HomeMy WebLinkAboutRES 040 Draft 01 1996-1998
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COUNTY OF HAWAII
STATE OF HAWAII
RESOLUTION NO. 4 0 97
RESOLUTION APPROVING AN AMENDMENT TO THE COUNTY'S EXTERNAL
AUDIT CONTRACT NO. 94207 WITH DELOITTE & TOUCHE LLP
WHEREAS, the County Council adopted Resolution No. 156-93, which authorized the
Council Chairperson to perform all tasks necessary to enter into a contract for an external audit
as required by Section 10-13 of the Hawaii County Charter for a period extending over four
fiscal years; and
WHEREAS, the County Council adopted Resolution No. 206-94 further stating that sufficient
funds be budgeted in future fiscal years to cover the obligation of the County under the
contract agreement; and
WHEREAS, in accordance with these Resolutions, the County of Hawaii has entered into
Contract No. 94207 with Deloitte & Touche LLP to conduct the annual external audit of the
financial records of the County, including those of the Department of Water Supply, for the
fiscal years ended June 30, 1994, through June 30, 1997; and
WHEREAS, Section 8 of the Contract provides for amendments to the Contract if the scope of
the work to be done must be extended beyond that covered in the original contract; and
WHEREAS, on November 27, 1996, the U.S. Environmental Protection Agency (EPA) issued
final rules on the financial assurance mechanisms available to local government owners and
operators of municipal solid waste landfill facilities; and
WHEREAS, under these rules, the County will be able to self-insure for the liability for
closure, post-closure and remedial action for the Hilo and Kealakehe landfills; and
WHEREAS, to self-insure, an annual special report is necessary to comply with the EPA
requirements (see Exhibit A); and
WHEREAS, the cost of this special report will be $1,400 for the fiscal year ended
June 30, 1996, and $800 for the fiscal year ended June 30, 1997, and would be paid by the
Department of Public Works (see Exhibit B); and
WHEREAS, in addition, during the audit of the Department of Water Supply's financial
records as of June 30, 1996, additional services were necessary to complete the examination on
a timely basis (see Exhibit C); and
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WHEREAS, the cost of this additional work amounted to $4,500, which would be paid by the
Department of Water Supply; and
WHEREAS, the Council finds it necessary to expand the Contract's scope of work (1) to
provide financial assurances to the EP A for landfill closures and (2) to provide services to the
Department of Water Supply during the external audit.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE COUNTY OF
HAWAII that it approves an extended scope of work in Contract No. 94207 with Deloitte &
Touche LLP to encompass the additional work as delineated by the attached Exhibits A
through C to be paid appropriately by the Department of Public Works and the Department of
Water Supply.
BE IT FURTHER RESOLVED that the Clerk of the County of Hawaii transmit a copy of this
resolution to the Director of Finance, the Chief Engineer of the Department of Public Works,
the Water Manager of the Department of Water Supply and the Legislative Auditor.
Dated at Hilo, Hawaii, this
7th
INTRODUCED BY:
day of March
, 1997.
COUNCIL MEMBER, COUN Y OF HAWAII
COUNTY COUNCIL
County of Hawaii
_ Hilo, Hawaii
I hereby certify that the foregoing RESOLUTION was by the
vote indicated to the right bereof adopted by tbe COUNCIL of the
County of Hawaii on March 7. 1997
ATTEST:
ROLL CALL VOTE
AYES NOES ADS EX
ARAKAKI X
CHUNG X
LEITHEAD- TODD X
RAY X
REYNOLDS X
SANTANGELO X
SMITH X
TYLER X
YAGONG X
8 0 1 0
Reference C-139/FC-46
CHAIRMAN & PRESIDING OmCER RESOLUTION NO.
