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Home My WebLink AboutCOM 0401.000 2020-2022 Cowity of Hawaii u e r r�arra C"attics of the County Auditor G€Unty Auditor 120 raauahi St.,309 County of tiawai'i Hilo, Hi 96720 Office of the County Auaditw E 806.961.8905 Pty 806.961.5856 �!h�11� �IR��I��I�iA�iMI��I��if14�VNflI��IVa�fl �1��I�YG�L�M�6'��I�I��r�I�i�l4Nlh�uVWN�92�nf1�PIM1�1�4i��'!l�"iYw�Yai�Y�WWI�Y�k�l'Yi�Y��N�d9��Y�IG�MM�I�II�Ydn�11�uN��1�1U!�hf�Y �#I�C�dYa1W�1�I11�1��pY�Va�64NM8V !�IM1u�l�'dlf�0�i1S�Y�k��V�If�V�4��"un�lYn�kW��i��117�is�M�P�k�tlti!�YdilOn�P� 'Wllblll �"�I�U@Gnhi� September 10, 2021 Honorable Maile Medeiros David, Council Chair and Members of the Hawaii County Council °µ Hawaii County Council 25 Aupuni Street . m Flip, Hawaii 9720 Dear Chair David and Council Members, In accordance with Hawaii County Charter Section 3-18(d)(2), attached is the Office of the County Auditor's Fiscal Year 2021®2022 annual audit plan. This provision requires our Office to transmit an annual audit plan to the Hawaii County Council and the Payor. In addition to the annual comprehensive financial report and federal single financial audit contracted to be conducted by an outside CPA firm, our annual plan will include four self- initiate audits and -Four follow up audits. We have left room in the plan to allow for unplanned engagements which may be added in addition to our scheduled engagements. We would like to take this opportunity to share our appreciation with the entire organization for their participation in our risk assessment survey and earnest responses. We look forward to pursing the upcoming audit engagements for the County of Hawaii. Respectfully, Ile 51",2, County Auditor County of Hawaii F awai`i County is an Equal Opportunity Provider and Employer Comm. No. Ref. To: Ref. Date SEP 1 7 2021 Audk Nan- RscaYear 2021-2022 County of Hawal'i Ie Annual Audit Plan Fiscal Year 2021 - ®, wtlffd Fm County of i' Office the County AUditor 120 Pauahi St., 309 Hilo, HI 9672 Audit Man—FiscM Year 2021 2022 pr .p� M Paw dap Office of the County Auditor 120 PanahsI., 309 Hilo, 119 96729 66 Date: September 16, 2021 I..o^ Honorable Mafle Med&os David, Counoil Chair and Members of the ala ai`i County Council From: Tyler J. Bonner, County Auditor Subject Annual Audit Plan Fiscal Year2021-22 Executive In accordance with Hawaii County Charter Section 3-18(d)(2), The Office of the County Auditor resp otfully submits its Fi c l Year 2021 —2022 annuai edit plan. The provision requires our office to provide an annual audit plan -to the ldawai`i County Councfl and the Mayor. An edit plan is used to identify specific agencies, department, divisions, funds, programs and activitos that may be considered for examination with the goal of achieving one or more of the audit objectives. After considerable discussion with multiple stakeholders in both the executive and legislative branches we designed the workplan to consider priorities which focus on revenues, expenditures, public safety, and safeguarding of assets, We've reviewed our internal procedures focusing on reducing redundancy with the goal of freeing time to, increase overall capacity. Finally, we will increase communication with auditees throughout the audit by adding tools within the audit department's internal SharePoint site -to allow therm to monitor and track progress. Respectfully, 61TIP County Auditor County of Hawaii cc: Honorable Mitchell D. Roth, Mayor Loo Lord, Managing Director Jon Henric s, County Mork Audit Nan Fiscal Year 2021-2022 Vision Statement Our,vision is-to enhance County government by leveraging new and ernergMg technology and evolving the control environment at the speed of business, to provide reasonable assurance that public resources and services are receiving the adequate stewardship they deserve. Mission Statement It is our mission to serve the CouncH and citizens of Hawaii County by promoting accountability, fiscal integrity, and openness in Local government. Through performance and/or financial audits of County agencies and programs, the Office of the County Auditor examines the use of public funds, evaluates operations and activities, and provides -findings and recommendations to elected officials and citizens in an objective mariner. Our work is intended to assist County government in its management of public resources, delivery of public services and stewardship of public trust. Audit Objectives We achieve our mission by pursing the following audit objectives - Determine the effectiveness and efficiency of organizations accomplishing their mission and identify opportunities for cost savings and revenue enhancements. * Evaluate adequacy and compliance of internal controls, policies and procedures, systems, and processes. * Evaluate proper accounting and safeguarding of County owned assets. * Cause to conduct reviews of-the accuracy of financial and operating transactions. * Confirm compliance with local, state, and federal laws and regulations. * Proactively identify and investigate reported fraud, theft, waste, abuse, etc. and recommend controls to prevent and detect such occurrences. * Determine the effectiveness and efficiency of County programs being administered and resources being utilized. * Follow-up, review and evaluate previously conducted audits to ensure management actions are achieving satisfactory solutions of all significant issues. 2 Audit Nan.--HscaYear 2021-2022 ............._____..__.