HomeMy WebLinkAbout2022-COH - DWS Financial Statements and Supplementary Information With Independent Auditor's ReportsCOUNTY OF HAWAVII
DEPARTMENT OF WATER SUPPLY
(A component unit of the County of Hawaii, State of Hawaii)
FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
WITH INDEPENDENT AUDITOR'S REPORTS
Fiscal Year Ended June 30, 2022
� N&K C PAs, Inc.
ACCOUNTANTSCONSULTANTS
999 BISHOP STREET, SUITE 2200 1 HONOLULU, HAWAII 96813
T (808) 524-2255 F (808) 523-2090 1 nkcpa.com
COUNTY OF HAWAII
DEPARTMENT OF WATER SUPPLY
(A component unit of the County of Hawaii, State of Hawaii)
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 4 - 6
MANAGEMENT'S DISCUSSION AND ANALYSIS 7-11
FINANCIAL STATEMENTS
Statement of Net Position 12-13
Statement of Revenues, Expenses, and Changes in Net Position 14
Statement of Cash Flows 15-16
Notes to Financial Statements 17-44
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
Schedule of Proportionate Share of the Net Pension Liability 46
Schedule of Contributions (Pension) 47
Notes to Required Supplementary Information Required by
GASB Statement No. 68 48
Schedule of Changes in the Net OPEB Liability and Related Ratios 49
Schedule of Contributions (OPEB) 50
Notes to Required Supplementary Information Required by GASB
Statement No. 75 51 -52
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COUNTY OF HAWAII
DEPARTMENT OF WATER SUPPLY
(A component unit of the County of Hawaii, State of Hawaii)
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT A UDI TING STANDARDS 53-54
SCHEDULE OF FINDINGS AND RESPONSES
CORRECTIVE ACTION PLAN
��1
57
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS - STATUS
REPORT 58
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1k N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
INDEPENDENT AUDITOR'S REPORT
To the Water Board
County of Hawaii, Department of Water Supply
Report on the Audit of the Financial Statements
Opinion
999 BISHOP STREET, SUITE 2200
HONOLULU, HAWAII 96813
T (808) 524-2255 F (808) 523-2090
We have audited the financial statements of the County of Hawaii, Department of Water
Supply (Department), a component unit of the County of Hawaii, State of Hawaii, as of
and for the fiscal year ended June 30, 2022, and the related notes to the financial
statements, which collectively comprise the Department's basic financial statements as
listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in
all material respects, the financial position of the Department, as of June 30, 2022, and
the changes in its financial position and its cash flows for the fiscal year then ended in
accordance with accounting principles generally accepted in the United States of
America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America (GARS) and the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of the
United States (Government Auditing Standards). Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. We are required to be independent of the
Department, and to meet our other ethical responsibilities, in accordance with the relevant
ethical requirements relating to our audit. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matters
Adoption of New Accounting Principle
As discussed in Note B to the financial statements, the Department adopted the
Governmental Accounting Standards Board Statement No. 87, Leases, during the fiscal
year ended June 30, 2022. Our opinion is not modified with respect to this matter.
Adjustment to Prior Period Financial Statements
As discussed in Note L to the financial statements, the 2021 financial statements have
been restated to correct a misstatement. Our opinion is not modified with respect to this
matter.
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N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with accounting principles generally accepted in the United
States of America, and for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there
are conditions or events, considered in the aggregate, that raise substantial doubt about
the Department's ability to continue as a going concern for twelve months beyond the
financial statement date, including any currently known information that may raise
substantial doubt shortly thereafter.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor's report that includes our opinion. Reasonable assurance is a high level
of assurance but is not absolute assurance and therefore is not a guarantee that an audit
conducted in accordance with GRAS and Government Auditing Standards will always
detect a material misstatement when it exists. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control. Misstatements are considered material if there is a substantial likelihood
that, individually or in the aggregate, they would influence the judgment made by a
reasonable user based on the financial statements.
In performing an audit in accordance with GARS and Government Auditing Standards,
we
• Exercise professional judgment and maintain professional skepticism throughout
the audit.
• Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, and design and perform audit procedures responsive
to those risks. Such procedures include examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Department's internal control.
Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness
of significant accounting estimates made by management, as well as evaluate the
overall presentation of the financial statements.
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ACCOUNTANTS I CONSULTANTS
• Conclude whether, in our judgment, there are conditions or events, considered in
the aggregate, that raise substantial doubt about the Department's ability to
continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit, significant audit findings, and
certain internal control -related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 7 through 11 and the schedules of
proportionate share of the net pension liability, contributions (pension), changes in the net
OPEB liability and related ratios, and contributions (OPEB) on pages 46 through 52 be
presented to supplement the basic financial statements. Such information is the
responsibility of management and, although not a part of the basic financial statements,
is required by the Governmental Accounting Standards Board who considers it to be an
essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with GARS, which
consisted of inquiries of management about the methods of preparing the information and
comparing the information for consistency with management's responses to our inquiries,
the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on
the information because the limited procedures do not provide us with sufficient evidence
to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 22, 2022 on our consideration of the Department's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is solely to
describe the scope of our testing of internal control over financial reporting and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the
Department's internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in
considering the Department's internal control over financial reporting and compliance.
Honolulu, Hawaii
December 22, 2022
0
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Fiscal Year Ended June 30, 2022
The Department of Water Supply, County of Hawaii (Department) operates as a semiautonomous
agency charged with the responsibility of operating and maintaining the County of Hawai`i's public
water systems. The Department is a utility enterprise and presents its financial statements using
the economic resources measurement focus and the accrual basis of accounting. This discussion
and analysis is designed to assist the reader in focusing on the significant financial issues and
activities and to identify any significant changes in financial position. Readers are encouraged to
consider the information presented here in conjunction with the financial statements taken as a
whole.
Financial Statements
The financial statements are designed to provide readers with a broad overview of the
Department's finances in a manner similar to a private sector business.
The statements of net position present information on all of the Department's assets, deferred
outflows of resources, liabilities, and deferred inflows of resources, with the residual amount
reported as net position. Over time, increases or decreases in net position may serve as a useful
indicator of whether the financial position of the Department is improving or deteriorating. Net
position increases when revenues exceed expenses. Increases in assets and deferred outflows
of resources, without a corresponding increase in liabilities and deferred inflows of resources,
result in increased net position, which indicate an improved financial position. In the case of the
Department, assets plus deferred outflows of resources exceeded liabilities plus deferred inflows
of resources by $218.0 million, at the close of the most recent fiscal year. This represents an
increase of $7.9 million, or 3.8% more than the previous year. At June 30, 2022, $228.0 million of
the Department's net position was invested in capital assets (net of related debt), and ($10.0)
million was unrestricted.
The statements of revenues, expenses, and changes in net position present information showing
how the Department's net position changed during the fiscal year. All components of the changes
in net position are reported as soon as the underlying event occurs, regardless of the timing of
related cash flows. Thus, revenues and expenses are reported in the statements for some items
that will result in cash flows in future fiscal periods.
The statements of cash flows present changes in cash and cash equivalents (short-term
investments with original maturities of three months or less from the date of acquisition), resulting
from operating, investing, capital and related financing activities, and non -capital financing
activities.
Notes to Financial Statements
The notes to the financial statements provide additional information that is essential to a full
understanding of the data provided in the financial statements.
Other Information
In addition to the financial statements and accompanying notes, this report also presents certain
required supplementary information concerning the Department's participation in the Employees'
Retirement System of the State of Hawaii (ERS) and the Employer -Union Health Benefits Trust
Fund of the State of Hawaii (EUTF).
7
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Fiscal Year Ended June 30, 2022
Condensed Financial Information
The following are summaries from the Department's financial statements as of and for the fiscal
years ended June 31, 2022 and 2021.
Assets
Capital assets, net
Other assets
Total assets
Deferred outflows of resources
Deferred outflows of resources
Total deferred outflows of resources
Total assets and deferred
outflows of resources
Liabilities
Long-term debt
Other liabilities
Total liabilities
Deferred inflows of resources
Deferred inflows of resources
Total deferred inflows of resources
Net position
Net investment in capital assets
Unrestricted
Total net position
Total liabilities, deferred inflows of
resources and net position
0
2021
2022 (as restated)
$ 305,806,379 $ 300777744
7, 448,161 10, 072, 803
7, 448,161 10, 072, 803
$ 374, 574, 565 $ 362, 063, 284
$ 75, 079, 033 $ 67, 451, 426
67, 442, 706 76, 811, 943
142, 521, 739 144, 263, 369
14, 017, 408 7, 670, 371
14, 017, 408 7, 670, 371
228, 036,135 230, 096, 604
(10) 000, 717) (19) 967, 060)
$ 374, 574, 565 $ 362, 063, 284
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Fiscal Year Ended June 30, 2022
Condensed Financial Information (Continued)
Operating revenues - water sales
Operating expenses
Operating loss
Nonoperating revenues
Nonoperating expenses
Loss before contributions
Contributions in aid of construction
Change in net position
Net position at beginning of fiscal year
Prior period adjustment
Net position at beginning of fiscal year,
as restated
Net position end of fiscal year
Financial Analysis
(175297673)
210,129, 544 214, 568, 856
$ 21870357418 $ 21071297544
Capital assets, net increased by $5.0 million, or 1.7%, during the fiscal year ended June 30, 2022
(FY2022), due primarily to an increase in utility plant in service of $26.7 million, offset by an
increase in accumulated depreciation of $15.8 million, and decrease in preliminary survey and
investigation charges and construction work in progress totaling $5.5 million.
Other assets increased by $10.1 million, or 19.7%, in FY2022, due primarily to increases in cash
and cash equivalents and intergovernmental receivables of $6.0 million and $4.0 million,
respectively.
