HomeMy WebLinkAboutCOM 0522.028 2000-2002
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471tainbow Drive
. _ I-lilo, Hawaii 96720-2013
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Telephone: (808)961-2681
;µax: (808) 935-9213
April 3, 2002 _ -
The Honorable Curtis Tvler _ ,
Hawaii County Council Office -
25 Aupuni Street
Nilo, Hawaii 96720
SUBJECT: I;IA~VAII COUNTY COUNCIL SPECIAL MEETING - 04/01/02
Dear Councilman Tyler:
i
Pursuant to your request at the Hawaii County Council Special meeting on April 1, 2002, the Hawaii
County Economic Opportunity Council (1 ~CEOC) is forwarding to you the Audit Report for fiscal year
ended September 30, 2000. The audit report for year ended September 30, 2001 is presently'veing
prepared by a contracted Certified Public Accountant and a copy will be available to you upon
completion. -
Also at the meeting, you inquired about the $44,62 ] increase in personnel cost in comparison to the
current and projected budget for FY 2002-2003. The growth in the aforementioned personnel cost
reflects a 5% pay increase.
As you know. the mission of HCEOC's Transportation Program is to provide specialized tran3portation
services to lo:v-income individuals, elderly, disabled and pre-school children. In order to obtain a
Commercial I'Jriver License, drivers are r;,quired to meet stringent health and safety licensing standards.
Furthermore, our drivers face a pay disparity among their peers from the private sectors, thus impossible
to compete, solicit and retain qualified drivers from the labor market. As of date, HCEOC employs a total
of 25 bus drivers for the County of Hawaii. The salaries of our drivers are notably conservative when
factoring in health care cost and basic living expenses. A breakdown of our driver's monthly salary is as
follows:
1 -driver employed as of 1211 1/73 earns $1.906.00
1 -driver employed as of 02/10/76 earns $1,823.00
] -driver employed as of 05/31/88 earns $1,666.00
3 -drivers have earnings ranging from $1,508.00 to $1,578.00
The remaining 19 drivers earn a monthly salary of $1,155.00 to $1,448.00. Please note that the total
monthly salary reported represents the monthly gross earnings and not indicative of the net pay.
Thank you for the opportunity to address your concerns and for the many years of continued support of
HCEOC Transportation Program.
Sincerely,
v%
Toshie Miyasaki File ;:'~o,
Fiscal Officer
Enclosure ref' To',,,,,,,
T~~f. D~ ~
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C~~~r~~~D ~U~LIC ~CCOUN'TAN~
An Accounting Corporation
.
I°iAlll/~ll COUNTY C®N®IdtliC ®PP®I~T'UN1TY ~®UNCIL
i~°IIL~, I~~da00e41i
Financial Statements and Supplementary Data
And Comments on Interne! Control and Compliance
Year ended September 30, 2000
(With Independent Auditor's Reports)
~
a
.
i~~WAli C~IIN°Tl( ~C~3N®NtIC ~PPt3i~1°~lNi~ C(3UhtCiL
Year ended September 30, 2000
~fabte of Contents
Pa es
Independent >~uditor's Report ~ Unqualified Opinion on Financial
Statements end Supplementary Schedule of F~cpenditures of
irederal Awards 1
Financial Statements:
Statements of Financial Position 2
Statements of Activities 3
Statements of Functional Expenses 4
Statement of Cash F{ows 5
Notes to Financial Statements g
Supplementary Data:
Schedule of Expenditures of Federal Awards 9
Schedule of Findings and questioned Costs 10
Report on Compliance and on Internal Control over Financial
Reporting used on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 11
Report on CompliancQ with Requirements Applicable to Each
Major Program and on Internal Control over Compliance in
Accordance with OMl3 Circular A-133 12
Prior Year Management Letter Comments Follow Up 14
~EI~TIFiEID I~UBLIC ACCOUNTANT
An Accounting Corporation
688 Kinoole Street, Suite 201 • ;<3ilo, c?awaii 96720 • Phone (808) 9693115 Fax (808) 969-?463
UNQUALIFIlrD OPINION ON FINANCIAL. STATEMENTS AND SUPPLEMENTARY SCHEDULE OF
EXPENDITURES OF FEDERAL AWARDS -NOT-FOR-PROFIT ORGANIZATION
Independent Auditor's Report
To the Board of Directors
I-9awaii County Economic Opportunity Council:
'~'Ve have audited the accompanying statement of financial position of Hawaii County Economic
Opportunity Council as of September 30, 2000, and the related statements of activities, functional
expenses, and cash flows for the year then ended. These financial statements are the responsibility of
Hawaii County Economic Opportunity Council's management. Our responsibility is to express ~n opinion
on these financial statements based on our audit. Information for the year ended September 3s, 1999, is
cresented for comparati~ee purposes only and was extracted from the financial statements for tha4 year,
on which we expressed an unqualified opin'son in our report dated September 15, 2000.