___....... Risk Assessment .The audit pWi was developed using a risk-based approach. "'T"his "risk assessment" compiled the list of audit engagements through the foliowing approach: �o Understan6ng the County goals I he plan sought input from multiple stakeholders to understand the goals of the organization and challenges 'to it SUccess. This input and understanding were gained through review and conversations from a diverse group of stakeholders including those in the administration, legislative branch, and citizens. Goals include items such as: * Promoting fiscal responsibility and stability * Rightsizing department and resource allocations to better ensure success and sustainable growth * Improving ease of access for public Interaction with government services * Maintaining, improve and enhance public facilities and infrastructure * Protecting County owned assets against theft, loss, and misuse * Ensuring public safety Completing Countywide Risk Survey The Countywide risk survey administered through a web-based survey -tool is used to identify and assess potential events or situations that may threaten the county's success in achieving its' goals. The risk survey evaluated risk in 4 areas: * Operational * Compliance * Financial * Reputation The guiding axes are assessed along two lines, the probability and likelihood that adverse events might occur and the degree of impact the event would have if it occurs. In addition, other variables including the volume of transactions, complexity of a process, known weaknesses, degree of oversight, and other criteria may guide impact or probability. � Identifying Processes and their potential impacts on operations Key business processes are identified and the potential for improvement on those operations, and impact those improvements might make to the County's operations and ability improve its core services are final components to determining audit engagements. 3 Audit Nan-.-Fiscal Year 2021-2022 Fiscal Year 2021- 2022 Planned Audits (Order yet to be determined) Mandated by Charter Single Financiah Audit Annual Comprehensive Financial Audit In accordance with Flawai1 County Charter Section 10-13 our office vvM monitor the contract with the external auditor, N&K CPA's Inc. (RFP #3544) to complete the -following: * Conduct audits of the accounts and other evidence of financial 'transactions of the County of Hawai'i for, Fiscal Year Ended June 30, 2021 * Single Audit* of Federal Financial Assistance Programs for Fiscal Year Ended June 30, 2021 ® Financial Audit of the Department of Water Supply for Fiscal Year Ended June 30, 2021 * Report for Landfill Financial Assurance; and * Financial Assessment Electronic Submission of Section 8 — Housing choice vouchers *Additional programs may be added as determined by Schedule of Expenditures of Federal Awards ( EFA). 4 Audit Nan- Fisc i Year 2021-2022 "' -Ind t Real Property - max revenue Cyc:enage ent Property taxes constitute most of the revenue for the County corning in at gust under 337 un°0iion dollars in FY 2019--20M A steadily growing cornponent of the receivable inventory includes a past due balance of accounts which the division director estimates to be appro irnately 15 million dollars. Our audit MH explore program efficpency and effectiveness while expioring opportunities to increase revenues. Contracts, Change Orders and Supplements The Office of the County Auditor performed a limited scope edit in FY 2006-07 to examine Department of Public Works, capital improvement project contract change orders and supplements. A topical analysis revealed that since 2011 the County has expended over 70 million dollars in this category. Our edit will examine primary cost drivers, contributing departments, and evaluate opportunities to reduce costs related project overruns. )�- Fire Department— Performance Audit The Flawai`i Dire Department is the second largest general ledger department with an annual operating budget above 50 million dollars and utilizes a workforce between 450 570 employees to carry out critical, life-saving activities related to protection of persons and property. Cour audit will determine general program success through evaluations of various functional areas of its operations and conduct a critical needs assessment. �- Countywide Limited Scope/audit of Inventory and Controls. The County of Hawaii holds approximately 11 million dollars in its materials, tools, and supplies inventory and an additional (approx.) 182.5 million in its fixed asset inventory. Cour audit will look across various county departments to conduct an analysis of operations, internal controls, and program efficiency and efficacy. 5 ALdt Nan--RscA Year 2021 ..2022 Addifions to Audit Work Man Resks are dynamic and can evolve rapUy. The audit pRan may be modified at anytime with engagernents being added or replacing existinUdits after a separate threat assessment, anMysis, and evaWfion, Modifications shoWd �n no way L)e considered a faikffe of the pean and shoWd instead refleGt the changdng environment and the need to adapt to new and Ljnantcipated threats. Audit Plan—Fiscal Year 2021-2022 Follow-up Enagagements ➢ Department of Human Resources Hiring Practices ➢ Mass Transit Cash Handling ➢ Department of Water Supply - Cash Handling ➢ Department of Water Supply - Contingency Plans Continued Process Improvement As with any proactive unit in an organization, the audit department periodically assesses its own strengths and weaknesses to determine where it can improve elements of its own operations. Audits consist of six distinct phases; Audit Progress • initiating • planning Initiating the Audit • conducting • distributing • completing and • - • conducting a follow-up. After a review of internal Conducting Audit Activities procedures, we determined that the audit function could benefit from additional streamlining of post audit follow-ups, by referencing, rather than duplicating planning efforts. The _- _. 7. 7 department will use this time saving opportunity to increase its capacity and engagement Conducting the Follow-up auditees with greater frequency. 7 Audrt INanFiscaB Year 2021-2022 Next Steps Audit engagements WH cornmence irnrnediatepy steer the pubfisHng of this report. The County Auditor's Office WH maint aM an activity p in pts internW page on SharePoint to monitor engagement statuses and HIUstrate progress toward cornppefion. For department audits, at comppefion of engagements, the procedures, and resu[ts WH be shared with the audKee and management wiH have the opportunfty to provide comments. For aUdits of activities that work across multiple county units, such as inventory, resu[ts WH be shared with appHcaNe agencies as each is reviewed with the opportUnity for management comments and the completed report will be present edto County Council and transmitted tothe Mayor's office once all engagements have concluded. We. woad We to take this opportunity to thank the County Council and the Administration for their suppoft. We look forward to conducting our work this coming year. Respectfully, courrty Auditor County of Hawai''