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awarded by the granting agency,encumbrances and unexpended allotments are treated as <br /> expenditures for purposes of determining legal compliance with the annual budget,all leases are <br /> treated as operating leases,and accounts payable are not accrued. <br /> The County also maintains an encumbrance accounting system as one technique of <br /> accomplishing budgetary control. Encumbrances outstanding at fiscal year end are reported as <br /> reservations of fund balances and do not constitute expenditures or liabilities because they will <br /> be honored during the following year. As demonstrated by the statements and schedules <br /> included in the financial section of this report,the County continues to meet its responsibility for <br /> sound financial management. <br /> Pension Plan <br /> All full-time employees of the County participate in the Employees' Retirement System of the <br /> State of Hawaii,a cost-sharing,multiple-employer defined benefit public employee retirement <br /> system. <br /> Cash Management <br /> Cash temporarily idle during the year was invested in demand deposits,certificates of deposit <br /> and repurchase agreements. The average yield on investment was 4.15%. <br /> The County's policy is to minimize credit and market risks while maintaining a competitive yield <br /> on its portfolio. Accordingly,with the exception of$174,256 held by a rental management <br /> agent,deposits were either insured by federal depository insurance, collateralized,or secured by <br /> irrevocable letters of credit. All collateral on deposit was held for safe keeping with a County- <br /> designated agent in the County's name. <br /> Risk Management <br /> The County maintains insurance coverage for privately owned police vehicles as well as for <br /> other purposes. The County is substantially self-insured for its vehicles as well as for all other <br /> perils including workers' compensation and general liability. <br /> Other Information <br /> Independent Audit <br /> The Hawaii County Charter requires an annual audit by independent certified public <br /> accountants. KPMG LLP was selected by the County Council to perform the audit. <br /> Employee Union Contracts <br /> County employees are members of eight different bargaining units. All of the bargaining units <br /> have contracts that run through June 30,2007. <br /> -5 - <br />