zNe conducted cur audit in accordance with generally accepted auditing standards and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain
seasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and the significant
~;stimates made by management, as well as evaluating the overall financial statement presentG#ion. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Hawaii County Economic Opportunity Council as of September 30, 200€3, and the
changes in its net assets and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards, we have also issued my report dated July 31, 2001
on my consideration of Hawaii County Economic Opportunity Council's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and
grants.
Our audit was performed for the purpose of forming an opinion on the basic financial statements of
I°lawaii County Economic Opportunity Council taken as a whole. The accompanying schedule of
expenditures of federal awards is presented for purposes of additional analysis as required by the U:S.
Office of Management and Sudget Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations, and is not a required part of the basic financial statements. Such information has been
:subjected to the- auditing proc~:dures applied in the audit of the basic financial statements and, in our
~apinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a
~,~shole.
July 31, 2001
I"II1~dlUA11 COUNTY ECONOMIC OPPORTUNITY COl1NClt~
Statements of Financial Position
September 30, 2000 and 1999
2000 1999
Assets
Current assets:
Cash $ 31,162 $ 183,901
Grant receivables from
governmental agencies 697,330 325,468
Other receivables 64,593 61,678
Prepaid expenses 17,582 30,415
Total current assets 810,667 601,462
Property and Equipment:
Vehicles 1,122,575 1,035,063
Furniture and Equipment 597,194 543,727
Building 77,800 77,800
Leasehold improvements 2,604,510 2,fi04,510
Land 35,000 35,000
4,437,079 4,296,100
Accumulated depreciation (1,294,665) (1,085,509)
Total property and equipment 3,142,414 3,210,591
Construction in progress 32,700
Security deposits 18,039 17,696
Total Assets 4,003,820 3,829,749
Liabilities and Net Assets
Current liabilities:
Accounts payable 255,052 147,246
Accred liabilities 268,947 266,864
Due to grantors 27,630
Notes payable to banks 1,669
Deferred revenue 56,024 86,960
Total current liabilities 580,023 530,369
Net assets
Unrestricted 3,423,797 3,299,380
Total Liabilities and Net Assets $ 4,003,820 $ 3,829,749
See accompanying notes to financial statements.
2
i-fAgl49e411 C~UN`TY ~C(3N®I~IlC ~PP~J~T'UNII°Y C®UNCIL
Statements of Activities
Year ended September 30, 2000
with comparative totals for the year ended September 30, 1999
2000 1999
Pub°€c Support and Revenues:
Public support:
Federal grants $ 4,803,243 $ 3,779,375
State grants 802,452 864,173
County grants 297,462 332,434
Foundations/donations 3,140 15,465
In-kind contributions 546,036 552,778
Total public support 6,452,333 5,544,225
Revenues:
Program income 599,569 504,662
Medicaid/ ~",edicare 188,292 173,940
Interest income 2,631 2,841
Refunds 61,067 65,482
Other income 46,221 59,445
Total revenues 897,780 806,370
Total public support and revenue 7,350,113 6,350,595
F_xpenses:
Program services 6,286,153 5,312,650
Supporting services 939,543 790,632
Iota! expenses 7,225,696 6,103,282
Change in net assets 124,417 247,313
Net assets, beginning of year 3,299,380 3,052,067
Net assets, end of year $ 3,423,797 $ 3,299,380
See accompanying notes to frnancia/ statements.