Deferred outflows of resources decreased by $2.6 million, or 26.1 %, in FY2022, due primarily to
a decrease in deferred outflows of resources related to pension of $2.4 million.
Long-term debt increased by $7.6 million, or 11.3%, in FY2022, due primarily to bond and loan
repayments of $6.2 million, offset by loan and bond proceeds of $14.1 million.
9
2021
2022
(as restated)
$ 56, 617, 894
$ 50, 502, 359
60, 831, 000
58, 632, 238
(472137106)
(871297879)
172597700
172717384
(177937927)
(179277397)
(477477333)
(877857892)
1276537207
473467580
779057874
(474397312)
21071297544
21670987529
(175297673)
210,129, 544 214, 568, 856
$ 21870357418 $ 21071297544
Capital assets, net increased by $5.0 million, or 1.7%, during the fiscal year ended June 30, 2022
(FY2022), due primarily to an increase in utility plant in service of $26.7 million, offset by an
increase in accumulated depreciation of $15.8 million, and decrease in preliminary survey and
investigation charges and construction work in progress totaling $5.5 million.
Other assets increased by $10.1 million, or 19.7%, in FY2022, due primarily to increases in cash
and cash equivalents and intergovernmental receivables of $6.0 million and $4.0 million,
respectively.
Deferred outflows of resources decreased by $2.6 million, or 26.1 %, in FY2022, due primarily to
a decrease in deferred outflows of resources related to pension of $2.4 million.
Long-term debt increased by $7.6 million, or 11.3%, in FY2022, due primarily to bond and loan
repayments of $6.2 million, offset by loan and bond proceeds of $14.1 million.
9
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Fiscal Year Ended June 30, 2022
Financial Analysis (Continued)
Other liabilities decreased by $9.4 million, or 12.2% in FY2022, due primarily to decreases in net
pension liability and net OPEB liability of $6.2 million and $3.9 million, respectively.
Deferred inflows of resources increased by $6.3 million, or 82.8%, in FY2022, due primarily to
increases in deferred inflows of resources related to pensions and OPEB of $4.4 million and $2.2
million, respectively.
Net investment in capital assets decreased by $2.1 million, or 0.90%, in FY2022, due primarily to
an increase in net capital assets of $5.0 million, offset by an increase in long-term debt of $7.6
million.
Total net position increased $7.9 million, or 3.8%, in FY2022, due primarily to contributions in aid
of construction with the receipt of $5.2 million in federal funds for reimbursement of capital project
expenditures and $6.3 million in dedicated projects offset by a $4.2 million operating loss.
In October 2020, the Water Board approved a 13% rate increase for water consumption and
standby charges that became effective January 1, 2021. Total operating revenues increased by
$6.1 million, or 12.1% in FY2022, due primarily to an increase in water consumption charges of
$2.5 million, power charges of $2.5 million, and standby charges of $1.1 million.
Operating expenses increased by $2.2 million, or 3.8%, in FY2022, due primarily to an increase
in power and pumping of $6.3 million offset by decreases in general and administrative and
transmission and distribution expenses of $4.3 million.
Contributions in aid of construction increased by $8.3 million, or 191.1 %, in FY2022, due primarily
to an increase in current year dedications by $5.1 million and in federal funding of $5.1 million for
reimbursement of capital project expenditures.
Capital Assets and Debt Administration
As of June 30, 2022, the Department had $305.8 million invested in capital assets, and $75.1
million of long-term debt outstanding.
10
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Fiscal Year Ended June 30, 2022
During 2022, major capital asset additions included:
$7.9 million for the Papaikou Transite and GI Pipeline Replacement.
$0.6 million for the Piihonua-Kukuau Reservoir & Transmission Improvements
$0.6 million for the Pahoa Deepwell Repair.
$0.6 million for the Kahaluu Deepwell Repair.
• $1.0 million for the Waimea Deepwell Repair.
$0.9 million for the Ke'ei Deepwell and Boosters Repair.
$0.9 million for the Pana'ewa Well Repairs.
$0.9 million for the Kalaloa Deepwell Repair.
$0.6 million for the DHHL Maku'u Farm Lots dedication.
$0.9 million for the West Ramp Demolition and Lease Lots dedication.
$3.6 million for the Hokulia Phase 2 dedication.
More detailed information about the Department's capital assets is provided in Note E to the
financial statements.
At June 30, 2022, the Department had outstanding $20.1 million in County of Hawaii general
obligation bonds for public improvements, and $53.6 million in State of Hawaii revolving fund
loans.
As of June 30, 2022, the Department, through the County of Hawaii, maintained an "AA" rating
from Standard & Poor's, an "Aa2" rating from Moody 's and an "AA+" rating from Fitch for general
obligation debt.
11
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
STATEMENT OF NET POSITION
June 30, 2022
ASSETS
Current assets
Cash and cash equivalents
$ 2311811846
Investments
1610001000
Interest receivable
1591495
Trade receivables, less allowance for doubtful accounts of
$113221000
815221062
Intergovernmental receivables
412281519
Leases receivable, current portion
2071387
Other receivables
2361633
Inventories of materials and supplies
115931673
Prepaid expenses
601288
Total current assets
5411891903
Noncurrent assets
Restricted cash
8881225
Investments
410001000
Leases receivable, noncurrent portion
212411897
Capital assets
Depreciable assets
Utility plant in service
58415531473
Less accumulated depreciation
(306,479,516)
278, 073, 957
Nondepreciable assets
Land and rights
513241040
Preliminary survey and investigation charges
212131049
Construction work in progress
1919371881
27,474,970
Right to use lease assets
2831520
Less accumulated amortization
(26,068)
257,452
Net capital assets
30518061379
Total assets
36711261404
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows of resources related to pensions 510541087
Deferred outflows of resources related to OPEB 213941074
Total deferred outflows of resources 714481161
Total assets and deferred outflows of resources $ 37415741565
The accompanying notes are an integral part of these financial statements.
12
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
STATEMENT OF NET POSITION (Continued)
June 30, 2022
LIABILITIES
Current liabilities
Accounts and construction contracts payable,
including retainages $ 615771539
Long-term debt, current portion 519021341
Accrued compensation 210291486
Accrued interest payable 4141870
Other long-term liabilities, current portion 110491737
Total current liabilities 1519731973
Noncurrent liabilities
Long-term debt, noncurrent portion
6911761692
Net pension liability
2910171165
Net OPEB liability
1014511786
Other long-term liabilities, noncurrent portion
1719021123
Total noncurrent liabilities
12615471766
Total liabilities 142,521,739
DEFERRED INFLOWS OF RESOURCES
Deferred inflows of resources related to pensions
611661609
Deferred inflows of resources related to OPEB
512581985
Deferred inflows of resources related to leases
214311531
Unamortized gain on refunding of debt
1601283
Total deferred inflows of resources
1410171408
NET POSITION
Net investment in capital assets 22810361135
Unrestricted (10, 000, 717)
Total net position 21810351418
Total liabilities, deferred inflows of resources
and net position $ 374,574,565
The accompanying notes are an integral part of these financial statements.
13
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
Fiscal Year ended June 30, 2022
OPERATING REVENUES
Water sales $ 56,6177894
OPERATING EXPENSES
Power and pumping 247247093
Depreciation and amortization 1577917386
General and administrative 878607394
Transmission and distribution 672867862
Purification 271827536
Maintenance and repairs 176967609
Customers' accounting and collecting 172897120
Total operating expenses 6078311000
Operating loss (4,213,106)
NONOPERATING REVENUES
Interest income 294,347
Other 9657353
Total nonoperating revenues 172597700
NONOPERATING EXPENSES
Interest expense on long-term debt
(1,134,491)
Loss on disposal of capital assets
(445,217)
Other
(214,219)
Total nonoperating expenses
(1,793,927)
Loss before contributions
(4,747,333)
CONTRIBUTIONS IN AID OF CONSTRUCTION 12,6537207
Change in net position 779057874
NET POSITION
Beginning of fiscal year, as previously reported 212,1197595
Prior period adjustment (1,990,051)
Beginning of fiscal year, as restated 21011297544
Net position at end of fiscal year $ 21870357418
The accompanying notes are an integral part of these financial statements.
14
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
STATEMENT OF CASH FLOWS
Fiscal Year ended June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 5652335975
Payments to suppliers for goods and services (27,781,774)
Payments to employees for services (17,527,033)
Net cash provided by operating activities 1059255168
CASH FLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES
Principal repayments on lease receivables 2045314
Acquisition and construction of capital assets (14,144,545)
Cash received from contributions in aid of construction and other 251185909
Principal paid on long-term debt (6,214,531)
Debt proceeds 1451055000
Interest paid on long-term debt (1,480,135)
Principal payments on lease liabilities (24,434)
Net cash used in capital and related financing activities (5,435,422)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (18,000,000)
Proceeds from sale and maturities of investments 1850005000
Interest received 5725471
Net cash provided by investing activities 5725471
Net increase in cash and cash equivalents 650625217
CASH AND CASH EQUIVALENTS - BEGINNING OF FISCAL YEAR 1850075854
CASH AND CASH EQUIVALENTS - END OF FISCAL YEAR $ 2450705071
RECONCILIATION OF CASH AND CASH EQUIVALENTS
TO THE STATEMENT OF NET POSITION
Unrestricted $ 23,181, 846
Restricted 8885225
$ 24, 070, 071
The accompanying notes are an integral part of these financial statements.
