2009-02-AU Limited Scope Performance Audit of the Highway Fund

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• Adopt policies and procedures that will set the "tone" for all County services and operations stressing the cost - savings related to proactive planning and the development of formal long -term plans, relevant performance measures, and adequate and timely maintenance of capital assets and infrastructure. • Ensure the proper safeguarding of County assets through review of and strict adherence to proper controls, such as the implementation of perpetual inventory systems, regular inventory documentation, proper segregation of duties, and unannounced counts and audits. • Implement a centralized intake center for public complaints to ensure that ALL reports are more consistently and timely documented and addressed, and to permit the standardization of prioritization, response, and reporting protocols. Mayor and Council: • Require that DPW and its Divisions implement an outcome or performance based planning and budgeting process to provide direction to program operations and improve public accountability. Thereafter, ensure that resource allocations are adequate to permit DPW and its Divisions to execute planned and prioritized operational activities and meet their respective responsibilities under the Highway Fund. • Review the adequacy of the County's Code of Ethics as well as its monitoring and enforcement of Code of Ethics provisions, and implement internal control processes that address both the fact and appearance of impropriety in County contracts. DPW RESPONSE In response to audit recommendations, the Department of Public Works stated that it recognizes the importance of effective internal controls to ensure that the mission and objectives of the Highway Fund are achieved. DPW also stated that its new administration is committed to continue improving coordination, planning, and monitoring of its Highway Fund operations; and as part of this ongoing process, DPW will review findings and incorporate recommendations of the auditor as appropriate. CONCLUSION We found the internal control structures of the Department of Public Works relating to operational activities financed by the Highway Fund for the maintenance and improvement of road, bridge, and flood control infrastructure and safety to be inadequate. We also reported on deficiencies in the design and /or implementation of related County internal control structures that, in our judgment, could adversely affect the County's broader goals and objectives related to governance, transparency, and public accountability. Given current economic realities, County departments and divisions cannot afford to operate in a reactive manner as isolated operational units. The November 2008 mayoral election, and subsequent appointment of new department directors, provides an ideal opportunity to put a fresh face on County government. A new "Tone at the Top" needs to be established by County administrators at the highest levels and communicated by example as much as policy to foster a clear understanding of each employee's role and contribution in meeting program, division, department, and County goals and objectives for providing services and safeguarding assets. Program, division, and department goals, objectives, and action plans need to support a broader County -wide strategic plan for long -term infrastructure maintenance and improvement, and should include realistic timelines and budgets and relevant program measures to assess progress. We need to know where we want to go as a County; how and when we are going to get there; what tasks need to be completed when; and what performance measures need to be implemented to define, track, and report outcomes. Under its new leadership, County government needs to develop new strategies for providing consistent and reliable infrastructure maintenance as well as improved road, bridge, and flood control capacity and safety, if we are to meet our mission under the Highway Fund. Colleen M. Schrandt Legislative Auditor County of Hawaii September 2009