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HomeMy WebLinkAboutCOM 0504.000 2000-2002 ~atY Qtl. AL KONISHI = DONALD IKEDA County Clerk Deputy County Clerk '~'~r`~R~°' CONSTANCE R. KIRIU Legislative Auditor C®asnty ®f'~acwai`i ®~~ee ®f'~he Cau~~~ Clerk 25 Aupuni Street Nilo, Hawaii 96720 Telephone: (808) 961-8255 Facsimile: (808) 961-8912 c::::: , °i t...: - January 24, 2002 TO: Council Members FROM: Constance Kiriu Legislative Auditor RE: Single Audit Report for Fiscal Year Ending June 30, 2001 A copy of the Single Audit Report of the County of Hawaii for Fiscal Year Ending June 30, 2001, is distributed for your information and review. The Single Audit Report was prepared by KPMG LLP as part of the Council's overall audit contract. The Single Audit Report is prepared for federal awarded programs to meet reporting and auditing requirements. Specifically, sub-recipients in receipt of a minimum threshold amount of funds are audited for the purpose of identifying material weakness of internal controls and testing compliance with certain provisions of laws, regulations, contracts and grants, which could have a direct and material effect on the financial statement amounts. A list of all county programs that have received federal funds can be found on pages 7-16 ("Schedule of Expenditures of Federal Awards"). Another separate memorandum received on January 24, 2002 from the Controller Deanna Sako submitting a "Corrective Action Plan" and a "Summary Schedule of Prior Audit Findings" should be kept with the Single Audit Report. Item O l -0l of the schedule of findings and questioned costs, the County did not comply with requirements regarding subrecipient monitoring that are applicable to its Workforce Investment Act program. They have considered this reportable condition to be a material weakness. The auditors found that, except for the noncompliance in the preceding paragraph, the County complied in all material respects with the requirements applicable to each of its major federal programs for the year ended June 30, 2001. The auditors will be present at the Finance Committee meeting on February 5, 2002, to answer any questions you may have. We will also request Housing Administrator Edwin Taira to attend the meeting. Enclosures (The Single Audit Report and the "Corrective Action Plan" and "Surunary Schedule of Prior Audit Findings" are on file in the County Clerk's Office) C~rnxn. Im'~, _ ~1,~ COUN~'Y OF IIAWAI`I S~°ATE OF I-IAWAI`I Single Audit of Federal Financial Assistance Programs Year ended June 30, 2001 C0~2ECTIVL ACTION PLAN Department of Labor Passed through the State Department of Labor and Industrial Relations Workforce I~vestnaent Act CFDA No. 1.255 Federal Award No. AA-10589.00-50 Finding 131-O1 Subrecipient 1Vlonitoring Iles®rnmendati®n: We recommend that the County perform subrecipient monitoring procedures to determine whether or not there is compliance with provisions of the Workforce Investment Act (WIA) and applicable laws and regulations similar to those performed on its other subrecipients. Adnainistr°nta®n's C®raa~nent: The County acknowledges the imporkance of monitoring subrecipients to determine whether or not there is compliance with provisions of the WIA and applicable laws and regulations. Fiscal year 2001 was the first year of implementation of the WIA Program by the County; time was spent learning the program and getting services up and running. The County's Office of Housing and Community Development (OHCD) requested and received technical assistance on monitoring from the State of Hawaii Department of Labor and Industrial Relations (State DL1R). The monitoring workshop was held on November 30, 2001, and included a briefing on the monitoring requirements and tools the State DLIIZ will utilize to monitor the counties. The monitoring requirements include WIA customer eligibility requirements, and core, intensive, and training services provisions. The OHCD must and will adapt these monitoring tools for its use to monitor the service provider. Development of monitoring tools and initial on-site monitoring of the State DLIR will be completed by the February 1, 2002. Antisipe~ed C®~npleti®n Date: Initial monitoring will be completed by February 1, 2002, however, monitoring will continue to be an ongoing effort. Contest I°ers®ns: Edwin S. Taira, Housing Administrator Office of Housing and Community Development Department of Ilousing and Urban Development Section 8 