dated October 6, 2000 has also been issued W'e would like [o take this opportunity [o express our appreciation to the personnel of the County of Haw•ar'i for the cooperation and assistance extended to us during our audit W'e will be pleased to discuss any questions that you or your associates may have regarding our recommendations Very truly yours, ~/v(Cz LLB SECTION ll -COMPLIANCE AND INTERNAL CONTROL OVER FINANCIAL REPORTING ~!1 FC L3cY 4156 hcrc~Wc F 96612 415C Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Members of [he County Council of Hawaii County of Hawaii Hilo. Hawaii We have audited the general purpose financial statements of the County of Hawaii, State of Hawaii (County), as of and for the year ended June 30, ?000, and have issued our report thereon dated October 6 ?000 W'e conducted our audit in accordance w•i[h auditing standards generally accepted in the United S[a[es of America and the standards applicable to financial audits contained in Government AudranR Standards, issued by the Comptroller General of the United States Compliance As part of obtaining reasonable assurance about whether the County's general purpose financial statements are free of material misstatement, yve performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts However, providing an opinion on compliance with those provisions was not an obJecuve of our audit, and accordingly, we do not express such an opinion The results of our tests disclosed no instances of noncompliance that are required [o be reported under Government Audumg Standards Internal Control Over Financial Reporting In planning and performing our audit, we considered the County's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over financial reporting Our consideration of the internal control over financial reporting would not necessarily disclose all matters m the internal control over financial reporting [hat might be material weaknesses A material weakness rs a condmon m which the design or operation of one or more of the internal control components does no[ reduce to a relatively low level the nsl. that miss[atement~ m amounts that would be material m relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees m the normal course of perfornung their assiened functions W'e noted no matters 3 ; im•olvmg [he internal control over financial reporting and rts operation that we consider [o be ma[enal weaknesses However, we noted other matters mvoh•mg the internal control over financial reporting, which we have reported to management of the County m a separate letter dated October 6, 2000 This report is intended solely for the information and use of [he County Admmistra[wn, [he Counh Council and federal awarding agencies and is not intended to be and should not be used by anyone other than these specified parties f~Pw(G t_t_~ Honolulu, Hawaii October 6, 2000 4 SECTION 111 -COMPLIANCE AND INTERNAL CONTROL OVER FEDERAL AWARDS ~ =G Sot 4150 H~'ip~•J~J H 96824160 Report on Compliance wtth Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 To [he Members of the County Council of Hawaii County of Haw•at't Hrlo, Hawat`1 Compliance We have audited the compliance of the County of Hawaii, Slate of Hawat`t (County), wrth the n'pes of compliance regwrements described m [he L`S Office of.Managemen! and Budget IO.MBj CtrcularA-l33 Complrance Supplement that are applicable to each of tts maJor federal programs for the year ended June 30, ?000 The County's maJor federal programs are identified to the summary of auditor's results section of the accompanying schedule of findings and questioned costs Compliance w•tth the requtrements of laws. regulations, contracts and grants applicable to each of its maJor federal programs is [he responsibility of the Countv's management Our responsibility is to express an opinion on the County's compliance based on our audit We conducted our audit of compliance m accordance wrth auditing standards generally accepted m [he United Stales of America, the standards applicable to financial audus contained m Government Audurng Standards, issued by the Comptroller General of [he United States, and OMB Circular A-133, Rud~ls of Slates Local Gor•ernments and :ion-Profrt Organr_ahoro Those standards and OMB Ctrcular A-l33 require that we plan and perform [hc audit to obtain reasonable assurance about whether noncompliance with the types of compliance regtnremen[s referred to above that could have a direct and material effect on a maJor federal program occurred An audit includes e>,amintng, on a test basis, evidence about the County's compltance with those requtrements and performing such other procedures as we considered necessary m the circumstances Rre believe that our audit provides a reasonable basis for our opinion Our audit does no[ provide a le¢al determmauon on the County s compliance wrth those requtrements In our opinion, the County complied, m all matenal respects, with the requirements referred [o above that are applicable to each of its maJor federal programs for the year ended June 30, 2000 However, the results of our auditing procedures disclosed an instance of noncompliance with [hose requirements. which is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying schedule of findings and questioned costs as item 00-01 Internal Control Over Compliance The management of the County is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs In planning and performing our audit, we considered the County's internal control over compliance with requirements that could have a direct and matenal effect on a maJor federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the internal control over compliance in accordance with OMB Circular A-133 Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses A material weakness is a condition in which the design or operation of one or more of the internal control components does no[ reduce to a relatively low level the nsk [hat noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material iii relation to a maJor federal program being audited may occur and no[ be detected w•rthm a timely penod by employees m the normal course of performing their assigned functions We noted no matters involving [he internal control over compliance and rts operation that we consider [o be material weaknesses Schedule of Expenditures of Federal Awards We have audited the general purpose financial statements of the County of Hawai- i as of and for the year ended June 30, 2000, and have issued our report thereon dated October 6, 2000 Our audit was performed for [he purpose of forming an opinion on the general purpose financial statements taken as a whole The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is no[ a required part of the general purpose financial statements Such information has been subJec[ed to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole This report is intended solely for the information and use of the County Administration, the Counh Council and federal awarding agencies and is no[ intended to be and should not be used by anyone other than these specified parties K`pw(G u-P Honolulu. Hawai i October 6, 2000 6 L N_ C r!