4.D
97
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Stephen K. Y...sh~ro
Mayor
Harry A. Ta~ahashi
Director
QIuunfl! of ~ltfultii
DEPARTMENT OF FINANCE
25 Aupuni Street. Room 118 . Hilo. Hawaii 98720-Q252
(808) 981-823q . Fax (808) 981-82q8
January 8, 1997
Ms. Deanna Bauman, Manager
Deloitte & Touche LLP
345 Kekuanaoa Street, Suite 30
HHo, Hawaii 96720
Re: Auditor's Opinion on Chief Financial Officer's Letter
Financial Assurance for Municipal Solid Waste LandfIlls
I spoke to the person at the Environmental Protection Agency in Washington, D.C. who wrote
the final rule on the financial assurance mechanisms for closure, post-closure and corrective
action costs for municipal solid waste landfills. He assures me that the County of Hawaii does
qualify to use the bond rating guidelines to satisfy the local government fmancial test as
established in the final rule. Therefore, we do not have to use the two ratios I mentioned earlier.
A new draft of our chief financial officer's letter is attached.
What Deloitte & Touche LLP has to say in its report is that it has reviewed our records, and:
1. All of our outstanding rated bonds are currently rated "A";
2. The audited financial statements are prepared on a GAAP basis and are audited annually
by external auditors;
3. The County of Hawaii has not operated at a deficit equal to five percent or more of
annual revenue in each of the past two fiscal years; and
4. The County of Hawaii has not received an adverse opinion, disclaimer of opinion, or
other qualified opinion on its June 30, 1996 financial statements.
Based on the above information and the information I supplied to you earlier, I would like a
proposal from Deloitte & Touche LLP stating what the cost will be for performing the required
review and preparing the necessary letter, which we need to receive before April 9, 1997. As
soon as I have the cost proposal, I will begin the process of amending the audit contract to
include this additional work.
Please call me if you have any questions. Thank you for your assistance.
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Dixie Kaetsu
Controller
Attachment
EXHIBIT A
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DRAFf
I am the chief financial officer of the County of Hawaii, 25 Aupuni Street, Hilo, Hawaii.
This letter is to demonstrate financial responsibility for closure, post-closure, and
corrective action costs related to the following municipal solid waste landfills (MSWLFs)
operated (or formerly operated) by the County of Hawaii:
Hilo Landfill - South Hilo, Hawaii
Kealakehe Landfill - North Kona, Hawaii
The total amount of costs to be assured as of June 30, 1996, is $13.465,000 for MSWLF
costs and $1,000,000 for underground storage tank costs, for a total of $14.465,000. The
maximum amount that the County of Hawaii can assure under applicable federal rules is
limited to 43% of total annual revenues, or $66,282.405 as of June 30, 1996. Details of
the cost estimates and the calculation of the maximum assurance amount are shown on
Schedule 1 attached to this letter.
I certify that the CountY of Hawaii has a current bond rating of "A" on all rated,
uninsured, outstanding general obligation bonds and meets the requirements of 40 CPR
Part 258, Section 258.70(t)(a)(i)(A).
As required by 40 CPR Part 258, Section 258.70(t)(I)(ii), I certify that the financial
statements of the County of Hawaii as of June 30, 1996, were prepared in conformity
with Generally Accepted Accounting Principles for governments, and that they have
been audited by Deloitte & Touche LLP, independent certified public accountants.
As required by 40 CPR Part 258, Section 258.70(t)(1)(iii), I certify that:
a) the County of Hawaii is not currently in default on any outstanding general
obligation bonds;
b) the County of Hawaii does not have any outstanding general obligation bonds
rated lower than Baa as issued by Moody's or BBB as issued by Standard and
Poor's;
c) the County of Hawaii has not operated at a deficit equal to five percent or more of
annual revenue in each of the past two fiscal years; and
d) the County of Hawaii has not received an adverse opinion, disclaimer of opinion,
or other qualified opinion from Deloitte & Touche LLP, independent certified
public accountants.
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I certify that the County of Hawaii has complied with the requirements of 40 CPR
Part 258, Section 258.70(t)(2), by confonning to the requirements of Government
Accounting Standards Board Statement 18 and including information on closure and
post-closure costs in the Comprehensive Annual Financial Report (CAFR) as of
June 30, 1996. Information on any corrective action taken in the future will be placed in
the operating record of the appropriate MSWLF facility until the next available CAFR is
prepared.
