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Home My WebLink AboutAnnual Audit Plan FY 2020-2021Aaron S. Y. Chung Bonnie S. Nims, CGAP t�K�.OF: 14 Council Chair �o��:: w9, Legislative Auditor Hawai `i County Council Business Address "TF'oc'nA�P 120 Pauahl St. Suite 309 kLjunt of'Fabiat"t Hilo, Hawai i 96720 OFFICE OF THE LEGISLATIVE AUDITOR 25 Aupuni Street Hilo, Hawaii 96720 * (808) 961-8386 * Fax (808) 961-8905 website: h9p:11hawaiicount gov e-mail: publiclao&hawaiicounU.gov June 30, 2020 Aaron S. Y. Chung, Council Chair Members of the Hawaii County Council Hawaii County Council 25 Aupuni Street Hilo, Hawaii 96720 Dear Chair Chung and Council Members, In accordance with Hawaii County Charter Section 3-18(d)(2), attached is the Office of the Legislative Auditor's Fiscal Year 2020-2021 annual audit plan. This provision requires our Office to transmit an annual audit plan to the Hawaii County Council and the Mayor. The purpose of the audit plan is to identify particular agencies, departments, funds, programs, or other matters we have scheduled for audit in the fiscal year. Our annual audit plan includes three performance audits, three follow-up audits, and coordination of the financial statement and federal single audit of the County of Hawaii with a contracted CPA firm. In addition, we will consider County -wide surprise cash counts and ongoing monitoring of County -issued purchasing cards and travel expenditures. Our audit plan facilitates an efficient allocation of limited audit resources on a risk -basis, provides a flexible mechanism for managing competing audit needs, elimates the potential overlapping of audits with other audit organizations, and provides a sound foundation for obtaining sufficient budgetary funds required to execute our mission. The Office of the Legislative Auditor is committed to maintaining a collaborative partnership with the County Council and the Mayor's Office. Furthermore, we would like to acknowledge the professionalism and coorporation extended to our staff by County agencies and departments in the past and we look forward to the upcoming year of audit coverage and services to the County of Hawaii. Hawai `i County is an Equal Opportunity Provider and Employer Respectfully, Bonnie Nims, CGAP Legislative Auditor cc: Harry Kim, Mayor Roy Takemoto, Managing Director Jon Henricks, County Clerk Hawai `i County is an Equal Opportunity Provider and Employer OPL C JL. Fisca/ leear Zara-�a OF * ■ A b N:7 lk or A T - Amp 4p 04, dp 1p OWN J�.- r hrA *A y 'F IF A : 40p- r 42 a IL� �~-4=� - t}�� f Irek/e elf I O"fents Introduction Accomplishments How do we select our audits? Government Auditing Standards What risk factors do we consider? Planned Audits Contact Information /Offedisfetio#7 It is our mission to serve the County Council and citizens of Hawaii County by promoting accountability, fiscal integrity, and openness in local government. Through performance and financial audits of Countv agencies and programs, J V we examine the use of public I am pleased to present the Office of the Legislative Auditor's annual audit plan for fiscal year 2020-2021. The purpose of the audit plan is to identify particular County agencies, departments, funds, programs, or other matters we have scheduled for audit in the fiscal year. Our annual audit plan includes funds, evaluate operations and activities, and three performance audits and three follow-up audits. provide findings and recommendations to We also coordinate the financial statement and elected officials and citizens in an objective manner. Our work is intended to assist County government and its management of public resources, delivery of public services, and stewardship of public trust. federal single audit of the County of Hawaii with a contracted CPA firm. In addition, we may also consider County -wide surprise cash counts and ongoing monitoring of Count y -issued purchasing cards and travel expenditures. This audit plan facilitates an efficient allocation of iimitea auait resources on a risk -basis; provides a flexible mechanism for managing competing audit needs; eliminates the potential overlapping of audits with other audit organizations, and provides a sound foundation for obtaining sufficient budgetary funds required to execute our mission. Respectfully, Ac"IAA,cl nov�, Bonnie Nims, CGAP Legislative Auditor Our work is intended to assist County government and its management of public resources, delivery of public services, and stewardship of public trust,," FY 2020-2021 Annual Audit Plan 01 fecon p/is/+inenfs Performance Audits Since 2014, the Office of the Legislative Auditor has: • Conducted and issued 12 performance audit reports resulting in 79 recommendations. • Obtained a 100% agreement rate with departments to implement recommended corrective actions. • Followed up on three performance audits concluding that 77% of recommendations have been implemented. "Thank you for your work