2006-01-AU Audit of the County of Hawai‘i's Recycling and Diversion Grants Program

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CHAPTER BACKGROUND In conducting the audit, the audit team reviewed pertinent ordinances, laws, rules, and prior audits pertaining to the County's recycle and diversion programs. Auditors reviewed departmental programs for compliance with applicable County, State, and federal laws, rules, regulation, and requirements, and assessed management controls relevant to the objectives of the audit. Auditors reviewed departmental policies, procedures, contracts, reports, communications, and other related data to evaluate the existence and effectiveness of internal controls, compliance with governmental permit and contractual requirements, and monitoring of departmental and contractor performance. Additionally, the audit team interviewed departmental personnel and contractors and made site visits to County facilities and contractor operations. The objectives of the audit did not encompass assessment of the effectiveness and/or efficiency of the Department of Environmental Management as a whole, or assessment of the efficacy of DEM's Recycling and Diversion Grants Programs relative to other counties and states. However, the audit team would recommend that future audits of this scope be considered. Due to the quantity and diversity of programs audited, the audit team has structured the report to begin with "General Findings" in Chapter 2. The General Findings reflect the broad and pervasive issues that auditors feel have negatively impacted the County's efforts to address recycling, reuse, diversion, and reduction of solid waste streams on Hawaii Island. The General Findings also reflect issues underlying specific program findings or issues that permeated multiple programs included in the audit sample, and are followed by general conclusions and recommendations. The Recycling and Diversion Program Analysis in Chapter 3 discusses the individual recycling and diversion programs and their respective contracts and includes findings and recommendations specific to those programs. Internal Control Chapter 7.11 of the "Government Auditing Standards" Revised Yellow Book states: "The lack of administrative continuity in government units because of changes in elected legislative bodies and in other government officials increases the need for effective internal control. Auditors should obtain an understanding of internal control significant to the audit objectives and consider whether specific internal control procedures have been properly designed and placed in operation." Chapter 7.10 (c) further states: "Internal control, often referred to as management controls, in the broadest sense includes the plan of organization, methods, and procedures adopted by management to meet its mission, goals, and objectives. Internal control includes the processes for planning, organizing, directing, and controlling program operations. It includes the systems for measuring, reporting, and monitoring program performance. Internal control also serves as the first line of defense in safeguarding assets and preventing and detecting errors, fraud, and violations of laws, regulations and provisions of contracts and grant agreements." 7