~ r R - `1 O r vl x OO T O M - T r ' :/1 O N N N y 9 ~ - - 1"1 T VI J ~ r .r u p c T~ N r ~ .p 4 y r is w ~p a 9 C rSa? - ? C ~j S y ~ A 7 I~ T vl ~ V` M v\ ? y p; E .c r a oorv < ~ ~~i a _ L _ r^ . o xc I~ P r ZZZ Z c ZZ a ~ ~ ~ < °O z 3 3 - ~ o o ~ ~ ~ Y r. T ~ r~ T S~ O L T v~ ~ ~ ~ T Q~ p C C O O _ _ c v z ~ p ^ O ~ ~ z ~ _ ~ y O N y ~ u u L y L E A L L p L Y C 9 a ~ a ~ c ~i ~ `e y, - ~ - n _ au y ~ c S „ _ ~ L - J C K ,n C r+ pp C _ U ~ .3 - 9 ~ ~ p Q 9 O ~ ~ yy~ r ~ E r ~ L i P C r L T j ~ L J y L h Y S°aaL c 5 E y :i _t i E E~ c L 'J ~ 5~ T $ y c r r~ S°~ ~ a c. 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J ~ a ~ ~ ii^ % sz _ ~ r COUNTY OF HAWAPI STATE OF HAWAII Notes [o Schedule of Expenditures of Federal Awards Year ended June 30, 2000 (1) Basis of Presentation The accompanying schedule of expenditures of federal awards (schedule) includes the federal grant activity of the County of Hawai i, State of Hawaii (County) Such schedule rs presented on the modified accrual basis of accounting, which is described m Note I to the County's general purpose financial statements The information in [his schedule is presented in accordance with [he requirements of OMB Circular A-133, 9udus of States, Local Governments, and:~bbProfr! Organrzalrons Therefore, some amounts presented m this schedule may differ from amounts presented in, or used in the preparation of, the general-purpose financial statements (2) Subrecipieots Of the federal expenditures presented in this schedule, the County provided federal awards to subrecipients as follows Amount CFDA Provided to Program Title Number Subrecipients Housing Preservation Grants 10 433 $ 49,734 Paauilo Water System 10 760 325,437 Paauhau Water System 10 760 1,079,>24 Economic Development-Technical Assistance 11303 X3,245 Community Development Block GranUSmall Cities Program 14 219 162,750 Community Development Block GranUSpecial Purpose Grant ] 4 227 2,250 Emergency Shelter Grants Program 14 231 48,853 HOME Investment Partnership Program 14 239 39,917 Juvenile Accountability Incentive Block Grant 16 523 49,983 Tide V -Delinquency Prevention Program 16 548 47,445 Cnme Victim Assistance 16 575 145 026 Bicycle Education Program 20 6U0 13.814 Title III, Part B -Grants for Supportive Services and Senior Centers 93 044 240.390 Title 111, Part D - In Home Services for Frail Older Individuals 93 046 2,458 15 COUNTY OF HAW:41`I STATE OF HAWAII Schedule of Fmdmgs and Questioned Costs Year ended June 30, 2000 (1) Summary of Auditor's Results (a) The type of report tssued on [he general purpose financtal statements Unqualified optmon (b) Reportable conditions to internal control were disclosed by the audn of the general purpose financial statements No Material weaknesses No (c) Noncompliance which is material to the general purpose financial statements No (d) Reportable conditions m internal control over maJor programs No Material weaknesses No (e) The type of report issued on compliance for maJor programs Unqualified opinion (f) Any audn findings which are required to be reported under section 510(a) of OMB Grcular A-133 Yes (g) MaJor programs Department of Agriculture - 10 760 -Water and 1Vas[e Disposal Systems for Rural Communities Department of Housing and Urban Development - 14 219 - Community Development Block GrandSmall Ct[ies Program Department of Transportation - 20 205 -Highway Planning and Construction (h) Dollar threshold used to distinguish behveen Type A and Type B programs 3% of total federal awards expended or $758,793 (i) Audrtee qualified as a low-risk audrtee under Section 530 of OMB Circular A-133 Yes (2) Findings Relating to the General Purpose Financial Statements Reported to Accordance with Governmen! Audilrng Standards: None 16 (Continued) COUNTY OF HAR'41`1 STATE OF HAWAI`1 Schedule of Findings and Questioned Costs Year ended June 30, ?000 (3) Findings and Questioned Costs Relating to Federal Awards: Department of Agriculture Water and Waste Dtsposal Systems for Rural Communities CFDA No. 10.760 Department of Housing and Urban Development Community Development Block Grant/Small Cities Program CFDA Na. 14.219 Federal Award No. B-93-DH-15-0002, B-94-DH-15-0002, B-97-DH-IS-0002 and B-98-DH-15-0003 Ftndine 00-O1 Subrectotent Momtonne Condition During our testw•ork on subrectpten[ monitoring, w•e noted that the County has not received audited financial statements from a subrectptent, Hamakua Housing Corporation, for the year ending December 31, 1999 as regmred by OMB Circular A-133 Cntena: The County, as a direct recipient or pass-through agency, should obtain and review audited financial statements as part of its subrectpten[ monnonng process to comply with OMB Circular A-133 The subrectpten[ agreement between the County, [he subrectptent and [he grantor for the Water and Waste Dtsposal Systems for Rural Commumues program regwres audited financtal statements to be provided within 1 ~0 days of the subrectptent's December 31 year end Effect: The County is unable to uuhze the audited financtal statements to evaluate the subrectpten['s administration of the program in accordance with Federal requirements Cause: The subrectpten[ is to [he process of finalizing their audit The County expects to receive the subrectptent's audited financtal statements to the near future Questioned Cost: $0 Recommendation: We recommend that the County closely monitor its subrectptents to ensure that the County receives audited financtal statements m a timely manner 17