15
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
STATEMENT OF CASH FLOWS (Continued)
Fiscal Year ended June 30, 2022
RECONCILIATION OF OPERATING LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Operating loss
$
(4,213,106)
Depreciation and amortization
1557915386
Provision for doubtful accounts
(249,800)
Change in assets, deferred outflows of resources, liabilities
and deferred inflows of resources
Trade and other receivables
(134,119)
Inventories of materials and supplies
(155,173)
Prepaid expenses and other
(10,269)
Deferred outflows of resources related to pensions
254345893
Deferred outflows of resources related to OPER
1895749
Accounts and construction contracts payable,
including retainages
6775517
Accrued compensation
675575
Other long-term liabilities
1635439
Net pension liability
(6,273,092)
Net OPER liability
(3,942,028)
Deferred inflows of resources related to pensions
453925503
Deferred inflows of resources related to OPER
251855693
Net cash provided by operating activities
$
1059255168
SUPPLEMENTAL DISCLOSURE OF NONCASH CAPITAL
AND RELATED FINANCING ACTIVITIES
Contributions in aid of construction
$
1055345298
Amortization of bond premium
$
2625863
Amortization of unamortized gain on refunding of debt
$
225107
The accompanying notes are an integral part of these financial statements.
16
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE A - NATURE OF ACTIVITIES
The Department of Water Supply, County of Hawaii (Department) is administered by the
Water Board, which consists of nine members who serve staggered terms of five years in
length. Board members are appointed by the Mayor of the County of Hawaii, State of Hawaii
(County) and are confirmed by the County Council, as required by the County Charter.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) Financial Statement Presentation - The Department is a component unit of the County
(primary government). The accompanying financial statements present only the financial
position and activities of the Department and do not purport to, and do not present the
financial position of the County, the changes in its financial position, or, where
applicable, its cash flows.
Recently Adopted Accounting Pronouncement
In June of 2017, the Governmental Accounting Standards Board (GASB) issued
Statement No. 87, Leases (GASB 87). The objective of this Statement is to better meet
the information needs of financial statement users by improving accounting and financial
reporting for leases by governments. This Statement requires recognition of certain
lease assets and liabilities for leases that previously were classified as operating leases
and recognized as inflows of resources or outflows of resources based on the payment
provisions of the contract. It establishes a single model for lease accounting based on
the foundational principle that leases are financings of the right to use an underlying
asset. The requirements of this Statement are effective for reporting periods beginning
after June 15, 2021. The implementation of this Statement resulted in the Department
recording right to use lease assets and leases payable of $261,060, as well as leases
receivable and deferred inflows of resources of $2,640,583 as of June 30, 2021 . The
implementation of this Statement had no impact to net position as of June 30, 2021.
(2) Measurement Focus and Basis of Accounting - The Department's financial
statements are prepared using the economic resources measurement focus and the
accrual basis of accounting. Under this method, revenues are recorded when earned
and expenses are recorded at the time liabilities are incurred.
(3) Use of Estimates - The preparation of the financial statements in accordance with
accounting principles generally accepted in the United States of America requires
management to make a number of estimates and assumptions that affect the reported
amounts of assets, deferred outflows of resources, liabilities, deferred inflows of
resources and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting
period. Significant items subject to such estimates and assumptions include the carrying
amount of capital assets, valuation allowances for trade receivables, valuation of
noncash contributions in aid of construction, accrued workers' compensation, pensions
17
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
and postretirement healthcare and life insurance benefits, and lease transactions
entered into by the Department as lessee and lessor. Actual results could differ from
those estimates.
(4) Cash and Cash Equivalents -For purposes of the statement of cash flows, the
Department considers all highly liquid investments with a maturity of three months or
less or money market funds with a weighted average maturity of three months or less
when purchased to be cash equivalents.
(5) Investments -Investments in time certificates of deposits are carried at cost, which
approximates fair value.
(6) Trade Receivables - Trade receivables are recorded at the invoiced amount and do not
bear interest. The allowance for doubtful accounts is the Department's best estimate of
the amount of probable credit losses in the Department's existing trade receivables. The
Department determines the allowance based on historical write-off experience. The
Department reviews its allowance for doubtful accounts monthly. Past -due balances
over 90 days and over a specified amount are reviewed individually for collectibility.
Account balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote.
(7) Leases - The Department has agreements to lease certain land, buildings, and
equipment. The lease agreements qualify as other than short-term leases under GASB
87 and, therefore, are recorded at the present value of the future minimum lease
payments beginning on the effective date of the lease agreement or July 1, 2021,
whichever is later. The present value of the future minimum lease payments is
measured at the discount rate.
Lessee recognition and measurement: The Department recognizes a lease payable and
a right to use lease asset in the financial statements. At the commencement of a lease,
the Department initially measures the lease payable at the present value of payments
expected to be made during the lease term. Subsequently, the lease payable is reduced
by the principal portion of lease payments made. Right to use lease assets are initially
measured as the initial amount of the lease payable, less any lease incentives received
from the lessor at or before the commencement of the lease term along with any initial
direct costs that are ancillary charges necessary to place the right to use assets into
service. Right to use lease assets are amortized using the straight-line method over the
shorter of the lease term or the useful life of the underlying asset.
Lessor recognition and measurement: The Department recognizes a lease receivable
and deferred inflows of resources in the financial statements. At the commencement of
a lease, the Department initially measures the lease receivable at the present value of
payments expected to be received during the lease term. Subsequently, the lease
receivable is reduced by the principal portion of lease payments received. The deferred
inflows of resources are initially measured as the initial amount of the lease receivable,
adjusted for lease payments received at or before the lease commencement date.
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Subsequently, the deferred inflows of resources are recognized as revenue over the life
of the lease term in a systemetic and rational method.
(8) Inventories of Materials and Supplies - Materials and supplies are stated at cost on
an average cost basis.
(9) Restricted Assets -Unspent bond proceeds that are restricted for purchases of water
system improvements are recorded as restricted assets.
(10) Capital Assets - Capital assets in service as of January 1, 1950, date of inception of
the Department, were recorded at the cost of the assets acquired by the County for its
water system from January 1, 1924 to December 31, 1949, less accumulated
depreciation to December 31, 1949, as determined by the Department. Assets
purchased prior to 1924 and property acquired by gift or grant prior to 1950 are not
included in capital assets. Additions to capital assets since January 1, 1950 are stated
at cost and include contributions by governmental agencies, private subdividers, and
customers at their cost or estimated cost. The capitalization threshold of assets is $400
with estimated useful lives greater than one year. Construction costs include amounts
for contract work, engineering supervision, and other direct costs and overhead costs.
Preliminary survey and investigation charges represent expenditures incurred to determine
the feasibility of potential water system sites for future development.
Maintenance and repairs and minor replacements are charged to operations. Major
replacements, renewals, and betterments are capitalized to capital asset accounts.
Depreciation is computed using the straight-line method over the following estimated
useful lives:
Distribution mains and accessories
40 years
Structures and improvements
40 to 50 years
Electric and hydraulic pumping equipment
10 years
Services
25 years
Transmission mains and accessories,
hydrants and purification system
40 years
Meters
10 years
Transportation, communication, tools
and office equipment and furniture
5 years
Other equipment
5 to 10 years
Other fire protection plant
25 years
Annual depreciation rates are applied to costs of the various classes of depreciable
assets on the group basis or, as to transportation equipment, to the cost of individual
units of property. Right to use lease assets are amortized on a straight-line basis over
the shorter of the lease term of the estimated useful life.
iR
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Gains or losses resulting from the sale, retirement, or disposal of capital assets in service
are charged or credited to operations in the year realized.
(11) Deferred Outflows of Resources and Deferred Inflows of Resources -Deferred
outflows of resources represent a consumption of net position that applies to a future
period and will not be recognized as an outflow of resources (expense) until that time.
Deferred inflows of resources represent an acquisition of net position that applies to a
future period and will not be recognized as an inflow of resources (revenue) until that
time.
(12) Compensated Absences -Employees earn vacation credits at the rate of one and
three-quarter working days for each month of service. Up to 90 days of vacation leave
credits can be accumulated per employee. In addition, employees who work overtime
can elect to take compensatory time off instead of overtime pay. The time off is earned
at the rate of one and a half hours for each hour of overtime worked. Both compensatory
time off and vacation credits are converted to pay upon termination of employment.
Sick leave can be taken only in the event of illness and is not convertible to pay upon
termination of employment. Accumulated sick leave at June 30, 2022 amounted to
approximately $5,866,000.
(13) Pensions - For purposes of measuring the net pension liability, deferred outflows of
resources and deferred inflows of resources related to pensions, and pension expense,
information about the fiduciary net position of the Employees' Retirement System of the
State of Hawaii (ERS) and additions to/deductions from the ERS's fiduciary net position
have been determined on the same basis as they are reported by the ERS. For this
purpose, employer and member contributions are recognized in the period in which the
contributions are legally due and benefit payments (including refunds of employee
contributions) are recognized when due and payable in accordance with benefit terms.
Investments are reported at fair value.
(14) Postemp/oyment Benefits Other Than Pensions (OPEB) - For the purposes of
measuring the net OPEB liability, deferred outflows of resources and deferred inflows
of resources related to OPEB, and OPEB expense, information about the fiduciary net
position of the Hawaii Employer -Union Health Benefits Trust Fund (EUTF) and additions
to/deductions from EUTF's fiduciary net position have been determined on the same
basis as they are reported by EUTF. For this purpose, EUTF recognizes benefit
payments when due and payable in accordance with the benefit terms. Investments are
reported at fair value, except for investments in commingled and money market funds,
which are reported at net asset value (NAV). The NAV is based on the fair value of the
underlying assets held by the respective fund less its liabilities.
