2014-COH - Single Audit of Federal Financial Assistance Programs

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;A: N&K CPAs, Inc. ACCOUNTANTS; CCNSUi CANTS To the Chair and Members of the County Council County of Hawai'i AMERICAN SAVINGS BANK TOWER 1001 BISHOP STREET, SUITE 1700 HONOLULU, HAWAII 96813-3696 T (808) 524-2255 F (808) 523-2090 We have audited the financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the County of Hawaii, State of Hawaii (County), as of and for the fiscal year ended June 30, 2014. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and OMB Circular A-133, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated August 25, 2014. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accountinq Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the County are described in Note 1 to the financial statements. The County adopted the provisions of Government Accounting Standards Board (GASB) Statement No. 65 Items Previously Reported as Assets and Liabilities. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the County's financial statements were: • Estimate of the useful lives of the County's capital assets used to compute depreciation expense • Estimate of the liability for postretirement benefits other than pensions • Estimate of the loss reserves for workers' compensation • Estimate of the landfill closure and postclosure cost liability Management's estimate of the depreciation recorded on capital assets is based in part on the estimated useful lives of those capital assets. We evaluated the key factors and assumptions used to develop the estimated useful lives used to depreciate the County's capital assets in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimate of the liability for postretirement benefits other than pensions was determined using an actuarial valuation study performed by a third -party specialist. We evaluated the