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A s s o c i a t i o n o f L o c a l G o v e r n m e n t A u d i t o r s December 12, 2013 Mr. Lane Shibata, Acting Legislative Auditor County of Hawai’i Office of the Legislative Auditor 25 Aupuni Street Hilo, Hawai’I 96720 Dear Mr. Shibata , We have completed a peer review of the Office of the Legislative Auditor, Count y of Hawai’ i for the period July 1, 2009, through June 30, 2012 and issued our report thereon dated December 12, 2013 . We are issuing this companion letter to offer certain observations and suggestions stemming from our peer review. We would like to ment ion some of the areas in which we believe your office excels: The office is effective at identifying criteria and including it in the report to help the reader understand the findings, conclusions, and recommendations. The office is receptive to managemen t’s comments and changes the report when warranted to ensure the report is accurate and balanced. The amount of research the office performs in preparation of planning the report is effective in helping the office assess risk, scope its work, and develop i ts audit objectives. We offer the following observations and suggestions to enhance your organization’s demonstrated adherence to Government Auditing Standards : GAS 3.84 requires the audit organization to “document its quality control policies and proce dures and communicate those policies and procedures to its personnel.” The OLA’s Audit Manual did not adequately address GAS 3.42, which requires “ an auditor who previously performed nonaudit services for an entity that is a prospective subject of an audi t . . . to evaluate the impact of those nonaudit services on independence before accepting an audit.” The OLA’s Audit Manual also did not adequately address GAS 3.60, which requires auditors to “use professional judgment in planning and performing audits and in reporting the results.” To strengthen its procedures related to independence and professional judgment, w e recommend that the Office of the Legislative Auditor address the identified Standards in its policies and procedures. During our review, the Office of the Legislative Auditor revised it policies and procedures to address these Standards. GAS 3.93 requires audit organizations to “establish policies and procedures for monitoring of quality in the audit organization.” GAS 3.95 requires the audi t organization to analyze and summarize the results of its monitoring process at least annually, with identification of any systemic or repetitive issues needing improvement, along with recommendation s for 449 Lewis Hargett Circle , Suite 290 , Lexington, KY 40503 , Phone: (859) 276 - 0686, Fax: (859) 278 - 0507 webmaster @ nasact.org www. algaonline .org