HomeMy WebLinkAboutREP FC 104 08/28/2001 2000-2002 DEPORT OF TIIE
COlO~IMITTEE ON FINANCE
DATE: August 28, 2001 Re: Comm. No. 291 /Res. No. 108-O1
PLACE: Council Chambers
TIME: 10:05 A.M.
Council Chair and Members
Hawaii County Council
Hilo, Hawaii 96720
Your Committee on Finance, to which was referred Resolution No. 108-01, reports as follows:
Resolution No. 108-01, transmitted by Council Member Aaron S.Y. Chung, via
Communication No. 291, dated August 1, 2001, authorizes the Council's process for procuring
an independent auditor(s), pursuant to Section 10-13, Hawaii County Charter, and authorizes the
payment of funds in future fiscal years to cover afour-year contract.
The current four-year contract for an independent financial audit of the County's financial
statements with KPMG, LLP is in its last year. A draft Request for Proposals prepared by the
Legislative Auditor in consultation with County Controller (Deanna Sako), Department of Water
Supply Assistant Controller (Rick Sumada), and other counties, was attached.
According to the resolution, the Chair of the Council would be authorized to proceed with the
procurement of the independent auditor(s) in the following manner:
An Evaluation Committee will be established and could be composed of a Council member
appointed by the Chair, the Legislative Auditor, the Fiscal/Program Review Auditor, a
Council Legislative Assistant, and a representative from the State Auditor's Office.
~ The Request for Proposal (RFP) will be finalized.
~ The RFP will be published in local and statewide newspapers, and invitation letters will be
mailed to a distinct group of Certified Pubic Accountants (CPA) and CPA firms.
® Proposals will be received and registered.
~ The Evaluation Committee will evaluate and rank the proposals, and will make its
recommendation to the Council.
~ The Council will discuss the recommendations of the Evaluation Committee in Executive
Session and will proceed to authorize awarding of the contract.
~ Contract will be finalized, routed, and executed.
The external audit contract cover the requirements for each of the four consecutive years
commencing with the fiscal year ending June 30, 2002 through June 30, 2005.
Section 10-13, Hawaii County Charter, requires the County Council to provide for an annual
independent audit of the accounts and other evidences of financial transactions of the County and
of every county agency and executive agency.
Also, Section 10-11, Hawaii County Charter, requires that any contract, lease or other obligation
requiring payment of funds from appropriations of a later fiscal year or of more than one fiscal
year be approved by resolution of the Council.
FC REPORT NO. l04
Your Committee, during its discussion of Resolution No. 108-01, Draft 2, approved the
following amendments:
Amending the resolved clause to read l . An Evaluation Committee will be
established and [could] may be composed of [a] at least one Council Member appointed
by the Chair, the Legislative Auditor, the Fiscal/Program Review Auditor, a Council
Legislative Assistant, and a representative from the State Auditor's Office...."
Also during its discussion a revised RFP based on comments from individual Council members
was requested.
Your Committee questioned whether the amount of experience needed of agencies having to
qualify as an audit firm should be raised from three years to five years of governmental audits
and a budget of $50 million to $100 million. It could not be determined whether raising these
minimum figures would raise the quality of the audit firm.
An amendment was brought forward to reduce the audit contract period from four to two years.
However, that motion was defeated. Although theoretically the Council would have the
opportunity to hire another audit firm with "fresh eyes" every Council term, this does affect the
total cost, the amount of start-up time necessary to understand the county government processes,
and the amount of time spent by administration to assist the audit firm in familiarizing
themselves with the processes.
Several members of Your Committee expressed a desire to conduct performance and efficiency
audits. It was pointed out that these are very different from the narrower financial audit. If the
Council wished to conduct these other reviews, money has been budgeted this fiscal year to
make this happen.
Your Committee on Finance is in accord with the purpose and intent of Resolution No. 108-01,
as amended to Draft 2, and recommends its adoption.
smc
nsES NOES ,4&E Ea Respectfully submitted
CHUNG X
PISICCHIO x COMMITTEE ON FINANCE
ARAKAKI X
ELARIONOFF X
JACOBSON X
LEITHEAD-TODD X
SAFARIK X AARON S.Y. CHUNG, C AIR
TYLER X FC REPORT N~ - 104 ry~
Y'AGONG X ADOPTED: 1 ~ c.mo