3
Hy4'1V~!!I COUNTY ECONOlIA6C OPPORTUNITY COUNCIL
S#atements of Functional Expenses
Year ended September 30, 2000
with comparative totals for the year ended September 30, 1999
Program Supporting Total
Services Services 2000 1999
Salaries and wages $ 2,983,075 $ 646,661 $ 3,629,736 $ 2,807,270
Fringe benefits 374,159 82,133 456,292 462,188
Payroll taxes 427,102 93,754 520,856 410,029
'~1laterials and supplies 808,133 16,500 824,633 661,432
Contractual services 107,715 40,000 147,715 137,840
In-kind expenses 546,036 546,036 552,778
Vehicle expenses 261,045 2,640 263,685 259,696
Travel 69,095 15,065 84,160 39,313
Conference and meetings 62,160 3,272 65,432 29,512
Telephone 55,413 6,157 61,570 51,124
Equipment rental
anrt maintenance 18,773 2,165 20,938 26,861
Insurance 59,681 6,631 66,312 61,302
Occupancy 178,711 16,711 195,422 182,717
Postage 5,536 1,215 6,751 7,566
Other 60,655 6,630 67,285 82,242
interest expense 9 9 924
Rehabiliation loans 59,709 59,709 124,941
Total expenses
before depreciation 6,076,998 939,543 7,016,541 5,897,735
Depreciation expense 209,155 209,155 205,547
Total expenses $ 6,286,153 $ 939,543 $ 7,225,696 $ 6,103,282
See accompanying notes to financial statements.
4
_
l~A1110~.11 ~C®N~IV93~ C3~P~Rl'l1NIT1( C®l1NCfl~
Statement of Cash Flows
Year ended September 30, 2000
Cash flows from operating activities: $ 124,417
Increase in net assets
,Adjustments to reconcile change in net assets to
net cash provided by operating activities:
Depreciation 209,155
Increase in receivables (374,777)
Decrease in prepaids and deposits 12,490
Increase in accounts payable and accrued liabilities 82,259
Decrease in deferred revenue (30,936)
Net cash provided by operating activities 22,608
Cash flows from financing activities:
Bank loan proceeds (1,669)
Loan repayments
Net cash used by financing activities (1,669)
Cash flows from investing activities: (32,700)
Construction in progress (140,978)
Purchases of property and equipment
Net cash used by investing activities (173,678)
Net decrease in cash (152,739)
Cash at beginning of year 183,301
Cash at end of year $ 31,152
Su elemental Disclosure of Cash Flow Information
l"here were no noncash financing or investing actovities for the year
:ended September 30, 2000.
See accompanying notes to financial statements.
5
HAWAII COUNTY ECONOMIC OPPORTUNITY COUNCIL
Notes to Financial Statements
September 30, 2000
Organization and Summary of Significant Accounting Policies
Organization
- The Hawaii County Economic Opportunity Council (HCEOC) was incorporated in the State of
Hawaii on May 27, 1965. HCEOC is a Community Action Agency that provides services for low-
income, elderly and handicapped individuals in Hawaii County. The operations of HCEOC are
funded primarily through grants and contracts from federal, state and county governmental
agencies. These grants and contracts comprise approximately 83 percent of HCEOC's total
support and revenue.
Financial Statement Presentation
The accompanying financial statements of HCEOC are presented in accordance ~:~ith the
standards of accounting and financial reporting prescribed for not-for-profit organizations. In
accordance with these standards, the accounting policies applicable to not-for-profit
organizations are used by HCEOC. HCEOC reports its financial position and activities according
to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted net
assets. A11 grants, and other support received during the year with performance restrictions
imposed by the donors are recognized as revenue in the period received when performance
requirements are satisfied. As of September 30, 2000, none of the net assets of HCEOC are
subject to donors imposed passag° of time restrictions and are therefore classified as
unrestricted net assets.
ProRerty and Equipment
Land and building consists of property contributed to I°ICEOC. The property has been recorded
at fair value based en the assessed value for real property tax purpose. Subsequent
improvements to the building that prolong its useful life have been added to the basis at cost.
Leasehold improvements include the cost of the human service complex that serves as the
"i°ICEOC main facility. (see note 4). Vehicles and equipment are stated at cost at the date of
acquisition or at fair market value at the time of donation. Major renewals and betterrr~ents are
included it the equipment fund whi4e repairs and maintenance that do not improve or extend the
lives of assets are charged to expense.
Depreciation on all property and equipment is calculated by on the straight-line basis over the
estimated useful lives of the respective assets.