20
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(15) Net Position - Net position represents the difference between assets and deferred
outflows of resources less liabilities and deferred inflows of resources. Net position is
classified in the following components: net investment in capital assets and unrestricted
net position. Net investment in capital assets consists of capital assets, net of
accumulated depreciation, reduced by outstanding debt related to the acquisition or
construction of those assets, less unspent bond proceeds. Unrestricted net position
consists of all other net position not categorized as net investment in capital assets.
When both restricted and unrestricted resources are available for use, generally, it is
management's policy to use restricted resources first, then unrestricted resources, as
they are needed.
(16) Operating Revenues and Expenses - Revenues and expenses are distinguished
between operating and nonoperating items. Operating revenues generally result from
providing services in connection with the Department's principal ongoing operations.
The principal operating revenues of the Department are fees charged to customers for
providing water services. Operating expenses include the costs associated with
providing water services, administrative expenses and depreciation and amortization on
capital assets. All revenues and expenses not meeting these definitions are reported as
nonoperating revenues and expenses.
(17) Contributions in Aid of Construction - Contributions in aid of construction represent
cash or capital assets received by the Department to aid in the construction of
infrastructure assets. It also includes the forgiveness of principal due on state revolving
fund loans that were used to finance the costs of infrastructure needed to maintain the
water system. Contributions in aid of construction are recognized when they are
accepted by the Water Board and when all applicable eligibility requirements have been
met.
NOTE C - DEPOSITS AND INVESTMENTS
At June 30, 2022, the carrying amount of deposits (cash, time certificates of deposit, and
money market funds) was $44,070,071, with a corresponding bank balance of $44,771,351.
These amounts were fully insured or collateralized with securities held by the County's agent
in the County's name.
21
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE C -DEPOSITS AND INVESTMENTS (Continued)
The Hawaii Revised Statutes (HRS) authorizes the County Director of Finance to invest
Department moneys that are in excess of the amounts necessary for meeting immediate
requirements. The primary objective of the County's investment policy is to safeguard the
principal. The secondary objective is to meet the liquidity needs of the Department. The third
objective is to return an acceptable yield. In accordance with the HRS, the County's
investment policy permits investments in obligations of or guaranteed by the U.S. government,
obligations of the State of Hawaii, federally insured savings and checking accounts, time
certificates of deposit, and repurchase agreements with federally insured financial institutions.
Investments in time certificates of deposits totaled $20,000,000 at June 30, 2022.
Custodial Credit Risk - Custodial credit risk for deposits is the risk that, in the event of the
failure of a depository financial institution, the Department will not be able to recover deposits
or will not be able to recover collateral securities that are in possession of an outside party.
The Department's policy requires deposits to be maintained at financial institutions that are
members of the Federal Deposit Insurance Corporation and for deposits in excess of insured
amounts to be collateralized with securities in accordance with the HRS.
Custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty (e.g., broker-dealer) to a transaction, the Department will not be able to recover
the value of its investment or collateral securities that are in the possession of another party.
The Department's policy provides a list of authorized counterparties as well as minimum
requirements that counterparties must demonstrate in order to be utilized by the Department.
Interest Rate Risk - Interest rate risk is the risk that changes in interest rates will adversely
affect the fair value of an investment. Generally, the longer the maturity of an investment, the
greater the sensitivity of its fair value to changes in market interest rates. One of the ways that
the Department manages its exposure to interest rate risk is by purchasing a combination of
short-term and mid-term investments and by timing cash flows from maturities so that a portion
of the portfolio is maturing or nearing maturity evenly over time as necessary to provide the
cash flow and liquidity needed for operations. The Department monitors the interest rate risk
inherent in its portfolio by measuring the weighted average maturity of its portfolio.
Credit Risk and Concentration of Credit Risk - Credit risk is the risk that an issuer of an
investment will not fulfill its obligation to the holder of the investment. Concentration of credit
risk is the risk of loss attributed to the magnitude of a government's investment in a single
issuer. The Department's policy limits investment options to those authorized in the HRS and
requires the diversification of assets as to issuer.
22
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE D - LEASES RECEIVABLE
The Department leases office space in its Hilo office space to the County and a single family
residential home to an employee of the Department. Leases receivable consist of agreements
with others for the right to use of the underlying assets. The terms of the arrangements range
from two to twenty years. The calculated interest rate used was 1.50%. For the fiscal year
ended June 30, 2022, the Department recognized approximately $222,100 in lease revenue
and $38,400 in interest income.
A summary of changes in leases receivable for the fiscal year ended June 30, 2022 is as
follows:
Balance
July 1, 2021 Balance Due Within
(restated) Additions Deductions June 30, 2022 One Year
$ 2,640,583 $ 135015 $ (204,314) $ 2,449,284 $ 207,387
Leases receivable are due in the upcoming years as follows:
Year Ending
June 30,
Principal
Interest
Total
2023
$ 2075387
$ 355314
$ 2425701
2024
2035870
325230
2365100
2025
2065947
295153
2365100
2026
2105075
265025
2365100
2027
1955355
215070
2165425
2028-2032
151145142
665358
151805500
2033-2037
3115508
35321
3145829
$ 254495284
$ 2135471
$ 256625755
23
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE E - CAPITAL ASSETS
The following summarizes the Department's capital assets at June 30, 2022:
Depreciable assets
Utility plant in service
Structures and improvements
Distribution mains and accessories
Electric and hydraulic pumping equipment
Transmission mains and accessories
Services
Purification system
Meters
Hydrants
Transportation equipment
Communication equipment
Office equipment and furniture
Tools and work equipment
Other equipment
Other fire protection plant
Less accumulated depreciation
Total depreciable assets
Non depreciable assets
Land and rights
Preliminary survey and investigation charges
Construction work in progress
Total nondepreciable assets
Right to use lease assets
Land
Equipment
Accumulated amortization
Land
Equipment
Total right to use lease assets
Net capital assets
24
S
Amount
215,213,911
15312041489
81, 304, 516
50,424,357
34, 352, 939
13,384,414
11,458,227
10, 630, 070
5,257,665
3,182, 341
2,788,224
1,658,609
1,674,124
1 q 587
58415531473
(306,479,516)
278, 073, 957
5,324,040
2,213,049
19, 937, 881
27,474,970
2261050
57,470
283,520
(5,626)
(20,442)
(26,068)
$ 305, 806, 379
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE E -CAPITAL ASSETS (Continued)
The following is a summary of changes in capital assets during the fiscal year ended
June 30, 2022:
Depreciable assets
Utility plant in service
Less accumulated depreciation
Total depreciable assets
Nondepreciable assets
Land and rights
Preliminary survey and
investigation charges
Construction work in progress
Total nondepreciable assets
Right to use lease assets
Land
Equipment
Balance
July 1, 2021
(restated)
Retirements/ Balance
Additions Transfers June 30, 2022
$ 560,826,916 $ 2672807 $
(293,271,311) (15,765,318)
5,268,940 55,100
3,255742 900,436
32,961,079 15,185,433
(3,002,330) $
584,553,473
2,557,113
(306,479,516)
(445,217)
278,073,957
--
5,324,040
(1,943,129)
2,213,049
(18,728,413)
19,93701
(20,671,542)
27,474,970
226,050 -- -- 226,050
35,010 22,460 -- 57,470
261,060 22,460 -- 283,520
Accumulated amortization
Land -- (5,626) -- (5,626)
Equipment -- (20,442) -- (20,442)
-- (26,068) -- (26,068)
Total right to use lease assets 261,060 (3,608) -- 257,452
Net capital assets $ 300,777,744 $ 26,145,394 $ (21,116,759) $ 305,806,379
25
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE F - LONG-TERM DEBT
At June 30, 2022, long-term debt consisted of the following:
Public improvement refunding bonds ($13,497,500 issued), 2016 Series B,
payable to the County, interest at 3% to 5%, due in semiannual
installments through 2026
Public improvement refunding bonds ($6,353,750 issued), 2016 Series E,
payable to the County, interest at 2% to 5%, due in semiannual
installments through 2029
Public improvement bonds ($4,105,000 issued), USDA Bond #R-1, payable
to the County, interest at 2%, due in semiannual installments
through 2057
Public improvement refunding bonds ($3,751,250 issued), 2020 Series C & D,
payable to the County, interest at 5%, due in semiannual
installments through 2029
Public improvement bonds ($147,000 issued), 2008 Series A, payable to
the County, interest at 4.125%, due in semiannual installments
through 2043
State Revolving Fund loans ($83,624,812 loaned) payable to the State
of Hawaii, interest up to 1%, due in semiannual installments
through 2041
Total long-term debt
Add: Unamortized premium
Less: Current portion
Noncurrent portion
Amount
$ 715255000
5,297,500
4,105, 000
3,097,500
114,155
53,580,508
73,719,663
1,359,370
75,079,033
(559025341)
$ 6951765692
The public improvement bonds consist of long-term obligations to the County that reflect the
Department's proportionate share of general obligation bonds that were issued by the County,
in part, for the purpose of improving the public water system. The County's general obligation
bonds are an absolute and unconditional general obligation of the County for which its full
faith and credit are pledged. The principal and interest payments on the bonds are a first
charge on the general fund of the County.
The Department's State Revolving Fund Loans are direct borrowings of the Department for
which it pledges either its full faith and credit or gross revenues of the Department.