Cluster CFDA Ivo. 14.855 and 14.857 Federal Award No. III08-V002 and III08-E002 Finding 01-02 Tenant File Itevievvs Iles®a~grnsn~ati®n: We recommend that County supervisors perform reviews of tenant files for new participants in the Section 8 program as stipulated by County policies and procedures. Administration's Co~nnaent: The County supervisors will perform reviews of tenant files on a monthly basis for new participants in the Section 8 program as stipulated by County policies and procedures. Anticipated Coagapdetion Rate: This will be an ongoing effort. Contact persons: Edwin S. Taira, Housing Administrator Office of Housing and Community Development Department of housing and Urban DevelopYnent Scction 8 -Rental Certif cate Program CFDA 1010. 14.857 Federal Award 1010. III08-EOOB Finding 01-03 Reporting Recosnrnendation: We recommend that the County review the information reported to the grantor prior to submission. Administr'ation's Comment: The County will review the information reported to the grantor prior to submission. Anticipated Corrapdetion Date: This will be an ongoing effort. Contact ~ersoras: Edwin S. Taira, Housing Administrator Office of Housing and Community Development _ _ _ _ SUMMARY SCI~[EDUL~ OF PRIOR AUDIT FILINGS Environmental Protection Agency Capitalisation Grants for State Revolving Funds Finding ~g-O5: We recommend that the Division monitor the contractor's compliance with the Davis-Bacon Act (and other labor requirements) and ensure that adequate documentation is maintained. The Division should require that it be provided with a copy of the appropriate certification(s) as part of the proper monthly progress billing. Corrective action taken: The payroll certifications are being maintained by the Construction Manager (CM) for the duration of a proj ect. The CM provides an affidavit each month that certified payroll records have been reviewed are maintained in their offices. The County has continued to make periodic inspections of the records to ensure compliance. Such periodic inspections will continue. Contact person: Peter Boucher Wastewater Division Chief Department of Agriculture Water and Waste Disposal Systeans for Rural Communities Department of Hoaasing and Urban Developagaent Community Development I31ock Grant/Small Cities Program Finding ~9-Ol : We recommend that the County closely monitor its subrecipients to ensure that the required audit reports are completed in a timely manner. Corrected: Procedures have been implemented to ensure that the required audit reports are completed in a timely manner. No such instances YNere noted in the current year. The comment is no longer applicable. Contact persons: Edwin S. Taira Housing Administrator Rick Sumada Department of Water Supply Assistant Controller Finding 99-02: We noted that the County and the subrecipient are currently in the process of executing and amendment to the subrecipient agreement that will be effective Apri129, 1999 and extend the agreement to April 28, 2000. The County should exercise greater care in monitoring activities under subrecipient agreements. Corrected: Procedures have been implemented to improve monitoring activities of subrecipient agreements. No such instances were noted in the current year. The comment is no longer applicable. Contact person: Rick Sumada Department of Water Supply Assistant Controller Department of Dousing and Urban Developaa~ent Cognanur~ity Development block Grant/Sanall Cities Program Finding 99-03: We recommend that the County exercise greater care in ensuring that all procurement documentation is properly maintained. Corrected: Procedures have been implemented to ensure that •all procurement documentation is properly maintained. No such instances were noted in the current year. The comment is no longer applicable. Contact person: Edwin S. Taira Housing Administrator Department of Agriculture Water and Waste Disposal Systems for Mural Coma~xunities Department of Dousing and Urban Development Coaraffiunity Development block GrantlSBnall Cities Program Finding 00-O1: We recommend that the County closely monitor its subrecipients to ensure that the County receives audited financial statements in a timely manner. Corrective action taken: 'The audit report in question has been received by the County. All agreements with this- subrecipient have expired and no further audit reports are required to be submitted. All other subrecipients submit their reports in a