Deferred Crant Revenue
The HCEOC received cash payments in advance of incurred expenses for certain programs
funded by governmental sources. These advance payments are reflected as deferred revenue
in the accompanying financial statements.
6
HAWAII COUNTY ECONOMIC OPPORTUNITY COUNCIL
Notes to Financial Statements, Continued
Contributions
Jn accordance with SFAS No. 116, contributions received are recorded as unrestricted,
temporarily restricted, or permanently restricted support, depending on the existence and/ or
nature of any donor restrictions. As of =eptember 30, 2000, HCEOC had no donor imposed
restricted or temporarily restricted contributions.
Income Taxes
HCEOC is classified as atax-exempt organization under Section 501 (c)(3) of the Internal
Revenue Code and is exempt from Federal and State income taxes.
Contributed Services
Contributed services do not meet the criteria set forth in SFAS No. 116 for recognition in the
financia! statements and, therefore have not been recorded. However, a number of volunteers
have donated their time to the Head Start program and an estimate of the value of these
donated hours are reported to the C3epartment of Human Services and are included in HCEOC's
20% matching fund requirement for federal Head Start funds.
Comparative Iinancial Information
The information shown for 1999 in the accompanying financial statements is included to provide
a basis for comparison with 2000 and represents summarized totals only.
Estimates
The preparat'son of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial Statements and the reported amounts of revenue and expenses during the reporting
peeiod. Actuaf results could differ from those estimates.
2~ Note Payable to Eanlc
HCEOC completed repayment on the balance of its unsecured promissory note with the E3ank of
Hawaii in November 1999. Interest expense for the year totaled $9, computed at 1.5 percent
over the band: s base rate. At September 30, 2000, HCEOC had no outstand'+ng loan balances
with the Bank of Hawaii.
Pension Plan
ter.
HCEOC has anon-contributory defined contribution pension plan covering most of the full time
personnel. Employee eligibility to participate is based on age and length of service
requirements. The annual contribution to the plan is based on 7 percent of employee
compensation. Pension expense was $160,724 for the year ended September 30, 2000.
7
F-IAWAII COUNTY ECONOMIC OPPORTUNITY COUNCIL
Notes to Financial Statements, Continued
Lease Obligations
HCEOC entered into a 55 year lease commitment with the Department of Land and Natural
Resources beginning June 24, 1994 for a portion of a parcel of land situated at Piihonua, South
Hilo, Hawaii, designated by Tax Map Key No. 2-3-32:1. The human services comwlex, was
constructed on this parcel in fiscal years 1995 and 1996 using State of Hawaii, Capital
Improvement project funding passed through to I-iCEOC. The lease calls for an annual rental
fee of $8,348 through June 23, 2014 at which time the fee will be renegotiated. HCEOC records
the leasehold facility on its books and depreciates the facility over the useful life of the building.
HCEOC has two agricultural lease commitments with the Department of Land and Natural
Resources. A direct lease of unencumbered State land, identified as TMK 2-5-06:1 is comprised
of approximately 59.143 acres. The lease expires in 2001 with a token lease payment of $1 over
the life of the lease. The second direct lease is comprised of approximately 400 acres, identified
as TMK ;3) 2-4-8-22. The lease term is for fifty-five years and expires in 2039. The fair market
value of these leases is not readily determinable.
HCEOC also rents space on a month-to-month basis at various sites county wide for use as
offices and program work centers. The monthly minimum lease obligations for these facilities
are $ 1,187.
`5~ Donated facilities
HCEOC used administrative offices and classroom facilities free of charge at several locations.
'The use of such facilities is recorded on the financial statements based on the estimated annual
rental vague of such facilities. The annual rent value for the twelve months ended September 30,
2000 is $546,036.