26
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE F -LONG-TERM DEBT (Continued)
The following is a summary of changes in long-term debt during the fiscal year ended
June 30, 2022:
At June 30, 2022, future principal and interest payments for long-term debt are scheduled as
follows:
Balance
Public
Balance
Due Within
July 1, 2021
Additions
Decreases
June 30, 2022
One Year
State Revolving Fund Loans
$ 46,997,951
$ 10,000,000
$ (31417,443)
$ 53,580,508
$ 31372,203
Public Improvement Bonds
18,831,243
41105,000
(21797,088)
20,139,155
212671275
Add: Unamortized premium
11622,233
--
(262,863)
11359,370
262,863
Total
$ 67,451,427
$ 14,105,000
$ (61477,394)
$ 75,079,033
$ 51902,341
At June 30, 2022, future principal and interest payments for long-term debt are scheduled as
follows:
27
Public
Year Ending
State Revolving Fund Loans
Improvement Bonds
Total
June 30,
Principal
Interest
Principal
Interest
Principal
Interest
2023 $
31372,203
$ 828,205
$ 21267,275 $
686,031
$ 51639,478 $
11514,236
2024
31410,263
772,960
21384,921
569,760
51795,184
11342,720
2025
31452,810
713,173
21593,370
455,303
61046,180
11168,476
2026
31495,958
6521726
217021484
348,314
61198,442
11001,040
2027
31539,724
591,587
21811,626
236,548
61351,350
828,135
2028-2032
15,771,190
21123,317
41021,286
465,936
19,792,476
21589,253
2033-2037
1417611274
948,216
591,941
242,344
15,353,215
11190,560
2038-2042
51777,086
176,194
641,896
192,390
61418,982
368,584
2043-2047
--
--
661,507
139,744
661,507
139,744
2048-2052
--
--
7041214
88,902
7041214
88,902
2053-2057
--
--
758,635
341478
758,635
341478
$
53,580,508
$ 61806,378
$ 20,139,155 $
31459,750
$ 731719,663 $
10,266,128
27
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE F -LONG-TERM DEBT (Continued)
In prior years, the County defeased certain general obligation bonds by placing the proceeds
of new bonds in irrevocable trusts to provide for all future debt service payments on the old
bonds. Accordingly, the assets of the irrevocable trust and the liability of the defeased bonds
are not included for the Department's proportionate share on the Department's financial
statements. As of June 30, 2022, the Department's proportionate share of the outstanding
balance of the unpaid defeased bonds amounted to $17,503,750.
NOTE G - OTHER LONG-TERM LIABILITIES
The following is a summary of other long-term obligations transactions for the fiscal year
ended June 30, 2022:
NOTE H - LEASES PAYABLE
The Department has entered into leases for land and equipment use. The terms of the
agreements range from one to fifty years. The calculated interest rate used was 1.50%.
W
Balance
July 1, 2021
Deductions
Balance
Due Within
(restated)
Additions
and Payments
June 30, 2022
One Year
Customers' deposits
$ 16,119,667
$ 710,240
$ (391,609)
$ 16,438,298
$ 2343727
Accrued vacation
2,029,668
894,553
(969,745)
1,954,476
644,977
Accrued workers'
com pensation
380,000
--
(80,000)
300,000
138,464
Leases payable
261,060
223460
(24,434)
259,086
31,569
Total
$ 18,790,395
$ 1,627,253
$ (1,465,788)
$ 18,951,860
$ 1,049,737
NOTE H - LEASES PAYABLE
The Department has entered into leases for land and equipment use. The terms of the
agreements range from one to fifty years. The calculated interest rate used was 1.50%.
W
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE H -LEASES PAYABLE (Continued)
Principal and interest payments to maturity are as follows:
Year Ending
June 30, Principal Interest Total
2023
2024
2025
2026
2027
2028-2032
2033-2037
2038-2042
2043-2047
2048-2052
2053-2057
2058-2062
2063-2065
NOTE I - EMPLOYEE BENEFITS
Pension Plan
$ 311569 $
3,651 $
35,220
141128
3,668
171796
4,334
3,166
7,500
4,393
3,107
7,500
41453
3,048
7,501
20,673
14,327
35,000
221275
121725
35,000
24,004
10,996
35,000
25,867
9,133
35,000
27,874
71126
35,000
30,036
4,964
35,000
32,367
2,633
35,000
171113
376
171489
$ 259,086 $
78,920 $
338,006
Plan Description - Generally, all full-time employees of the State and counties are required
to be members of the ERS, a cost-sharing multiple -employer defined benefit pension plan that
administers the State's pension benefits program. Benefits, eligibility, and contribution
requirements are governed by HRS Chapter 88 and can be amended through legislation. The
ERS issues publicly available annual financial reports that can be obtained at the ERS
website: https://ers.ehawaii.gov/resources/financials.
Benefits Provided - The ERS Pension Trust is comprised of three pension classes for
membership purposes and considered to be a single plan for accounting purposes since all
assets of the ERS may legally be used to pay the benefits of any of the ERS members or
beneficiaries. The ERS provides retirement, disability and death benefits with three
membership classes known as the noncontributory, contributory and hybrid retirement
classes. The three classes provide a monthly retirement allowance equal to the benefit
multiplier (generally 1.25% to 2.25%) multiplied by the average final compensation multiplied
by years of credited service. Average final compensation for members hired prior to July 1,
2012 is an average of the highest salaries during any three years of credited service, excluding
any salary paid in lieu of vacation for members hired January 1, 1971 or later and the average
W
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
of the highest salaries during any five years of credited service including any salary paid in
lieu of vacation for members hired prior to January 1, 1971. For members hired after June 30,
2012, average final compensation is an average of the highest salaries during any five years
of credited service excluding any salary paid in lieu of vacation.
Each retiree's original retirement allowance is increased on each July 1 beginning the
calendar year after retirement. Retirees first hired as members prior to July 1, 2012 receive a
2.5% increase each year of their original retirement allowance without a ceiling. Retirees first
hired as members after June 30, 2012 receive a 1.5% increase each year of their original
retirement allowance without a ceiling. The annual increase is not compounded.
The following summarizes the provisions relevant to the largest employee groups of the
respective membership class. Retirement benefits for certain groups, such as police officers,
firefighters, some investigators, sewer workers, judges, and elected officials, vary from
general employees.
Noncontributory Class
Retirement Benefits - General employees' retirement benefits are determined as 1.25%
of average final compensation multiplied by the years of credited service. Employees with
ten years of credited service are eligible to retire at age 62. Employees with 30 years of
credited service are eligible to retire at age 55.
Disability Benefits - Members are eligible for service -related disability benefits regardless
of length of service and receive a lifetime pension of 35% of their average final
compensation. Ten years of credited service is required for ordinary disability. Ordinary
disability benefits are determined in the same manner as retirement benefits but are
payable immediately, without an actuarial reduction, and at a minimum of 12.5% of
average final compensation.
Death Benefits - For service -connected deaths, the surviving spouse/reciprocal
beneficiary receives a monthly benefit of 30% of the average final compensation until
remarriage or re-entry into a new reciprocal beneficiary relationship. Additional benefits
are payable to surviving dependent children up to age 18. If there is no spouse/reciprocal
beneficiary or dependent children, no benefit is payable.
Ordinary death benefits are available to employees who were active at time of death with
at least ten years of credited service. The surviving spouse/reciprocal beneficiary (until
remarriage/re-entry into a new reciprocal beneficiary relationship) and dependent children
(up to age 18) receive a benefit equal to a percentage of the member's accrued maximum
allowance unreduced for age or, if the member was eligible for retirement at the time of
death, the surviving spouse/reciprocal beneficiary receives 100% joint and survivor
lifetime pension and the surviving dependent children receive a percentage of the
member's accrued maximum allowance unreduced for age.
30
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
Contributory Class for Emalovees Hired arior to Julv 1. 2012
Retirement Benefits - General employees' retirement benefits are determined as 2% of
average final compensation multiplied by the years of credited service. General
employees with five years of credited service are eligible to retire at age 55.
Police officers and firefighters' retirement benefits are determined using the benefit
multiplier of 2.5% for qualified service, up to a maximum of 80% of average final
compensation. Police officers and firefighters with five years of credited service are eligible
to retire at age 55. Police officers and firefighters with 25 years of credited service are
eligible to retire at any age, provided the last five years is service credited in these
occupations.
Disability Benefits - Members are eligible for service -related disability benefits regardless
of length of service and receive a one-time payment of the member's contributions and
accrued interest plus a lifetime pension of 50% of their average final compensation. Ten
years of credited service is required for ordinary disability. Ordinary disability benefits are
determined as 1.75% of average final compensation multiplied by the years of credited
service but are payable immediately, without an actuarial reduction, and at a minimum of
30% of average final compensation.
Death Benefits - For service -connected deaths, the surviving spouse/reciprocal
beneficiary receives a lump sum payment of the member's contributions and accrued
interest plus a monthly benefit of 50% of the average final compensation until remarriage
or re-entry into a new reciprocal beneficiary relationship. If there is no surviving
spouse/reciprocal beneficiary, surviving children (up to age 18) or dependent parents are
eligible for the monthly benefit. If there is no spouse/reciprocal beneficiary or dependent
children/parents, the ordinary death benefit is payable to the designated beneficiary.
Ordinary death benefits are available to employees who were active at time of death with
at least one year of service. Ordinary death benefits consist of a lump sum payment of the
member's contributions and accrued interest plus a percentage of the salary earned in the
12 months preceding death, or 50% joint and survivor lifetime pension if the member was
not eligible for retirement at the time of death but was credited with at least ten years of
service and designated one beneficiary, or 100% joint and survivor lifetime pension if the
member was eligible for retirement at the time of death and designated one beneficiary.
Contributory Class for Employees Hired After June 30, 2012
Retirement Benefits - General employees' retirement benefits are determined as 1.75%
of average final compensation multiplied by the years of credited service. General
employees with ten years of credited service are eligible to retire at age 60.
31
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
Police officers and firefighters' retirement benefits are determined using the benefit
multiplier of 2.25% for qualified service, up to a maximum of 80% of average final
compensation. Police officers and firefighters with ten years of credited service are eligible
to retire at age 60. Police officers and firefighters with 25 years of credited service are
eligible to retire at age 55, provided the last five years is service credited in these
occupations.