timely manner and the reports are reviewed when received. The problem has been corrected. Contact persons: Edwin S. Taira Housing Administrator Rick Sumada Department of Water Supply Assistant Controller COUNTY OF IIAWAI`I STATE OF IIAWAI`I Single Audit of Federal Financial Assistance Programs _ Year ended June 30, 2001 Table of Contents Page I. INTRODUCTION Audit Objectives 1 Scope of Audit 2 Organization of Report 2 II. COMPLIANCE AND INTERNAL CONTROL OVER FINANCIAL REPORTING Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 3 III. COMPLIANCE AND INTERNAL CONTROL OVER FEDERAL AWARDS Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 5 Schedule of Expenditures of Federal Awards ~ Notes to Schedule of Expenditures of Federal Awards 1 ~ Schedule of Findings and Questioned Costs 19 ~~C~I~N I ~ lN~~~~IJCTI®N P. O. Box 4150 Honolulu, HI 96812-4150 October 26, 2001 To the Members of the County Council of Hawaii County of Hawai i Hilo, Hawaii: We have completed our financial audit of the general purpose financial statements of the County of Hawaii, State of Hawaii (County), as of and for the year ended June 30, 2001. We have also audited the County's compliance with requirements applicable to its major federal financial assistance programs. We submit herein our reports on compliance and on internal control over financial reporting and over federal awards, a schedule of expenditures of federal awards, and a schedule of findings and questioned costs. The audit objectives and scope of the financial audit, as defined in our contract with the County, are as follows: AiJI)IT OBJECTIVES 1. To provide a basis for an opinion on presentation of the general purpose financial statements of the County and all of its agencies, including the Department of Water Supply. 2. To ascertain whether or not expenditures and other disbursements have been made, and revenues, receipts and receivables to which the County is entitled or is responsible for having collected and accounted for in accordance with the laws, rules and regulations, and policies and procedures of the County, the State of Hawaii and the federal government (where applicable) have been satisfied. 3. To evaluate the accuracy, effectiveness and efficiency of the systems and procedures for financial accounting, internal and operational controls of the County and of operations for which the County is responsible. 4. To ascertain whether: (1) the funds appropriated to the agencies have been expended in accordance with the purposes for which they were appropriated and in accordance with applicable laws, ordinances and regulations; (2) adequate accounting systems and procedures have been established to safeguard the public funds and property; (3) accurate and reliable fiscal records have been maintained; and (4) there has been efficiency in operations. 5. To test, study, examine, evaluate, and report on the general purpose financial statements, internal accounting and other control systems, and other compliance requirements for federal financial assistance programs in accordance with the provisions of the Single Audit Act of 1984, the Single Audit Act Amendments of 1996, as may be amended, and U.S. Office of Management and Budget (OMB) Circular A-133. 6. To recommend improvements to the internal control, reporting and accounting systems, and procedures of the County's agencies as appropriate. 1 KPMG ~ l P KPMG LAP, a U S. lin ilea hab I ty partnership, is _ a m2m0er of KPMG Intemanonal, a Swiss association SCOPE OF' AUDIT I. We performed an audit of the general purpose financial statements as of and for the year ended June 30, 2001 in accordance with auditing standards generally accepted in the United States of America, as adopted by the American Institute of Certified Public Accountants, and the standards applicable to governmental financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 2. As part of the audit of the County's general purpose financial statements, we performed tests of the County's compliance with certain provisions of laws, regulations, contracts, and grants. We also evaluated the County's internal control over financial reporting, which included an assessment of the extent to which the internal control structure can be relied upon to ensure accurate information, to ensure compliance with laws and regulations, to provide for efficient and effective operations, and to ensure integrity in the County's receipt and expenditure of public funds. 