8
Isl~~llAall C®UN~'1( ltd®N~I~II~ ®~P~~T'UNITY C®UNCIL
Schedule of Expenditure of Federal Awards
For the Year Ended September 30, 2000
Federal
l"ederal Grantor /Pass-through Grantor /Program Title CFDA Grantors
Number Number Expenditures
Department of Health and Human Services
~tect Programs:
Head Start 93.600 09CH7023 $ 2,047,437
Urban 8~ mural Economic Development 93.570 90EE0346/01 108,168
Job Opportunities for Low Income 93.570 90E00073/01 49,538
Passed through State of Hawaii:
c;ffice of Community Services:
Community Services i:3lock Grant 93.569 OCS-POS-00-61 450,296
Law Income Home Energy Assistance Prog. 93.568 HS-99-LIHEAP-7460 18,156
Community Food ~ Nutrition 93.571 OCS-POS-0059 9,225
The Emergency Food Assistance Program 10.569 NIA 640
Passed through County of Hawaii:
C:#fice of Aging:
Nutrition Transportation 93.044 N/A 155,710
^raartment of Labor
Di€ect Programs:
Titie II -Welfare-To-Work 17.253 Y-7228-9-00-81-60 1,471,356
Pissed through State of Hawaii:
Department of I~.abor & Industrial FZelations:
Welfare-To-Work 17.253 NIA 153,476
~~oartment of Agriculture
=tossed through State of Hawaii:
Department of Education:
National School Lunch Program 10.555 2101-6 161,817
;D~aartment of Energy
Pissed through State of Hawaii:
Office of Community Services:
Weatherization Assistance Program
For Law Income Homeowners 81.042 OCS-POS-99-52 28,995
I~~gartment of Ho~asino ~ Urban Development
Passed through County of Hawaii
~Cffice of Housing & Community Development:
Housing Preservation Grant
for Low Income Persons 10.433 98024 50,396
HONES E~ehabilitation Loan Program 92.508 NlA 47,977
D-impartment of Transportation
Passed through State of Hawaii:
department of Transportation:
Federal Transportation Admin. Grant 20.507 HI-16-0025 47,770
- Passed through KEO
~CAPDA Dialog on Poverty 93.570 OCS-90EQ0017 2,286
Total expenditures of federal funds $ 4,803,243
9
HAWAII COUNTY ECONOMIC OPPORTUNITY COUNCIL
Schedule of Findings and Questioned Costs
For the Year Ended September 30, 2000
A. Summary of Audit Results
1. The auditor's report, issued July 31, 2001, expresses an unqualified opinion on the
financial statement of Hawaii County Economic Opportunity Council for the year ended
: September 30, 2000_
2. No material weaknesses were identified during the audit of the financiaf statements.
3. No insfa;~ces ofi noncompl'sancc material to the financial statements of Hawaii County
Economic Opportunity Counci! were dlsclased during the audit.
4. No material weaknesses were identified during the audit of the major financial award
programs.
5. 1'he auditor's report on compliance for the major federal award programs for Hawaii
County Economic Opportunity Counci! expresses art unqualified opinion.
6. There were no audit findings relative to the major federal award programs for Hawaii
County Economic Opportunity Council.
7. The three programs tested as major programs are as follows:
(1) T'he Head Start Program, CFDA No. 93.600, a direct contract with the U.S.
Departr:~ent of Health and Human Services;
(2) The Community Services Block Grant, CFDA No. 93.589, a U.S. Department of
Human Services grant passed through the State of Hawaii Office of Community Services;
and
{3) The Welfare-T'o-Work Program, CFDA No. 17.253, a cluster comprised of a direct
contract with the U.S. Department of Labor and an contract passed through the State of
Hawaii Department of Labor.
8. The threshold for distinguishing Type A and B programs was $300,000. HCEOC has
three type A programs. Under the risk based approach three programs were selected as
high risl~. There were no type B programs identified as high risk for inclusion as a major
program.
9. Hawaii County Economic Opportunity Council was determined to be a low-risk auditee.
Findings -Financial Statements Audit
NONE
C. Findings and Questioned Costs Major Federal Award Programs Audit
NONE
10
f>' ~ERTI~IED ~J~LIC ACCOUNTANT
'<'s.:>'''' .An Acc®unting Corporation
688 Kinaole Street, Suite 201 • g€ilo, ~iawaii 96720 • Phone (608) 9693115 Fax (808) 969-7463
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNM~NTAUDITING STANDARDS
To the )3oard of Directors
Nawaii County Economic Opportunity Council:
~f<' We have audited the financial statements of Hawaii County Economic Opportunity Council as of
and for the year ended September 30, 2000, and have issued our report thereon dated July 31,
2001. We conducted our audit in accordance with generally accepted auditing standards and the
>L standards applicable to financial aud'sts contained in Government Auditing Standards, issued by
the Comptroller General of the United States.
