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HomeMy WebLinkAboutREP FC 275 07/22/2004 2002-2004REPORT OF THE COMMITTEE ON FINANCE Dn'T`F.: July 22, ?004 PLACE: Council Chambers 'LIME: 10:10 a.m. Council Chair and Members Hawaii County Council I lilo_ Hawaii 96720 Re: Comm. No. 654 Your Committee on Finance, to which was referred Communication No. 654, reports as follows: Communication No. 654, from Legislative Auditor Constance Kiriu, dated June 15, 2004, transmits the post-audit Financial Aadil Repar! ~~f /Ire ('aunty of Ffam~ur `i. for the Fiecal Year Ended.lune 20. 2003, and Ma~ra~,~emenl Lent r ciuircl R9orch !9, ?00~, as prepared by KPMG LLP. KPMG, LLP has issued an unqualified opinion, which stated that the Comprehensive Annual Financial Report hvas presented fairly in all material. 'T'his year's MunuKemcni Lefler contains tindings and recommendations related to: Unauthorized User Access • Proper account management is the foundation for strong system security. W ithout a formal process for reviewing the appropriateness of user account access by department heads, the County is exposed to an increased risk of account misuse by active and terminated employees. KPMG, I,LP has noted that the listing of users authorized to access the County's various information systems is not reviewed for appropriateness and update by County Departments Heads. Maintaining an updated list of authorized users lacilitates the County's efforts to ensure that terminated and/or unauthorized users are denied access to its information databases. • Additionally during KMPG I,LP's review of the County's real property tax Windows network, the accomrt lockout feature was not utilized. KMPG, LLP recommends that department head periodically review the listing of users authorized to access the County's various information systems. • Data Systems Department concurs with the recommendations made by KPMQ, LI,P and has complied with the recommendations. • Collection of Receivables (Sewer and Landfill) • 'T'imely collection of wastewater and solid waste receivables continues to be a problem for the Department of Environmental Management KPMG, LLP recognizes that an ordinance was passed requiring residential haulers to be current on their accounts prior to claiming a residential hauler's tax credit and contracts for trash removal services required that all contractors pay past due tipping fees before payments would be made to the contractor. Further, the Department of Environmental Management is continuing to work with the Department of Finance to develop comprehensive policies and procedures for collecting County receivables. • Despite the improvements made in the current fiscal year, sewer and landfill receivables outstanding for more than 60 days still account for a significant portion of the respective receivable balance. KPMG. LI,P recommends that the Department of Environmental Management continue to work with the Department of Finance to develop comprehensive policies and procedures Cor collecting County receivahlcs. l'he Department of Environmental Management concurs with the recommendations made by KPMG. LLP and will continue to work with the Department of Finance to develop comprehensive policies and procedures for collecting County receivables. To aid in the collection of sewer fees, the Department is working with members of the County Council and Corporation Counsel to draft an ordinance which would make the property owner responsible for the sewer bills. FC RF,PORT NU. 275 Status of prior year findings and recommendations related to: • General Fund Financial Situation • 'Fhe County administration and County Council have continued to work together to improve the County's financial position. The combination of increased tax revenues and other fees, and maintaining General Fund expenses consistent with the previous fiscal year have resulted in a favorable outcome Tor the year ended June 30, 2003. Thus, this comment is no longer applicable. • Solid Waste Fund Deficiency • The Department of Environmental Management performed an evaluation ofthe General Fund subsidies to the Solid Waste Fund and proposed landfill tipping fee increases, which were passed by the County Council effective over the nest five years. Therefore, this comment is no longer applicable. • Software Implementation • The Data Systems Department has assigned the Data Systems Manager to he the project manager of the new Financial Management Software (FRESH). To date, the project manager has worked closely with the FRESH committee to define a timetable for implementation and assess the adequacy of the resources allocated to die project Therefore, this comment is no longer applicable. • Inventories • The Department of Public Works and the Police Department has plans to implement periodic inventory count procedures during the fiscal year ending June 30, 2004. Additionally, the Police Department has its current fiscal year inventory count performed by an individual who does not have access to the storeroom. Therefore, this comment is no longer applicable. • Abandoned Vehicles • KPMG LLP noted that the number of abandoned vehicles and related vehicle disposal costs increased over the past three fiscal years. KPMG LLP recommended that Nte County evaluate the amount of penalties imposed on residents who were caught abandoning their vehicles in unauthorized locations. The Department of Environmental Management has worked with its abandoned vehicle task force to improve the process for dealing with abandoned vehicles and clarified the distinction behveen abandoned and derelict vehicles for the County's police officers. This savings of time and money coupled with an increase in the vehicle registration fee shows progress. Therefore, this comment is no longer applicable. Pursuant to Article X, Section 10-13, Hawaii County Charter, the county council shall provide at least once every year for an independent audit of the accounts and evidences of other financial transactions of die county and of every county agency and executive agency. The audit shall be made by a certified public accountant or firm of certified public accountants designated by the council. At today's meeting, KPMG Auditors Ralph Kanetoku and Grant Nakagawa reviewed the scope of the audit services, the results of audit, required communications, the management letter comments, and the compliance and internal controls over federal awards. Your Committee on Finance recommends acceptance of the post-audit FinanciulAudu Repol•l gfd~e Cnzrnli' of Nuu~ui'i for the Fr.rcul Year Ended June 30. 2003, as prepared by KPMG LLP. smc wrs vor;a ~x,r, rs CHUNG X SA F'ARIK X ARAKAKI X ELARIONOFF X HOLSCHUH X JACORSON X REYNOLDS X TI~LANG X TYLER X Respect Fully submitted ITTEE ON FINANCf? S.Y. C~NG, CHAIR FC REP RT NU. ~ ADOPTED: Al1i~