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Home My WebLink AboutCOM 0867.000 2020-2022 County of Hawaii tf lPx, / P�diaee t. f Office of the County Auditor County Auditor 120 Pauahi St., 309 County of Hawaii Hilo, HI 96720 a mK Office of the County Auditor F 808.961.8905 Ph 808.961.8386 vvww.hawaiicountygov u ', June 30, 2022CD ' v,h Honorable Maile Medeiros David, Council Chair ;5* and Members of the Hawaii County Council Hawaii County Council 25 Aupuni Street Hilo, Hawaii 96720 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 2022-2023 Annual Audit Plan. This provision requires our office to transmit an annual audit plan to the Hawaii County Council and the Mayor. Our plan includes: • Annual Comprehensive Financial Report for Fiscal Year Ending 2022 • Audit of the Financial Statements of the Department of Water Supply for the Fiscal Year Ending 2022 • Single Audit of Federal Financial Assistance Programs for Fiscal Year Ending 2022 • Concluding on several engagements/projects currently in process • Two self-initiated audits • Monitoring purchasing card and travel expenditures • Surprise cash counts • Unplanned engagements and special projects We would like to take this opportunity to share our appreciation with the entire organization as we look forward to pursuing the upcoming audit engagements and projects for the County of Hawaii. Respectfully, J;�-J— County Auditor County of Hawaii Comm. No. Ref. To: FG Ref. Date JUS -:022 County of Hawaii Annual Audit Plan Fiscal Year 2022 - 2023 r _ 5s County of Hawaii Office of the County Auditor 120 Pauahi St., 309 Hilo, HI 96720 County of Hawai'i _y 'Dr Office of the County Auditor 120 Pauahi St., 309 , Hilo, HI 96720 �_- �� 5s Date: July 1 , 2022 To: Honorable Maile Medeiros David, Council Chair and Members of the Hawaii County Council From: Tyler J. Benner, County Auditor Subject: Annual Audit Plan Fiscal Year 2022-2023 Executive Summary In accordance with Hawaii County Charter Section 3-18(d)(2), The Office of the County Auditor respectfully submits its Fiscal Year 2022— 2023 Annual Audit Plan. The provision requires our office to provide an annual audit plan to the Hawaii County Council and the Mayor. An audit plan is used to identify specific agencies, departments, divisions, funds, programs, and activities that may be considered for examination with the goal of achieving one or more of the audit objectives. After considerable discussion, we designed the work plan to focus on priorities that ensure network reliability, safety, security, and enhances the end-user experience. Finally, to increase transparency, we've developed a remediation tracker to be deployed in July 2022 to allow stakeholders and decision-makers to track the status of recommendations made. Respectfully, j5—le lP1', e�P121filelK County Auditor County of Hawaii cc. Honorable Mitchell D. Roth, Mayor Lee Lord, Managing Director Jon Henricks, County Clerk 1 Vision Statement Our vision is to enhance County government by leveraging new and emerging technology, 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 Council 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 manner. Our work is intended to assist the County government in its management of public resources, delivery of public services, and stewardship of public trust. Audit Objectives We achieve our mission by pursuing 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 Fiscal Year 2022- 2023 Planned Audits (Order yet to be determined) Mandated by Charter ➢ Annual Comprehensive Financial Audit of the County of Hawaii ➢ Audit of the Financial Statements of the Department of Water Supply ➢ Single Audit of Federal Financial Assistance Programs In accordance with Hawaii County Charter Section 10-13, our office will 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 Hawaii for the Fiscal Year Ending June 30, 2022 ➢ Financial Audit of the Department of Water Supply for Fiscal Year Ended June 30, 2022 ➢ Single Audit* of Federal Financial Assistance Programs for Fiscal Year Ended June 30, 2022 ➢ Report for Landfill Financial Assurance; and ➢ Financial Assessment Electronic Submission of Section 8 — Housing choice vouchers *Additional programs may be added as determined by the Schedule of Expenditures of Federal Awards (SEFA). 3 Audits In Process Engagement GQi+ Mass Transit -�- Cash Handling Follow-Up10046 3046 Jul 2023 Department of Public Warks, � Contracts,Change Orders, and Supplements � 5046 1546 Oct 2022 Real Pronue Cyclety Management ME JulRevenue Cycle Mana ement 10046 3046 2023 Department of Contingency Plans ter Supply di _' 115%N 50% Aug 2022 Department g FolioWater Supply MIMI N gCash Handlin Follow u 10465046 Au 2023 Reflects status of engagements as of 0613012022 Estimated completion subject to change ➢ Additions to Audit Work Plan We continuously evaluate risk. Risk can be inherent, dynamic, and can evolve rapidly. Our audit plan may be modified at any time. Modifications should in no way be considered a failure of the plan and should instead reflect the changing environment and the need to adapt to new and unanticipated threats. 