Comepliance
As part of obtaining reasonable assurance about whether Hawaii County Economic Opportunity
Council's 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 cou4d have a direct and material effect on the determination of financial statemrent
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 Re~ortinq
In planning and performing our audit, we considered Hawaii County Economic Opportunity
Council's internal control over financial reporting in order to determine our auditing procedures
for the purpose of expressing our opinion on the financial statements and not to provide
assurance on the internal control over financial reporting. Our consideration of the internal
control over financial reporting would not necessarily disclose all matters in the internal control
over financial ~
sporting that might be material weaknesses. A material weakness is a condition
in which the design or operation of one or more of the 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 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. We noted no
matters involving the interne! control over financial reporting and its operation that we consider
to be material weaknesses.
This report is intended for the information of the audit committee, management, and federal
awarding agencies and pass-through entities. However, this report is a matter of public record
and its distribution is not limited.
_
July 31, 2001
11
J~r.~~~. G®s~~~°~
C~~~~~D I~~.IC AccourrrAlv~r
A,n Accounting Corporatioa
>a>''
688 Kinoole Street, Suite 201 • ;r3ilo, Has~aii 46720 • Phone (808) 969.3115 Fax (808) 969.7463
'><>>'3,
' #EPORT ON COMPLIANCY WITH REQUIREMENTS APPLICABLE TO EACH MAJCR PROGRAM
f~f~iDON INTERNAR.~ CONTROL OVER COMPLIANCE_ IN ACCORANCE WITH OMB CIRCULAR A-133
To'•.he Board of Directors
Ma°N~aii County Economic Opportunity Council:
f,,','
'`on-,gtiance
;rsr~ have audited the compliance of Hawaii County Economic Opportunity Council with the types of
nom hence re uirernents described in the U. S. Office of Management and Budget (OMB) Circular A-133
p~ q
- =compliance Supplement that are applicable to each of its major federal programs for the year ended
~ September 30, 2000. Hawaii County Economic Opportunity Council's major federal programs are
. ides:#ified in the summary of auditor's results section of the accompanying schedule of findan~ls and
~~~:stioned costs. Compliance +~rith the requirements of laws, regulations, contracts, and grants
> : %~picable to each of its major federal programs is the responsibility of Hawaii County Economic
!f uaportunity Council's management. Our responsibility is to express an opinion on Hawaii County
i:4orromic Opportunity Council's compliance based on our audit.
'Y >Jyr. conducted our audit of compliance in accordance with general accepted auditing standards; the
st^:~dards applicable to financial audits contained in Government Auditing Standards, issued by the
;.e;~ptroller General of the United States; and OMB Circular A-133, Audits of States, Local
~o+iarnments, and Non-Profit Organizations. `Those standards and OMB Circular A-133 require that we
piar3 and perform the audit to obtain reasonable assurance about whether noncompliance with the types
;f bompGance requirements referred to above that could have a direct and material effect on a major
'edaral program occurred. An audit includes examining, on a test basis, evidence about Hawaii County
~bonomic Opportunity Council's compliance with those requirements and performing such other
} ^rccedures, as we considered necessary in the circumstances. We believe that our audit provides a
&asonable basis for our opinion. Our audit does not provide a legal determination of Hawaii County
=conomic Opportunity Council's compliance wit:. those requirements.
!n our opinion, Hawaii County Economic Opportunity Council complied, in all material respects, ~~ith the
~~';~irements referred to above that are applicable to each of its major federal programs for the year
~w:~ded September 30, 2000.
'^`ernal Control Over Compliance
j ~ ~ < management of Hawaii County Economic Opportunity Council is responsible for establishing and
r^xintaining effective internal control over compliance with the requirements of laws, regulations,
ur^tracts, and grants applicable to federal programs. In planning and performing our audit, we
c~;nsidered Hawaii County Economic Opportunity Council's internal control over compliance with
. requirements that could have a direct and material effect on a major federal program in order to
:..'ermine our auditing procedures for the purpose of expressing our opinion on compliance and to test
M„,, report on the internal control over compliance in accordance with OMB Circular A-133.