Disability and Death Benefits - Members are eligible for service -related disability benefits
regardless of length of service and receive a lifetime pension of 50% of their average final
compensation plus refund of contributions and accrued interest. Ten years of credited
service is required for ordinary disability.
For police officers and firefighters, ordinary disability benefits are 1.75% of average final
compensation for each year of service and are payable immediately, without an actuarial
reduction, at a minimum of 30% of average final compensation.
Death benefits for contributory members hired after June 30, 2012 are generally the same
as those for contributory members hired June 30, 2012 and prior.
Hybrid Class for Employees Hired Prior to July 1, 2012
Retirement Benefits - General employees' retirement benefits are determined as 2% of
average final compensation multiplied by the years of credited service. General
employees with five years of credited service are eligible to retire at age 62. General
employees with 30 years of credited service are eligible to retire at age 55.
Disability Benefits - Members are eligible for service -related disability benefits regardless
of length of service and receive a lifetime pension of 35% of their average final
compensation plus refund of their contributions and accrued interest. Ten years of credited
service is required for ordinary disability. Ordinary disability benefits are determined in the
same manner as retirement benefits but are payable immediately, without an actuarial
reduction, and at a minimum of 25% of average final compensation.
Death Benefits - For service -connected deaths, the designated surviving
spouse/reciprocal beneficiary receives a lump sum payment of the member's contributions
and accrued interest plus a monthly benefit of 50% of the average final compensation until
remarriage or re-entry into a new reciprocal beneficiary relationship. If there is no surviving
spouse/reciprocal beneficiary, surviving dependent children (up to age 18) or dependent
parents are eligible for the monthly benefit. If there is no spouse/reciprocal beneficiary or
dependent children/parents, the ordinary death benefit is payable to the designated
beneficiary.
32
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
Ordinary death benefits are available to employees who were active at time of death with
at least five years of service. Ordinary death benefits consist of a lump sum payment of
the member's contributions and accrued interest plus a percentage multiplied by 150%,
or 50% joint and survivor lifetime pension if the member was not eligible for retirement at
the time of death but was credited with at least ten years of service and designated one
beneficiary, or 100% joint and survivor lifetime pension if the member was eligible for
retirement at the time of death and designated one beneficiary.
Hybrid Class for Employees Hired After June 30, 2012
Retirement Benefits - General employees' retirement benefits are determined as 1.75%
of average final compensation multiplied by the years of credited service. General
employees with ten years of credited service are eligible to retire at age 65. Employees
with 30 years of credited service are eligible to retire at age 60. Sewer works, water safety
officers, and emergency medical technicians may retire with 25 years of credited service
at age 55.
Disability and Death Benefits - Provisions for disability and death benefits generally remain
the same except for ordinary death benefits. Ordinary death benefits are available to
employees who were active at time of death with at least ten years of service. Ordinary
death benefits consist of a lump sum payment of the member's contributions and accrued
interest, plus a percentage multiplied by 50% joint and survivor lifetime pension if the
member was not eligible for retirement at the time of death but was credited with at least
ten years of service and designated one beneficiary, or 100% joint and survivor lifetime
pension if the member was eligible for retirement at the time of death and designated one
beneficiary.
Contributions - Contributions are governed by HRS Chapter 88 and may be amended
through legislation. The employer rate is set by statute based on the recommendations of the
ERS actuary resulting from an experience study conducted every five years. Since
July 1, 2005, the employer contribution rate is a fixed percentage of compensation, including
the normal cost plus amounts required to pay for the unfunded actuarial accrued liabilities.
Contributions to the pension plan from the Department were $2,477,404 for the fiscal year
ended June 30, 2022. The contribution rates for fiscal year 2022 were 41 % for police officers
and firefighters and 24% for all other employees.
The employer is required to make all contributions for noncontributory members. Contributory
members hired prior to July 1, 2012 are required to contribute 7.8% of their salary, except for
police officers and firefighters who are required to contribute 12.2% of their salary.
Contributory members hired after June 30, 2012 are required to contribute 9.8% of their salary,
except for police officers and firefighters who are required to contribute 14.2% of their salary.
Hybrid members hired prior to July 1, 2012 are required to contribute 6.0% of their salary.
Hybrid members hired after June 30, 2012 are required to contribute 8.0% of their salary.
33
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and
Deferred Inflows of Resources Related to Pensions - At June 30, 2022, the Department
reported a liability of $29,017,165 for its proportionate share of the net pension liability. The
net pension liability was measured as of June 30, 2021, and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of that date.
The Department's proportion of the net pension liability was based on a projection of the
Department's long-term share of contributions to the pension plan relative to the contributions
of all participants, actuarially determined. At the measurement date, June 30, 2021, the
Department's proportionate share was 0.238%, which was an increase of 0.008% from its
proportionate share measured as of June 30, 2020.
There were no significant changes of assumptions or other inputs that affected measurement
of the total pension liability since the prior measurement date. There were no changes
between the measurement date, June 30, 2021, and the reporting date, June 30, 2022, that
are expected to have a significant effect on the proportionate share of the net pension liability.
For the fiscal years ended June 30, 2022, the Department recognized pension expense of
$313441975. At June 30, 2022, the Department reported deferred outflows of resources and
deferred inflows of resources related to pensions from the following sources:
Differences between expected and actual experience
Changes in assumptions
Net difference between projected and actual earnings
on pension plan investments
Changes in proportion and differences between
Department contributions and proportionate share
of contributions
Department contributions subsequent to the
measurement date
Total
34
Deferred Deferred
Outflows of Inflows of
Resources Resources
$ 8111089 $
801006 --
--
(4,927,920)
116851588 (11238,689)
214771404 --
$
51054,087 $ (6,166, 609)
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
At June 30, 2022, the $2,477,404 reported as deferred outflows of resources related to
pensions resulting from the Department's contributions subsequent to the measurement date
will be recognized as a reduction of the net pension liability in the fiscal year ended June 30,
2023. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pensions at June 30, 2022 will be recognized in pension expense as
follows:
$
Net Deferred
Fiscal Year Ending June 30,
Outflows (Inflows)
2023
$ (492,227)
2024
(879,557)
2025
(946,490)
2026
(1,304,725)
2027
331073
(3,589,926)
Actuarial Assumptions - The total pension liability in the June 30, 2021 actuarial valuation
was determined using the following actuarial assumptions, adopted by the ERS's Board of
Turstees on August 12, 2019, based on the 2018 Experience Study for the five-year period
from July 1, 2013 through June 30, 2018:
2021
Inflation 2.50%
Investment rate of return, including inflation 7.00%
Salary increases, including inflation
Police and fire employees 5.00% to 7.00%
General employees 3.50% to 6.50%
Teachers 3.75% to 5.75%
There were no changes to ad hoc postemployment benefits including cost of living allowances.
Post-retirement mortality rates are based on the 2019 Public Retirees of Hawai mortality table,
generational projection using the BB projection table from the year 2019 and with multipliers
based on plan and group experience. Pre -retirement mortality rates are based on multiples of
the Pub -2010 mortality table based on the occupation of the member.
35
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
The long-term expected rate of return on pension plan investments was determined using a
"top down approach" of the Client -constrained Simulation -based Optimization Model (a
statistical technique known as "re -sampling with replacement" that directly keys in on specific
plan -level risk factors as stipulated by the ERS board of trustees) in which best -estimate
ranges of expected future real rates of return (expected returns, net of pension plan
investment expense and inflation) are developed for each major asset class. These ranges
are then combined to produce the long-term expected rate of return by weighting the expected
future rates of return by the target asset allocation percentages and by adding expected
inflation. The target allocation and best estimates of geometric real rates of return for each
major asset class are summarized in the following table:
Strategic Allocation
(Risk -Based Classes)
Broad Growth
Diversifying Strategies
Long -Term Long -Term
Target Expected Expected Real
Allocation Rate of Return Rate of Return*
63.00% 8.00%
37.00% 5.10%
100.00%
*Uses an expected inflation of 2.10%
5.90%
3.00%
Discount Rate - The discount rate used to measure the net pension liability was 7.00%,
consistent with the rate used at the prior measurement date. The projection of cash flows used
to determine the discount rate assumed that employee contributions will be made at the
current contribution rate and that contributions from the Department will be made at statutorily
required rates, actuarially determined. Based on those assumptions, the pension plan's
fiduciary net position was projected to be available to make all projected future benefit
payments of current active and inactive employees. Therefore, the long-term expected rate of
return on pension plan investments was applied to all periods of projected benefit payments
to determine the total pension liability.
Sensitivity of the Department's Proportionate Share of the Net Pension Liability to
Changes in the Discount Rate - The following presents the Department's proportionate
share of the net pension liability calculated using the discount rate of 7.00%, as well as what
the Department's proportionate share of the net pension liability would be if it were calculated
using a discount rate that is one percentage point lower (6.00%) or one percentage point
higher (8.00%) than the current rate:
1 % Decrease Discount Rate 1% Increase
(6.00%) (7.00%) (8.00%)
Department's proportionate share of
the net pension liability $ 39,578,213
36
$ 29, 017,165
$ 20,31 O, 191
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
Pension Plan Fiduciary Net Position - Detailed information about the pension plan's
fiduciary net position is available in the separately issued ERS financial report. The ERS
complete financial statements are available at https://ers.ehawaii.gov/resources/financials.
Payables to the Pension Plan - At June 30, 2022, the amount payable to the ERS was
$321,521, which consists of statutorily required employer contributions for the month of June
and an accrual for excess pension costs attributed to the fiscal year, as required by the HRS.
