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

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Chapter 3 DIVERSION GRANT PROGRAM Scale weight tickets containing mathematical errors were identified by DEM, and appropriate adjustments were made to contractor claim reports. However, because of problems with vehicle tare weights cited above, verification of weights noted on scale tickets was not always possible. Recommendations 1. We recommend that the County obtain a legal opinion regarding the award of grants and grant contracts by County agencies and the applicability of HRS §103D- 102(b)(2)(A), Hawaii County Code chapter 2, article 25, and other statutory, code, and charter provisions. Policies should be updated as necessary to ensure compliance with State and County procurement and other applicable laws. • More specifically, the auditors would recommend a legal opinion be obtained regarding the issuance of grant monies by County departments and agencies to non -profit and for- profit entities since the majority of diversion grants awarded by the Department of Environmental Management have historically been to for - profit entities. 2. We recommend that the County review the issues of "conflict of interest" and "related party transactions" adopting any necessary revisions to the County Code in order to reduce the risk of abuse and/or fraud or perception of impropriety by the public. 3. We recommend that DEM establish a standardized policy pertaining to program file documentation, including: • Documentation of all communications, including, but not limited to, letters, e- mails, notes, and /or documents received and generated by the department regarding all actions taken to resolve any violations and/or discrepancies that may occur during a contract period. • Documentation of the review and reconciliation of the contractor claims reports including, for example, a checklist indicating that scale tickets were reviewed for errors, totaled and reconciled as to tonnage invoiced, and that any deviation from contract requirements was duly authorized. • Documentation and reporting of vendor performance. 4. We recommend that DEM ensure the timely procurement of its contracts so that a valid contract is issued prior to commencement of work. A spreadsheet or other type of tracking system needs to be utilized to assist in monitoring of timelines for procurement and contract related tasks. 5. We recommend that DEM review all contracts to ensure the accuracy and completeness of each contract. There should be no sections left incomplete within any contract. Every effort must be made to ensure that each contract is complete before execution and that program files contain at least one copy of the contract in its entirety. 24