;;f..;, ,~.4~consideration of the interne! control over compliance would not necessarily disclose all matters in the
!f: ^tcrnal control that might be material weaknesses. A material weakness is a condition in whsch the
~ resign or operation of one or more of the internal control components does not reduce to a re(atiately low
i~+~~l the risk that noncompliance with applicable requirements of laws, regulations, contracts, ant grants
~^at would be material in relation to a major federal program being audited may occur and not be
t~._
12
REPORT ON COMPLIANCE WITI-I REQUIREMENTS APPLICABLE TO EACt~ MAJOR PROGRAM
ARC ON INTERNAL CONTROL OVER COMPLIANCE IN ACCOR®ANCE WITH OMB CIRCULAR A-
133
(Continued)
?31>
detected within a timely period by employees in the normal course of performing their assigned
'f'`' functions. We noted no matters involving the internal control over compliance and its operation we
a:>
consider to be material weaknesses.
This report is intended for the information of the audit committee, management, and federal awarding
agencies and pass-through entities. ~iowever, this report is a matter of public record and its distrsbution
;~<.::<
is ^ot limited.
July 31, 2001
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13
J~~r~~~~ L. Goss~~~
~~R'I`IFIED ~LTlBLIC ~,000UN'ICANT`
An Accounting Corporation
.
688 Kix:oole Street, Suite 201 • 1-illo, ilawaii 96720 • Phone (808) 969.3115 Fax (808) 969-7463
Prior Year Management Letter Comments
A Follow Up
August 31, 2001
To The Board of Directors
Hawaii County Economic Opportunity Council
In planning and performing our audit of the financial statements of Hawaii County Economic
Opportunity Council for the year ended September 30, 2000, we considered the Organization's
internal controls in order to determine my auditing procedures for the purposes of expressing an
opinion on the financial statements and not to provide assurance on internal control.
As part of our audit, we reviewed the status of the prior year management letter comments, dated
September 15, 2000, for the fiscal year ended September 30, 1999. We are reporting on the
status of those recommendations through this communication. This letter does not affect our
~ report dated July 31, 2001 on the financial statements of Hawaii County Economic Opportunity
Council.
We have already discussed this letter with the Executive Director and Fiscal Officer, and we will
be pleased to discuss these comments in further detail at your convenience, or the assist you in
implementing the recommendations. Our comments are summarized as follows:
General Excise Tax
Condition: Whi!e testing transactions related to the gift shop and open market operations during
our audit for the year ended September 30, 1999, we noted that HCEOC is not paying state
general excise tax on these sales. Although various program income generated through the
' ro ram have been exem ted from the GET throw h a letter rulin a G-6 re west for
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determination `:ad not been submitted for items being sold through the gift shop and open market.
Recommended action: HCEOC needs to prepare and submit a State of Hawaii form G-6 to the
Department of Taxation requesting a letter determination for exemption of the general excise tax
with respect to the gift shop and open market sales.
Current status: HCEOC has submitted a State of Hawaii form G-6 to the Department of Taxation
requesting a letter determination for exemption of the general excise tax with respect to these
sales. A letter ruling from the Department of Taxation is pending.
Due Date of Annual Audit Report
The annual audit reports need to be submitted nine months after the close of the fiscal year in
`>l~~'''' accordance with OIUI~ Circular A-133. The small size of the fiscal office staff, coupled with the
additional reporting requirements for the federal Welfare-To-Work project, prevented the audit
from being initiated in a timely manner. T>~e audit agreement called for initiation of the annual
audit in November 1999 in order to deliver the audit reports in a timely manner. HCEOC was not
' able to prepare agreed upon schedules for the auditors until January and February 2000.
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recommended action: The Organization needs to hire and train additional personnel for the
fiscal office operations. This would help to ensure that work is completed in a timely manner. It
would also provide for improved segregation of functions and allow for cross training with respect
to various functions.
Status: Additional fiscal office personnel were hired subsequent to this recommendation and
various funeticns among staff have been reassigned. However, this action did not occur early
enough in the year to enable the staff to complete all auditor requested schedules in November
2000 for the cur-rent audit year. The additiona! fiscal staff were in training and stretched to the
limit in the daily processing of accounting data. Abetter result is anticipated for the closing of
fiscal year ending September 30, 2001. It may necessitate that the auditors assist in preparing
some of the schedules previously prepared by FiC~OC fiscal staff and this will likely result in an
increase in audit charges. E3ut the necessity of an extension for the report deadline can be
prevented.
We want to thank the fiscal office staff and other operational staff that provided assistance to us
during the audit process.
Sincerely,
.lennifer L. Gossert
t.
s~`'
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