Postemployment Health Care and Life Insurance Benefits
Plan Description - The Department provides certain health care and life insurance benefits
to all qualified employees. Pursuant to Act 88, SLH 2001, the Department contributes to the
EUTF, an agent multi-employer defined benefit plan. The EUTF was established to provide a
single delivery system of health benefits for state and county workers, retirees and their
dependents. The EUTF issues a publicly available annual financial report that can be obtained
at https://eutf hawaii. goy/reports.
For employees hired before July 1, 1996, the Department pays the entire base monthly
contribution for employees retiring with ten years or more of credited service, and 50% of the
base monthly contribution for employees retiring with fewer than ten years of credited service.
A retiree can elect a family plan to cover dependents.
For employees hired after June 30, 1996 but before July 1, 2001, and who retire with less than
10 years of service, the Department makes no contributions. For those retiring with at least 10
years but fewer than 15 years of service, the Department pays 50% of the base monthly
contribution. For employees retiring with at least 15 years but fewer than 25 years of service,
the Department pays 75% of the base monthly contribution. For employees retiring with at least
25 years of service, the State pays 100% of the base monthly contribution. Retirees in this
category can elect a family plan to cover dependents.
37
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
For employees hired on or after July 1, 2001, and who retire with less than 10 years of service,
the Department makes no contributions. For those retiring with at least 10 years but fewer than
15 years of service, the Department pays 50% of the base monthly contribution. For those
retiring with at least 15 years of service but fewer than 25 years of service, the Department pays
75% of the base monthly contribution. For employees retiring with at least 25 years of service,
the Department pays 100% of the base monthly contribution. Only single plan coverage is
provided for retirees in this category. Retirees can elect family coverage but must pay the
difference.
Employees Covered by Benefit Terms - At July 1, 2021, the following number of plan
members of the Department were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 108
Inactive employees entitled but not yet receiving benefit payments 13
Active employees 164
285
Contributions - Contributions are governed by HRS Chapter 87A and may be amended
through legislation. Employer contributions to the EUTF from the Department was $2,148,000
for the fiscal year ended June 30, 2022. The employer is required to make all contributions for
members.
Net OPEB Liability
The net OPEB liability as of June 30, 2022 was measured as of
July 1, 2021, and the total OPEB liability used to calculate the net OPEB liability was
determined by an actuarial valuation as of that date. As of June 30, 2022, the Department
reported a net OPEB liability of $10,451,786.
Actuarial assumptions. The total OPEB liability in the July 1, 2021 actuarial valuation was
determined using the following actuarial assumptions, applied to all periods included in the
measurement, unless otherwise specified:
Actuarial cost method
Discount rate
Inflation
Entry age normal
7.00%
2.50%
Salary increases 3.50% to 7.00% including inflation
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
Demographic assumptions
Mortality
Based on the experience study covering the five
year period ending June 30, 2018 as conducted by
the ERS
System -specific mortality tables utilizing scale BB
to project generational mortality improvement
Participation rates 98% healthcare participation assumption for
retirees that receive 100% of the base monthly
contribution. Healthcare participation rates of 25%,
65%, and 90% for retirees that receive 0%, 50%,
or 75% of the base monthly contribution,
respectively. 100% for life insurance and 98% for
Medicare Part B
Healthcare cost trend rates
PPO*
HMO*
Part B & base monthly contribution
Dental
Vision
Life insurance
Initial rate of 7.25%; declining to a rate of
4.70% after 12 years
Initial rate of 7.25%; declining to a rate of
4.70% after 12 years
Initial rate of 5.00%, declining to a rate of
4.70% after 9 years
4.00%
2.50%
0.00%
* Blended rates for medical and prescription drug
W
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
The long-term expected rate of return on OPEB plan investments was determined using a
building-block method in which best -estimate ranges of expected future real rates of return
(expected returns, net of OPEB plan investment expense and inflation) are developed for each
major asset class. These ranges are combined to produce the long-term expected rate of
return by weighting the expected future real rates of return by the target asset allocation
percentage and by adding expected inflation. The target allocation and best estimates of
arithmetic real rates of return for each major asset class are summarized in the following table:
Discount Rate - The discount rate used to measure the total OPEB liability was 7.00%, based
on the expected rate of return on OPEB plan investments. The Department's funding policy is
to pay the recommended actuarially determined contribution, which is based on layered,
closed amortization periods. The OPEB plan's fiduciary net position was projected to be
available to make all projected future benefit payments for current plan members. Therefore,
the long-term expected rate of return on OPEB plan investments was applied to all periods of
projected benefit payments to determine the total OPEB liability.
W
Long -Term
Target
Expected Real
Asset Class
Allocation
Rate of Return
U.S. equity
16.00%
6.09%
Private equity
12.50%
10.19%
Non -U.S. equity
11.50%
7.12%
Real assets
10.00%
6.16%
Trend following
10.00%
2.01%
Private credit
8.00%
5.83%
U.S. microcap
6.00%
7.62%
Long treasuries
6.00%
1.06%
Reinsurance
5.00%
4.44%
Global options
5.00%
4.33%
Alternative risk premia
5.00%
1.46%
TIPS
5.00%
-0.07%
100.00%
Discount Rate - The discount rate used to measure the total OPEB liability was 7.00%, based
on the expected rate of return on OPEB plan investments. The Department's funding policy is
to pay the recommended actuarially determined contribution, which is based on layered,
closed amortization periods. The OPEB plan's fiduciary net position was projected to be
available to make all projected future benefit payments for current plan members. Therefore,
the long-term expected rate of return on OPEB plan investments was applied to all periods of
projected benefit payments to determine the total OPEB liability.
W
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
Changes in the Net OPEB Liability
The following schedules presents the changes in the net OPEB liability for the fiscal year
ending June 30, 2022:
Balance at June 30, 2021
Changes for the fiscal year:
Service cost
Interest on the total OPEB liability
Difference between expected and
actual experience
Employer contributions
Net investment income
Benefit payments
Administrative expense
Other
Net changes
Balance at June 30, 2022
Increase (Decrease)
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability
(a) (b) (a) - (b)
$ 3512371107 $ 2018431293 $ 1413931814
7621769
--
7621769
214561079
--
214561079
(287,233)
--
(287,233)
--
112101523
(1,210,523)
--
516661092
(5,666,092)
(1,063,301)
(1,063,301)
--
-
(2,922)
(2,922)
21922
--
(50)
50
118681314
518101342
(3,942,028)
$ 3711051421 $
2616531635 $
1014511786
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate - The following
presents the net OPEB liability of the Department, calculated using a single discount rate of
7.0%, as well as what the Department's net OPEB liability would be if it were calculated using
a discount rate that is one percentage point lower or one percentage point higher than the
current discount rate:
Net OPEB Liability
1 % Decrease
(6.00%)
$ 16,140, 504
41
Discount Rate
(7.00%)
$ 1014511786
1 % Increase
(8.00%)
$ 519151712
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rates -
The following presents the net OPEB liability of the Department, calculated using the assumed
healthcare cost trend rates, as well as what the Department's net OPEB liability would be if it
were calculated using healthcare cost trend rates that are one percentage point lower or one
percentage point higher than the current healthcare cost trend rates:
Current
Healthcare
Cost Trend
1 % Decrease Rates 1 % Increase
Net OPEB Liability $ 516431775 $ 1014511786 $ 1616011852
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to OPEB
For the fiscal year ended June 30, 2022, the Department recognized OPEB expense of
$5811414. At June 30, 2022, the Department reported deferred outflows of resources and
deferred inflows of resources related to OPEB from the following sources:
Difference between expected and actual experience
Changes of assumptions
Net difference between projected and actual earnings
on OPEB plan investments
Employer contributions subsequent to the
measurement date
42
Deferred Deferred
Outflows of Inflows of
Resources Resources
$ -- $ (2,566,499)
2461074 (133, 761)
-- (21558,725)
2,148, 000 --
$
21394,074 $ (51258,985)
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE I -EMPLOYEE BENEFITS (Continued)
At June 30, 2022, the Department reported $2,148,000 as deferred outflows of resources
related to OPEB resulting from Department contributions subsequent to the measurement
date, which will be recognized as a reduction of the net OPEB liability in the fiscal year ended
June 30, 2023. Other amounts reported as deferred outflows of resources and deferred
inflows of resources at June 30, 2022 will be recognized in OPEB expense as follows:
Fiscal Year
Net Deferred
Ended June 30:
Inflows
2023
$ (1,116,608)
2024
(1,114,177)
2025
(1,167,543)
2026
(1,289,397)
2027
(309,489)
Thereafter
(15,697)
$ (5,012,911)
Deferred Compensation Plan
The Department participates in a deferred compensation plan established by the State of
Hawaii in accordance with Internal Revenue Code Section 457. The plan is available to all
the Department employees, and permits employees to defer a portion of their salary until
future years. The deferred compensation is not available to employees until termination,
retirement, death, or unforeseeable emergency.
All plan assets are held in a trust fund to protect them from claims of general creditors and
from diversion to any uses other than paying benefits to participants and beneficiaries. The
Department has no responsibility for loss due to the investment or failure of investment of
funds and assets in the plans, but does have the duty of due care that would be required of
an ordinary prudent investor.
NOTE J - COMMITMENTS AND CONTINGENT LIABILITIES
Risk Management - The Department is exposed to various risks of loss from torts; theft of,
damage to, and destruction of assets; employee injuries and illnesses; and natural disasters.
The Department maintains property, auto liability, and general liability insurance policies. The
Department remains self-insured for workers' compensation liability.