of servicing the citizens of this County. Your objectives of promoting accountability, fiscal integrity, and openness in government are very much appreciated. Your work is recognized as having made our government better. " N Harry Kim, Hawai " i County Mayor The Alantin of Local Government Au d hors Awards th I Certificate of Compliance irk Office of the Legislative Auditor County of Nawar'r Recognizing that the organization's internal quality Control system vias suitably designed and DIDerating effectively to provide reasonable assurance of ComIDIianCe with Cover ment Acif fiting Standards for audit and attestation engagements dUririg the period _1 u ly 1, 2016 through _I u ne 30, 2019_ Paul Geib ALGA Peer Rev1ew Cornrnittee Chair Pamela L_ Weipert ALGA President ntn Oe �4hty eh�Y A pa��e f h►a w�ahs at S ht of 4po/y dater Mdr�h 3 202o I 4' National Peer Review Gives Perfect Score The Association of Local Government Auditors conducted a review of the County of Hawai'i's Office of the Legislative Auditor's compliance with government auditing standards for the three-year period July 1, 2016 through June 30, 2019. The reviewers reported no recommendations for improvement. We are very proud to have accomplished this very rare milestone. FY 2020-2021 Annual Audit Plan 02 tion of Local Governme soev nr A 10*pcurro,�; . Zito 2017 Knighton Award Distinguished Winner Small Shop The Assoeianon of Local Gotvniment Auditors hereby presents this award to County of Hawai'i, HI, Office of the Legislative Auditor fur the perforrrtance audit entitled "County of Hawai'i's Department of Pitman Resources Hiring Practices" Tina Adams President, 2017.18 Deputy City Audam, City of Char4me. North Carolina b�r Prrsented tit the 1018 Annual Con(emtee of the Association of Local Gmemment Auditors colamdo Springs, Colorado ' t• � f � � t The report, County of Hawai`i's Department of Human Resources Hiring Practices, was awarded the 2017 Distinguished Knighton Award by the Association of Local Government Auditors (ALGA). The report was judged on such elements as: the potential for significant impact, the persuasiveness of the conclusions, the focus on improvin government efficiency and effectiveness, and its clarity, conciseness and innovation. ALGA has this to say about the audit: AF i� -mc- a MW 4M M audit is a thorough and well-documented examination of ue that affects a broad swath of the public. In particular, edit consistently clarified for the readers why the gs mattered to policymakers and citizens. __W� -V 'port also effectively used formatting, including header: sting, :and exhibits, to help readers move through 7 .cant detail and combrehend findings of high �.__" -• _ lance." W— d _ � r AL �. •fir •� �a + a. Vol, s IN FY 2020-2021 Annual Audit Plan 03 /low I)e Istdlif5elp I I re re le ef Oar Audits included in the annual audit plan are selected and prioritized using arisk-based approach. Risk assessment is a process used to identify and prioritize audits based upon specific risk factors related to the quality of internal controls and the estimated potential liability and level of risk exposure to the County of Hawaii related to various County departments, programs, activities, and contracts. The Office of the Legislative Auditor uses several techniques to identify and prioritize audits in the annual plan. These techniques include: • Analysis of operations and internal controls derived from previous audits • Assessment of operations and controls derived from previous external audits including information in the Countv's Comprehensive Annual Finan Audit Reports • Inbut from elected officials. opera tial Reports (CAFRs) and Single groups, ana memo • Benchmarking aga ers of the publi tional management, peer audit c inst the audit priorities of other governmental entities • Consideration of current local public policy issues events, financial conditions, and 5 y L ror I. L. LLM ,, I y• f. , %5 .: 4 % I % . Z �_ L. r A ii I 6J Gevsrnr�ent Aa�lifing Sfander�ls We conduct all audits in accordance with Generally Accepted Government Auditing Standards promulgated by the United States Comptroller General. e FY 2020-2021 Annual Audit Plan rJ ILrIe . A ii I 6J Gevsrnr�ent Aa�lifing Sfander�ls We conduct all audits in accordance with Generally Accepted Government Auditing Standards promulgated by the United States Comptroller General. e FY 2020-2021 Annual Audit Plan tract Alisk rs ve 160151 fe'ry Audit resources are limited, thus prohibiting one hundred percent audit coverage each year. This limiting factor is inherent in the concept of using risk assessments to help prioritize audits. Using a risk-based audit approach to identify and prioritize potential audit topics that pose the greatest potential risk and liability to the County, The Office of the Legislative Auditor considers the following risk factors. �j County Specific r"In Risk Factors I� • Size of Department or Operational Area • Qua Con