I certify that the County of Hawaii meets the requirements of 40 CFR Part 258,
Section 258.70(0(4), relating to the calculation of costs to be assured and the maximum
amount of assurance possible through this financial assurance mechanism. Details of the
calculations are shown on Schedule 1 attached to this letter.
Dated at Hilo, Hawaii,
Harry A. Takahashi
Director of Finance
Attachment: Schedule 1
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Sheet1
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Worksheet for Determination of Maximum Amount to be Assured
Using Financial Tests. and Details of Amounts to be Assured
From 6/30/96 CAFR
Total revenues (from combined statement of revenues, expenditures and changes
in fund balance):
Revenues
General $ 135,909,270
Special Revenue 19,625,440
Debt Service 935.999
Total $ 156.470.709
43% of Revenues: $ 67,282,405
UST Assurance 1 ,000,000
S 66,282,405
Detail of Amounts to be Assured:
Hilo Landfill $ 12,575,000
Kealakehe Landfill 890,000
Total to be assured S 13,465,000
Maximum amount that can be assured
Per year already assured
Available to assure MSWLF closure. post-closure. and
corrective action costs.
See Note 9 to General Purpose Financial Statements
Schedule 1
ASSURE.XLS
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Deloitte &
Touche LLP
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SUite 1200 Telephone (808) 543-0700
1132 Bishop Street Facsimile: (808) 526-0225'
Honolulu, HawaII 96813-2870
January 31, 1997
Ms. Dixie Kaetsu
Controller
County of Hawaii
25 Aupuni Street
Hilo, Hawaii 96720
Dear Dixie:
Thank you for the opportunity to propose on the required agreed upon procedures work relating
to the information supplied in the County's letter regarding its municipal solid waste landfills. We
understand that this review will be necessary for the fiscal years ended June 30, 1996 and 1997.
Accordingly we expect our fees to be $1,400 for the fiscal year ended June 30, 1996 and $800 for
the fiscal year ended June 30, 1997.
We appreciate this opportunity to serve the County of Hawaii. Please call me in Honolulu
(808-543-0716) or Deanna Bauman in Hilo (935-6614) with your questions.
Yours very truly,
DELOITTE & TOUCHE LLP
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John T. Marrack
Partner
Deloitte Touche
Tohmatsu
International
EXHIBIT B
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Deloitte &
Touche LLP
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SUite 1200
1132 Bishop Street
Honolulu. HawaII 96813-2870
Telephone. (808) 543-0700
Facsimile (808) 526-0225
January 31, 1997
Ms. Constance Kiriu
Legislative Auditor
County of Hawaii
25 Aupuni Street
Hilo, Hawaii 96720
Dear Connie:
We recently completed our audit of the County of Hawaii, including the Department of Water
Supply (DWS), for the year ended June 30, 1996. During the course of our work at DWS we
provided additional services outside the scope of our contract. These services required us to
spend additional time 87 hours. This time relates to consulting for inventory accounting,
recording of adjustments, allowance for doubtful receivables, fixed asset accounting and
contribution-in-aid documentation. Throughout the course of our work we were in contact with
DWS that this may result in additional billings, as this would involve their funds for future
payment. We worked with the Department of Water Supply to get their permission to bill for the
extra work.
We request $4,500 in additional billings to be paid by the Department of Water Supply. This
amount was calculated as 87 hours at $51.70 per hour (our discounted senior accountant rate per
our contract).
We appreciate the opportunity to serve the County of Hawaii. Please call me in Honolulu
(808-543-0716) or Deanna Bauman in Hilo (935-6614) if you should have any questions.
Yours very truly,
DELOITTE & TOUCHE LLP
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John T. Marrack
Partner
EXHIBIT C
Deloitte Touche
Tohmatsu
International