3. We performed an audit of the County's federal financial assistance programs for the year ended June 30, 2001 in accordance with auditing standards generally accepted in the United States of America, as adopted by the American Institute of Certified Public Accountants, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, certain provisions of OMB Circular A-133 and the applicable sections described in the OMB's Circular A-133 Compliance Supplement. ORGANIZATION OF REPORT Our report is organized into three sections as follows: 1. Section I, entitled "Introduction," describes the objectives and scope of our financial audit and the organization and contents of this report. 2. Section II, entitled "Compliance and Internal Control Over Financial Reporting," contains our report on the County's compliance and internal control over financial reporting based upon our audit of the County's general purpose financial statements. 3. Section III, entitled "Compliance and Internal Control Over Federal Awards," contains our report on the County's compliance and internal control over federal awards in accordance with OMB Circular A-133, a schedule of expenditures of federal awards and a schedule of findings and questioned costs. Our report on the general purpose financial statements of the County as of and for the year ended June 30, 2001 is included under a separate cover. A separate letter containing our observations regarding the County's system of internal control dated October 26, 2001 has also been issued to the County Council. We would like to take this opportunity to express our appreciation to the personnel of the County of Hawaii for the cooperation and assistance extended to us during our audit. We will be pleased to discuss any questions that you or your associates may have regarding our recommendations. Very truly yours, ~ 2 ~~C7°1®N l1 ~ ~~MPL1r4NC~ a4N~ IN~~i~N~4L ~®Nfi6~4®~ t~V~~ ~INANCIA~ ~'~P~1~T1NG P. O. Box 4150 Honolulu, HI 96812-4150 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Goverrareaent Auditing Standards To the Members of the County Council of Hawaii County of Hawaii Hilo, Hawaii: We have audited the general purpose financial statements of the County of Hawaii, State of Hawaii (County), as of and for the year ended June 30, 2001, and have issued our report thereon dated October 26, 2001. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the County's general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the County's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on internal control over financial reporting. However, we noted a certain matter involving internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of internal control over financial reporting that, in our judgment, could adversely affect the County's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial 3 KPMG L_P KPMG L_P a U 5 lim iFd liahili-y ~~.i~tn~~ish N, u ~ a member of KPMG Inte~na~ cnal, n Sws=_ a~sociai~o~ statements. The reportable condition is described in the accompanying schedule of #indings and questioned costs as item O 1-01. A material weakness is a condition in which the design or operation of one or more internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of internal control over financial reporting would not necessarily disclose all matters in internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe that the reportable condition described above is not a material weakness. We also noted other matters involving internal control over financial reporting, which we have reported to management of the County in a separate letter dated October 26, 2001. This report is intended solely for the information and use of the County Administration, the County Council, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. ~ October 26, 2001 4 SECTI®N 111 ~ C®N/P~I~AN~~ AN® IN`T~~Ne4L C®NTR~I~ ®ti/~~ ~~~1~~ ~VVAI~~S P. 0. Box 4150 Honolulu, HI 96812-4150 Report on Co;?npliance with Requirements Applicable to Each Major Progra>zn and on Internal Control Over Compliance in Accordance with OMB Circular A-133 To the Members of the County Council of Hawaii County of Hawaii Hilo, Hawaii: Compliance We have audited the compliance of the County of Hawaii, State of Hawaii (County), with the types of compliance requirements described in the U.S. Oj~ce of Management and Budget (OMB) CircularA-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2001. The County's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the