4 Self-Initiated Audits ➢ Information Technology— Network Security Group Our audit will explore compliance with and adherence to network security, data management, backup, and other best practices. Our audit may require the use of a subject matter expert (SME). Due to the extensive nature of the subject matter, this audit may be released as a multi-part series. ➢ Information Technology — User Group Our audit will explore desktop support, specifically, the process by which information is received, cataloged, prioritized, resolved, and dispositioned. Due to the sensitive nature of the subject matter, the release of information may be limited. Special Projects Projects currently underway and are scheduled to be completed in FY2022-23: ➢ Association of Local Government Auditors (ALGA) Peer Review ➢ Request For Proposal for Annual Comprehensive Financial Audit 6-Year Contract ➢ Remediation tracker ➢ Surprise cash counts ➢ Continuous monitoring of purchasing card and travel expenditures ➢ Tips requiring further research from Fraud and Whistleblower Hotlines 5 Remediation Tracker To increase government transparency and accountability, we have developed a remediation tracker. We will continuously monitor the status of new and applicable recommendations until they are completed. We intend to make this tool available for public access in July 2022 and will add previous engagements over time and current engagements as they are conducted. Office 3 51 234.88 Reports Being Tracked Count of Recommendations Average Days Outstanding zo u I-•. 1 13 1 N 10 . ■ ; 3 5 Z r Fully Implemented penaing Net applieable partially Resalvetl Nat lmplementeE Implemented No* Audit Entity Status Days outstanding Recommendation 1.0 Mass Transit Agency Partially 1507 "Werecommend Mass Transit management equip each County busand Implemented anwith an updated elearonic fare box to collect passenger fares and n ack ridership." 2.0 Mass Transit Agency Partially 1507 "We recommend Mass Transit management prioritize cash handling Implementedinternal controls.Managementshould beresp—cble for an effective internal control ryu—and internal controls increase the likelihood that the organization will achieve their objectives." 3.0 Mass Transit Agency Not 1507 We further recommend Mass Transit change lock or safe combinations Implementedemployee who had access leaves the organization or Is reassigned to another position:' 3.0 Mass Transit Agency Partially 1507 "We recommend Mass Transit management ensure physical secunty over Implemented ual receipts,cash.and rash equivalents(e.g.,bus tickets,bus passes, taxincoupons)" Office ofThe County Auditor-Rernediation Tracker Recommendation Details Departments Recommendation Response: What was asked of the department What the department said they would do 7�o# Recommendation - ... Department Department of Human Besources 1 1.0 "We further recommend Mass Transit remove or alter the •MTA stated that in 2018 they began removing ticket stubs Hawaii Fre Department 1 perforated stub at the top of the bus ticket sheets to ensure at the point of sale. Mass Transit Agency 1 passengers pay the full fare-' •MTA discontinued selling Hele-On Bus Tickets in January 2022. •On March 1,2022,MTA announced they are fare-free for bus and paratransit fares. 1.0 "We recommend Mass Transit management equip each Management explained that a plan for fareboxes will be County bus and van with an updated electronic fare box to implemented by 2024 and will be used primarily to track collect passenger fares and track ridership." ridership In the fare free system.Bus drivers are continuing to track ridership using a manual tally sheet process 3.0 "We further recommend Mass Transit change lock or safe Management needs to create and enforce procedures for combinations once an employee who had access leaves the managing how their keys are tracked and maintained. organization or is reassigned to another position." 3.0 "We further recommend Mass Transit staff restrictively MTA updated cash handling procedures to include endorse checks immediately upon receipt" endorsing checks immediately upon receipt. 10.0 "We further recommend Mass Transit complete treasury No actions are needed at this time. 7 Next Steps Carry-over audit engagements will continue until completed. New audit engagements will commence as scheduling permits. Completed audits will be shared with those charged with governance and responsible parties will have the opportunity to provide comments. Completed reports will be transmitted to the county council and the mayor and filed with the county clerk as a public record. We would like to take this opportunity to thank the County Council and the Administration for their support. We look forward to conducting our work this coming year. Respectfully, County Auditor County of Hawaii s