lity of Known Internal trol System • Age of Program or Operation • Complexity of Transactions • Audit History • Management Accountability • Departmental Requests Other Risk Factors • Compliance and Regulations • Public Sensitivity • Critical Infrastructure • Emerging Risk Areas • Inherent Risk Areas • Public Health and Safety FY 2020-2021 Annual Audit Plan I 05 r,105 eai rear ZaZa-Za�t p/annul tla�lifs (no particular order of importance) Financial andSinigle Audit � Financial audit of t Fiscal Year Ended J he County's Comprehensive Annual Financial Report (CAFR) for une 30, 2020 In accordance with Hawaii County Charter Section 10-13, our Office will monitor the conduct of the external auditor, N&K CPA's Inc. (RFP #3544) who will complete the following: • Single Audit of Federal Financial Assistance Programs for Fiscal Year Ended June 30, 2020; • Financial Audit of the Department of Water Supply for Fiscal Year Ended June 30, 2020; • Report for Landfill Financial Assurance; and • Financial Assessment Electronic Submission of Section 8 — Housing Choice Vouchers. FY 2020-2021 Annual Audit Plan 06 Self -Initiated Performance Audits Facilities Maintenance a Recreation (P&R) t the Department of Parks & We will evaluate preventative maintenance and repair, identify P&R's approach and strategy for park maintenance; review and evaluate procedures, practices, and controls of P&R's various divisions on a selective basis. ❑ CARES Act/COVID-19 Response We will consider risks related to the CARES Act and other emergency relief funding in regards to the COVID-19 pandemic. Potential audit areas could include preparedness (Continuity of Operations), financial impact/reporting, customer service, and/or Human Resource process challenges ❑ Inventory Management We will evaluate the County's inventory internal controls to ensure efficiency of process, accuracy and completeness of inventory records, accountability for inventory transactions, and safeguarding of inventory. aserflork"ancs 649f9lits Each audit listec initial objective designed to give lcludes one or more ,hese objectives are Mme insight into areas of interest regarding the audit topic, but do not prematurely identify audit findings. Once an audit is formally begun, the Legislative Auditor will gather key information regarding the audit topic during the audit's planning phase. After this phase has concluded, the Legislative Auditor will determine the fieldwork objectives that will be answered during the fieldwork phase of the audit and addressed in the public report. The FY20-21 Audit Plan is designed to be a flexible, dynamic document that allows for the addition of audits that address risks that may appear during the year, or whose priority to the organization may change during the year. In such cases, the Legislative Auditor will assess these emerging risks and determine whether audit resources should be allocated to meet the emergent need. FY 2020-2021 Annual Audit Plan 07 FOLLOW ACTION PLAN IMPLEMENT I CHANGES Follow-up Audits ❑ Dept,, of Human Resources's Hiring Practices We will follow up on recommendations made in the 2017 N's Department Perf of Human Resources Hiring Practices. 'ormance Audit on the County of Hawa Mass Transit Agency's Cash Handling We will follow up on recommendations made in the 2018 Performance Audit on Cash Handling at County of Hawai'i's Mass Transit Agency. � Dept,, of Water Supply's Cash Handling We will follow up on recommendations made in the 2017 Performance Audit on Cash Handling at County of Hawai'i's Department of Water Supply. FY 2020-2021 Annual Audit Plan I 08 1 M 1 i• - a ANN s - •mra-r - a - •1 r ■� ti ENRON ■ •'•- • ■ . ti "16- M _ ~ _ t 41 7 -��■.L �•- r - 1 iLL 3-6 A ir Jr �L� 1 •�_� r �r it A - _ % LANIN 1 _ _F ■ 1_ 1 H IF 11V _ -1 - -046 II'. r 11 1' 7 :. IN . : r` -r �_ 1 11 , IN Irr06 1 ~ 1 a ' J 11 1 ■ ��t 1 ��1 1MINI1 ■ y bl; is A IN ig - r 1 41. 91 1 11 ■ - r+ r J ti ■ r 11 � r,L - , ■ i 7 11 1 LF d ii 4 1 i -111111Ir 91 Cenfa • z r ti i ■'rL- ■ f �14, r 1 cf /nferinafien Bonnie Nims, CG ' , Legi4l Michael Cordova, Audit Analyst Nikol Lonokapu, Audit Analyst Maxinne Pacheco, Audit Analyst slati*ve Auditor County of Hawai'i's Office of the Legislative Auditor 120 Pauahi Street, Suite 309, Hilo, Hawai*4i 96720 (808) 961-8386 publiclao@hawaiicounty.gov Our I Nissien 0 m It is our mission to serve the Council and citizens of Hawaii County by promoting accountability, fiscal integrity, and openness in local government. Through performance and/or financial audits of County agencies and programs, the Office of the Legislative Auditor examines the use of public funds, evaluates operations and activities, and provides findings and recommendations to elected officials and citizens in an objective manner. Our work is i government in its management ntended to assist County of public resources, delivery of public services, and stewardship of public trust. FY 2020-2021 Annual Audit Plan 09