County's management. Our responsibility is to express an opinion on the County's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Proftt Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the County's compliance with those requirements and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the County's compliance with those requirements. As described in item 01-01 in the accompanying schedule of findings and questioned costs, the County did not comply with requirements regarding subrecipient monitoring that are applicable to its Workforce Investment Act program. Compliance with such requirement is necessary, in our opinion, for the County to comply with requirements applicable to that program. In our opinion, except for the noncompliance described in the preceding paragraph, the County complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2001. The results of our auditing procedures also disclosed an instance of noncompliance with those requirements, which is required to be reported in accordance 5 KPMG LLP KPMG ALP, a U 5 lim~ted liabilry panneiship, i, a member o~ KPMG Inte~nat onal, a SvnSS a5s<x~atiOn with OMB Circular A-133 and which is described in the accompanying schedule of findings and questioned costs as item 01-03. Internal Control Over Compliance The management of the County is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the County's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. We noted a certain matter involving internal control over compliance and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of internal control over compliance that, in our judgment, could adversely affect the County's ability to administer a major federal program in accordance with the applicable requirements of laws, regulations, contracts, and grants. Reportable conditions are described in the accompanying schedule of findings and questioned costs as items 01-01 and 01-02. A material weakness is a condition in which the ,design or operation of one or more internal control components does not reduce to a relatively low level the risk that noncompliance with the applicable requirements of laws, regulations, contracts, and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of internal control over compliance would not necessarily disclose all matters in internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, of the reportable conditions described above, we consider item 01-01 to be a material weakness. Schedule of Expenditures of Federal Amvards We have audited the general purpose financial statements of the County as of and for the year ended June 30, 2001, and have issued our report thereon dated October 26, 2001. Our audit was performed for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. This report is intended solely for the information and use of the County Administration, the County Council, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. ~ October 26, 2001 6 5 c 0 U a"i i, 00 ~7 M V1 00 OC O~ ei' O ~O v1 N v1 O~ f~ 00 M Vl Vl 1~ M ~ 00 ~ C! 'O 00 M N 00 ~ N O l~ U O~ Vl O ~ ~N~ 00 T ~-+M N ~ Y! 6rd 69 O O I o o O O O O~ C O ~~pp = O O O O~ n v~ N 0 0 y ~ r.C ~ O~ O 00 vi O o0 ~O ~D vi 1~ D@ ~ vi 'cp 00 N OC~~•-•M ~e HY ..L` QQQQ i~ i ~ 0 0 0 0 0 0 Q N~ ~N O~ O~ ~O O c~ 3 ~ o 33 ~ o o M ~ v ~ g @,~ M ~ ~ ~ ~ o ~ ti J ~ .ti. ~ ~l ~ v o ~ ¢ o 0 o ~ CD ~ N'~.. 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' ~ V ~ ~ ~ r~~ o ' 4 ~ ~ [a~ ® Q ~ 00.. p p. O o ~ fl. p ~ ~ ~ ~ c., c oaf o B~~i ~ ~ ~ ~ o ~ ~ ~ ~ ~v ~ ~ z~~~~a, ~ ~ ~ ~ 4~ o' ~ ~ Q ~ ~ H _ y l~ ~Y V' M ~ 0~0 v:71 N O 't5 ~D O ~ N 6> y V~'1 M ~ N ~ ~ Es9 ~ ~ L R ~ C pp Op N "9 ~ ~ ~ ~ ~ V ~ ~ V'1 64 O O ~ ~ N ~ ~ 7 00 ~ ~ C ~ _ t, ~ ~ Q ~ :C a~ ~ ° 3~ ~ a o M ~ ti ® ~ ~ ~ ~Q ~ ~ ~z w a ~ 7 ~ w.~ M b c%~ v Q ro y r ~ ro cd ~ ~ 7 ~ Q J ~ ` ~ z ~ ~ ~ ~ ~ y w ~ ~ ° y N W R ~ ~ Q ~ ~ ~ y v C~S ~ ~ Q E. -d ~ L ~ ;y :G y 'Lf ce, ~bD ~ y ~M ~ ~ O ~ ~ y O ~ ~ ~ ~ 7 ~ C U ~ ~ v w 4. ~ ~j L N U y ~ ~ U ~ .r O ~ Q C n y c,e, ~ b A. QR~ C ~ X c0~~ G ~ d h m t~» U ~ y O O ~ O ~ c 6sa G1. ~ ~ ~ ~ ~ v V ~ COUNTY OF IIAWAI`I STATE OF IIAWAI`I Notes to Schedule of Expenditures of Federal Awards Year ended June 30, 2001 (1) )Basis of Presentation The accompanying schedule of expenditures of federal awards (schedule) includes the federal grant activity of the County of Hawaii, State of Hawaii (County). Such schedule is presented on the modified accrual basis of accounting, which is described in note 1 to the County's general purpose financial statements. