Comprehensive Annual Financial Report 2016

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For the Future Public Safety — The Fire Department looks forward to the opening of the new Haihai Fire Station in Hilo in 2017. Culture and Recreation — The Department of Parks and Recreation will open various new and improved facilities in 2016 and 2017 including new District Parks in Pahoa and Waimea, a new Gymnasium in Ka'u, and a new Clubhouse for Hilo Municipal Golf Course, providing greater recreational opportunity for our communities. The Department also looks forward to expanding outdoor recreational opportunities with the near completion of projects such as Mauna Kea Recreational Area Improvements, Hilo Bayfront Trail Phase I and Honaunau Rodeo Arena Improvements. These are several of many ongoing projects expected to be completed in 2016 and 2017. The Department will continue with ongoing repairs, maintenance and improvement projects to ensure safe facilities for park patrons and staff. Other Financial Information Internal Control The management of the County is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the County are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Budgetary Control The County maintains budgetary controls to ensure that legal provisions of the annual budget are complied with and that those expenditures do not exceed budgeted amounts. Activities of the general fund and special revenue funds are included in the annual appropriated operating budget. Project -length financial plans are adopted for the capital projects fiord. Budgetary control is established at the department level. Formal budgetary integration is employed as a management control device for the general fund, special revenue funds, and the capital projects find. Budgetary control for the debt service fund is achieved through general obligation bond indenture provisions. The basis of accounting used for the budgets of the general and special revenue funds differs from generally accepted accounting principles. Intergovernmental revenues are recognized when awarded by the granting agency, encumbrances and unexpended allotments are treated as expenditures for purposes of determining legal compliance with the annual budget, all leases are treated as operating leases, and accounts payable are not accrued. -4-