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HomeMy WebLinkAboutCOM 1038.004 2004-2006 CONSTANCE R. KIRIU Y or WILLIAM E. SMITH ( M County Clerk Deputy County Clerk County of Hawai `i Office of the County Clerk " 25 Aupuni Street Hilo, Hawaii 96720 Telephone: (808) 961-8255 Facsimile: (808) 961-8912 October 12, 2006 To: Mr. Stacy Higa, Chairman From: Lane H. Shibata, Audit Analyst Hawaii County Council Colleen Schrandt, Audit Analyst Legislative Auditor's Office This memo is in response to your request for comment by the Legislative Auditor's Office relating to references by the Administration and the Department of Environmental Management to the recent audit of DEM's Recycling and Diversion Grants Program as justification for additional administrative staff positions. We have reviewed the subject position descriptions and justifications as they relate to the audit findings and offer the following comments: Business Manager Position During testimony, Ms. Kaetsu stated, "The Business Manager is a civil service position. It is going to be there and provide the continuity of operations rather than having an appointee. " However, on the "Position Description Form," the civil service box is not marked, but, the permanent, full-time, and exempt boxes are checked. Item No. 2 of the "New Position Information Form" for the Business Manager's position states that in the LAO'S recent audit "numerous instances were found where potential County liability could have been decreased or eliminated by proper staffing levels to ensure adequate internal controls and contracting oversight." Nowhere in the audit does it state that DEM's lack of internal controls, potential County liability or any of the other audit findings are the direct result of insufficient staffing levels. e General Recommendation Number Three does state that the Department should "Re- evaluate the department's organizational structure, staffing and position descriptions, Comm. No. 10,41, q Ref. To. Preseoft* ' Ref, pate OCT 16 200 Hawaii County Is An Equal Opportunity Provider And Employer October 16, 2006 Page 2 determine program components and personnel necessary to carry out effective and efficient operations and implement the changes necessary to ensure that internal controls and staffing levels are sufficient to meet program demands o Develop "Process Maps" to aid in evaluating adequacy of staffing levels. o Review current staff competencies and expertise. o Implement internal training programs. General Finding Number Three of the audit does discuss numerous deficiencies in the areas of operations, procurement, regulatory compliance and program monitoring which potentially increase the County's exposure to liability. The recommendations do not, however, state that the addition of manpower will correct these deficiencies and, in fact, the broad managerial deficiencies and the departmental culture can only be addressed through commitment and action by department management. Ms. Kaetsu's testimony, in fact, acknowledges that this must be done at the Director level, "the Accountant IV and Personnel Specialist will be under the authority of the Business Manager making sure that they follow administrative policy as set by the Director". [emphasis added] To aid in the process of focusing on accountability, General Recommendation number three suggests that Department management: • Implement a formal process for regular, recurring managerial review of program and departmental accountability, effectiveness and efficiency. o Program related review of: • Contractor performance ¦ Financial performance, Budget vs. Actuals vs. Projected • Program effectiveness and efficiency in meeting performance measures • Regulatory compliance ¦ Procurement schedule o Personnel related review of: • Budget vs. actuals, overtime analysis and justifications • Feedback/process improvement • Training This internal control should be implemented by the Director and would be a first step in communicating a culture of accountability. At this time, the Legislative Auditor's Office is unaware of whether this recommendation has been implemented. The audit showed that DEM management's "risk tolerance" is extremely high, focusing on having the services/programs in place versus on accountability or efficiency. Arguably, this culture may have been initially unavoidable due to statutory mandates, and public demands based on ethical considerations, combined with the unique obstacles created by our geographic isolation. In the long term, however, accountability must be a priority. October 16, 2006 Page 3 While a Business Manager position could increase Departmental accountability by providing intra- and extra-departmental coordination, policy, procedural and reporting consistency and administrative monitoring, this can only be accomplished with complete commitment on the part of the Administration and DEM to change this "culture" and focus on the principles of accountability: • Effectiveness and efficiency of operations, safeguarding of public assets. • Reliability of financial reporting. • Compliance with applicable laws and regulations. Contracts Technician and Clerk III While documentation of DEM's analysis to support the need for these positions is not included here, it seems reasonable that these two positions be added. However, additional staffing without a clear, concise plan for improvement will only result in additional cost and not in improvement of accountability. It is not clear, from the documentation included for the (3) fore mentioned positions who will be ultimately responsible for ensuring that departmental contracts will be issued complete, compliant and timely. While the Business Manager position with the aid of the Contracts Technician and Clerk III may develop a system and process for timely initiation of the procurement, the ultimate control, and thus responsibility for content and timely completion remains that of the Division Heads, Deputy Director and Director. The positions requested are to address administrative monitoring deficiencies. How does DEM plan to address operational monitoring deficiencies? In light of the magnitude of the Accountant IV's current responsibilities and the need for focus on procurement issues, the auditor's would like to offer for DEM's consideration, the possibility that the Contracts Technician and Clerk III positions could report directly to the Business Manager providing more focus on the contracting tasks involved without putting an even greater burden on the Accountant IV. We thank you for the opportunity to comment on this matter, and hope that the Council, Administration and DEM will find our input to be helpful.