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Not-Profrt Organizations. (2) Subrecipients Of the federal expenditures presented in this schedule, the County provided federal awards to subrecipients as follows: AYnOUIIt CFDA Provideal to Program Title Number Subrecipients Housing Preservation Grants 10.433 $ 113,002 Paauhau Water System 10.760 141,538 Economic Development -Technical Assistance 11.303 7,755 Community Development Block Grant/Small Cities Program 14.219 54,304 Emergency Shelter Grants Program 14.231 22,445 HOME Investment Partnership Program 14.239 1,246,786 Juvenile Accountability Incentive Block Grant 16.523 54,072 Title V -Delinquency Prevention Program 16.548 31,590 Crime Victim Assistance 16.575 155,344 Enforcing Underage Drinking Laws Program 16.727 1,000 Workforce Investment Act 17.255 2,737,477 Bicycle Education Program 20.600 67,847 Title III, Part B -Grants for Supportive Services and Senior Centers 93.044 257,551 17 (Continued) COUNTY OF IIAWAI`I STATE OF IIAWAI`I Notes to Schedule of Expenditures of Federal Awards Year ended June 30, 2001 (3) Workforce Investment Act The County transferred funds from the Job Training Partnership Act (JTPA) for the transition to and implementation of the Workforce Investment Act (WIA) program. Such funds were subject to similar terms and conditions as WIA program funds. The amounts expended under the WIA program relating to these transfers are as follows: JTPA Cluster: JTPA Title III - 17.246 $ 391,644 JTPA Title II - 17.250 80,207 Incentive grants 47,939 $ 519,790 Incentive grants were awarded to the State of Hawaii Department of Labor and Industrial Relations and passed through to the County in fiscal years 1998 and 1999 under the JTPA program based on past program performance. 18 COUNTY OF HAWAII STATE OF HAWAII Schedule of Findings and Questioned Costs Year ended June 30, 2001 (1) Summary of Auditors' Results (a) The type of report issued on the general purpose financial statements: Unqualified opinion (b) Reportable conditions in internal control were disclosed by the audit of the general purpose financial statements: Yes Material weaknesses: None noted (c) Noncompliance which is material to the general purpose financial statements: None noted (d) Reportable conditions in internal control over major programs: Yes Material weaknesses: Yes (e) The type of report issued on compliance for major programs: Qualified opinion (f) Any audit findings which are required to be reported under section. 510(a) of OMB Circular A-133: Yes (g) Major programs: Department of Housing and Urban Development: 14.219 -Community Development 161ock Grant/Small Cities Program Section 8 Cluster: 14.855 -Rental Voucher Program 14.857 Rental Certificate Program Department of Labor: 17.255 -Workforce Investment Act Department of Transportation: 20.509 --Formula Grants for Other Than Urbanized Areas Federal Emergency Management Agency: 83.544 -Public Assistance Grants (h) Dollar threshald used to distinguish between Type A and Type B programs: 3% of total federal ave~ards expended or $1,26b,961 (i) Auditee qualified as a low-risk auditee under Section .530 of OMB Circular A-133: Yes 19 (Continued) COUNTY OF IIAWAI`I STATE OF IIAWAI`I Schedule of Findings and Questioned Costs Year ended June 30, 2001 (2) Findings Relating to the General Purpose Financial Statements Reported in Accordance with Governa9aent Auditing Standards Department of Labor Passed through the State Department of Labor and Industrial Relations Worlforce Investment Act CFDA No. 17.255 Federal Award No. AA-10589.00-50 Finding 01-01 Subreci~ient Monitoring Condition: During our testwork on subrecipient monitoring, we noted that the County did not perform any procedures to monitor the program activities of one of its subrecipients, the Department of Labor and Industrial Relations, State of I--Iawai`i (Deparhnent). As fiscal year 2001 was the first year of the Workforce Investment Act (WIA) program's existence, the County did not have sufficient resources to operate the program on its own. Since the Department previously operated the Job Training Partnership Act (JTPA) program, the County contracted with the Department as a subrecipient. As a result, the Department was both a subrecipient of the County and a pass-through grantor of the federal funds. Reimbursement requests were remitted directly between two divisions within the Department, the division operating the program and the division responsible for receipt of the funds from the U.S. Department of Labor and disbursement to the subrecipients. The County received a monthly listing of the expenditures after each month, however, it did not perform any procedures to monitor the program activities of its subrecipient. We noted that the County did monitor the activities performed by other WIA program subrecipients. Costs were monitored by reviewing the request for reimbursement forms and related monthly expenditure registers for reasonableness and allowability. Additionally, the County also completed on-site inspections of participant files to determine whether documentation of eligibility requirements were met, reviewed financial and single audit reports, and followed up on any findings and questioned costs. Criteria: Recipients of WIA program funds must conduct regular oversight and monitoring of its subrecipients in order to determine whether or not there is compliance with provisions of the WIA and applicable laws and regulations and to provide technical assistance as necessary and appropriate. Effect: The County would not have detected any noncompliance with the WIA grant requirements and applicable laws and regulations. Cause: We were informed that the County did not have sufficient resources to properly monitor the subrecipient. Questioned Cost: $2,203,875 Recommendation: We recommend that the County perform subrecipient monitoring procedures to determine whether or not there is compliance with provisions of the WIA and applicable laws and regulations similar to those performed on its other subrecipients. 20 (Continued) COUNTY OF MAWAI`I STATE OF MAWAI`I Schedule of Findings and Questioned Costs Year ended June 30, 2001 (3) Findings and Questioned Costs Relating to Federal Avo~ards Department of Mousing and Urban Development Section 8 Cluster CFDA No. 14.855 and 14.857 Federal A`vard No. III08-V002 and MI08-E002 Finding 01-02 Tenant File Revieavs Condition: During our testwork on eligibility and allowable costs, we noted that for the period January 2001 through June 2001, supervisors did not review tenant files for new participants in the Section 8 program to ensure that the participant was eligible and that the housing assistance payment was calculated accurately. During this period, approximately 195 participants were newly enrolled into the Section 8 program. Criteria: The County's policy and procedures require supervisors to review tenant files, on a test basis, for new participants in the program to verify proper determination of eligibility and the housing assistance payment amount. Effect: As the control procedure was not operating as designed, the County's ability to detect ineligible new participants or errors in the calculation of the housing assistance payments during the period January 2001 through June 2001 was diminished. Cause: We were informed that monthly supervisory reviews were not performed due to increased workloads and a transition to a new program manager in December 2000. Questioned Cost: $0 Recommendation: We recommend that County supervisors perform reviews of tenant files for new participants in the Section 8 program as stipulated by County policies and procedures. 21 (Continued) COUNTY OF IIABVAI`I STATE OF IIAWAI`I Schedule of Findings and Questioned Costs Year ended June 30, 2001 Department of >Elousing and Urban Development Section 8 -Rental Certificate Program CFDA No. 14.857 Federal Amvard No. III08-E002 Findin~,,01-03 Reporting Condition: During our testwork on reporting, we noted that expenditures, amounting to $270,454, reported to the grantor on the Year-End Settlement Statement (Department of l-lousing and Urban Development Form 52861) exceeded the amount reported in the County's accounting records and schedule of expenditures of federal awards of $243,454 by $27,000. Criteria: Expenditures reported to the grantor should be supported by the receipient's accounting records. Effect: Expenditures reported to the grantor on the Year-End Settlement Statement was overstated by $27,000. Cause: The County's 2000 Year-End Settlement Statement was understated by $27,000 due to a transposition error. Consequently, the County included the $27,000 in the 2001 Year-End Settlement Statement. Questioned Cost: $27,000 Recorramendation: We recommend that the County review the information reported to the grantor prior to submission. 22 . .