Liabilities are recorded when it is probable that a loss has occurred and the amount of that
loss can be reasonably estimated. Claim liabilities are based on the estimated ultimate cost
of settling the claims, and include incremental costs for the hiring of special counsel and expert
witnesses. Claims liabilities are estimated by a case-by-case review of all claims and the
application of historical experience to outstanding claims.
43
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO FINANCIAL STATEMENTS
June 30, 2022
NOTE J -COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
Construction Contracts - The Department is obligated under construction contracts for the
utility plant and other projects. Such commitments totaled approximately $14,126,000 at June
30, 2022.
Litigation - The Department is involved in various legal proceedings arising in the ordinary
course of business. The Department provides for losses that, in the opinion of management,
are both probable of being incurred and that can be reasonably estimated. In management's
opinion, losses, if any, would not materially affect the Department's financial position or results
of operations.
NOTE K - RELATED PARTY TRANSACTIONS
Long-term Debt - As discussed in Note F, the County has issued general obligation bonds
on the Department's behalf for improvements to the water system. The Department is liable
to the County for its proportionate share of the debt service requirements. In connection with
these general obligation bond issues, long-term debt payable to the County totaled
$20,139,155 at June 30, 2022. Accrued interest payable to the County totaled $285,288 at
June 30, 2022.
Other - Amounts due to the County totaled approximately $258,000 as of June 30, 2022.
The County provides the Department with various administrative services including treasury,
legal, audit, and workers' compensation administration. The cost for these services are
generally invoiced and reimbursed on an annual basis.
NOTE L - PRIOR PERIOD ADJUSTMENT
Net position as of July 1, 2021 has been restated due to errors related to capital assets that
were misclassified and should have been either placed in service (classified as utility plant in
service) or written -off prior to June 30, 2021. Therefore, an adjustment was made to increase
utility plant in service by $22,057,519, decrease construction work in progress by
$20,562,979, increase accumulated depreciation by $1,224,752, and decrease preliminary
survey and investigation charges by $2,259,839 as of June 30, 2021. The effect for the fiscal
year ended June 30, 2021 was a decrease in change in net position of $460,378 and a
decrease in beginning net position as of July 1, 2021 of $1,990,051.
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
ml
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
SCHEDULE OF PROPORTIONATE
SHARE OF THE NET PENSION LIABILITY
Last Ten Fiscal Years*
* This schedule is intended to present information for ten years, as of the measurement date of
the collective net pension liability for each respective fiscal year. Additional years will be built
prospectively as information becomes available.
See accompanying notes to required supplementary information.
We
Proportionate
Plan
Share of the
Fiduciary
Net Pension
Net Position
Proportion
Proportionate
Liability
as a %age
Measurement
of the
Share of the
as a %age
of the Total
Period
Net Pension
Net Pension
Covered
of Covered
Pension
Ended
Liability (%)
Liability ($)
Payroll
Payroll
Liability
June 30, 2021
0.24%
$
29,017,165
$
11,016,038
263.4%
64.25%
June 30, 2020
0.23%
$
35,290,257
$
10,439,473
338.0%
53.18%
June 30, 2019
0.23%
$
32,029,248
$
10,318,136
310.4%
54.87%
June 30, 2018
0.25%
$
33,522,053
$
9742400
344.1%
55.48%
June 30, 2017
0.22%
$
28,365,453
$
9,358,187
303.1%
54.80%
June 30, 2016
0.22%
$
29,247,607
$
9,046,930
323.3%
51.28%
June 30, 2015
0.22%
$
18,940,065
$
9,012,196
210.2%
62.42%
June 30, 2014
0.26%
$
20,526,993
$
8,272,307
248.1%
63.92%
June 30, 2013
0.21%
$
18,469,400
$
7,640,477
241.7%
57.96%
* This schedule is intended to present information for ten years, as of the measurement date of
the collective net pension liability for each respective fiscal year. Additional years will be built
prospectively as information becomes available.
See accompanying notes to required supplementary information.
We
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
SCHEDULE OF CONTRIBUTIONS (PENSION)
Last Ten Fiscal Years
Fiscal
Statutorily
Year
Required
Ended
Contribution
June 30, 2022 $
June 30, 2021 $
June 30, 2020 $
June 30, 2019 $
June 30, 2018 $
June 30, 2017 $
June 30, 2016 $
June 30, 2015 $
June 30, 2014 $
June 30, 2013 $
214771404 $
215791631 $
212581593 $
119501328 $
117571461 $
116031278 $
115531128 $
115201994 $
116641580 $
112141933 $
Actual
Department
Statutorily
Required
Contributions
214771404 $
215791631 $
212581593 $
119501328 $
117571461 $
116031278 $
115531128 $
115201994 $
116641580 $
112141933 $
Contribution
Deficiency Covered
(Excess) Payroll
10,450,084
11, 016, 038
10,439,473
10,318,136
9,742,400
913581187
910461930
Contributions
as a %age
of
Covered
Payroll
23.71%
23.42%
21.64%
18.90%
18.04%
17.13%
17.17%
910121196
16.88%
812721307
20.12%
716401477
15.90%
See accompanying notes to required supplementary information.
M
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
REQUIRED BY GASB STATEMENT NO. 68
Fiscal Year Ended June 30, 2022
NOTE A - CHANGES OF ASSUMPTIONS
There were no changes of assumptions or other inputs that significantly affected the
measurement of the total pension liability since the measurement period ended June 30, 2016.
Amounts reported in the schedule of the proportionate share of the net pension liability as of the
measurement period ended June 30, 2016 (fiscal year ended June 30, 2017) were significantly
impacted by the following changes of actuarial assumptions:
o The investment return assumption decreased from 7.65% to 7.00%
o Mortality assumptions were modified to assume longer life expectancies as well as
to reflect continuous mortality improvement
Prior to the measurement period ended June 30, 2016 (fiscal year ended June 30, 2017), there
were no other factors, including the use of different assumptions that significantly affect trends
reported in these schedules.
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY
AND RELATED RATIOS
Last Ten Fiscal Years *
Cove red -e mp loye a payroll $ 10, 713, 826 $ 10, 266, 331 $ 10, 264, 425 $ 10, 212, 595 $ 9791
Net OPEB Liability as a Percentage of
Covered -employee Payroll 97.55% 140.20% 156.66% 160.90% 176.34%
*This schedule is intended to present information for ten years for each respective fiscal year. Additional
years will be built prospectively as information becomes available.
See accompanying notes to required supplementary information.
2022
2021
2020
2019
2018
Total OPEB liability
Service cost
$
762, 769
$
77307
$
746,672
$
698,126
$
687,414
Interest on the total OPEB liability
2,456,079
2,483573
2,349,959
2,264524
2,135,490
Difference between expected and
actual experience
(287,233)
(2,403,748)
(314,598)
(1,184,347)
--
Changes of assumptions
--
(190,921)
137542
432,233
--
Benefit payments
(1,063,301)
(1,036,438)
(1,012,084)
(1,016,548)
(953,288)
Net change in total OPEB liability
1,868,314
(373,927)
1,907,491
1,193,988
1,869,616
Total OPEB liability - Beginning
35,237,107
35,611,034
33703543
32509555
30,639,939
Total OPEB liability - Ending
$
37,105,421
$
35,237,107
$
35,611,034
$
33,703,543
$
32,509,555
Plan fiduciary net position
Employer contributions
$
1, 210523
$
1, 977, 000
$
1, 990, 000
$
1, ,936548
$
1, ,867788
Net investment income
506,092 092
376, 721
76406
1,111, 306
1,245,946
Benefit payments
(1,063,301)
(1,036,438)
(1,012,084)
(1,016,548)
(953,288)
Administrative expense
(2,922)
(3,013)
(5,493)
(3,336)
(2,782)
Other
(50)
(2,264)
522,371
--
16,370
Net change in plan fiduciary net position
5,810,342
1,312,006
2,259,490
2,027,970
2,174,034
Plan fiduciary net position - Beginning
20,843,293
19,531,287
17,271,797
15,243,827
13,069793
Plan fiduciary net position - Ending
$
26,653,635
$
20,843,293
$
19,531,287
$
17,271,797
$
15,243,827
Net OPEB liability
$
10,451,786
$
14,393,814
$
16,079,747
$
16,431,746
$
17,265,728
Plan fiduciary net position as a percentage
of the total OPEB liability
71.83%
59.15%
54.85%
51.25%
46.89%
Cove red -e mp loye a payroll $ 10, 713, 826 $ 10, 266, 331 $ 10, 264, 425 $ 10, 212, 595 $ 9791
Net OPEB Liability as a Percentage of
Covered -employee Payroll 97.55% 140.20% 156.66% 160.90% 176.34%
*This schedule is intended to present information for ten years for each respective fiscal year. Additional
years will be built prospectively as information becomes available.
See accompanying notes to required supplementary information.
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
SCHEDULE OF CONTRIBUTIONS (OPEB)
Last Ten Fiscal Years
Fiscal Actuarially
Year Determined
Ended Contribution
June 30, 2022
$
271487000
June 30, 2021
$
270467000
June 30, 2020
$
179777000
June 30, 2019
$
179907000
June 30, 2018
$
179337000
June 30, 2017
$
178677000
June 30, 2016
$
179147000
June 30, 2015
$
178507000
June 30, 2014
$
178997000
June 30, 2013
$
178347000
Contributions
in Relation to
the Actuarially
Determined
Contribution
$ 2,148, 000
$ 172107523
$ 179777000
$ 179907000
$ 179367548
$ 178677788
$ 179137204
$ 178487389
$ 179007758
$ 178337733
Contributions
See accompanying notes to required supplementary information.
50
asa%age
Contribution
Covered-
of Covered -
Deficiency
Employee
Employee
(Excess)
Payroll
Payroll
$ --
$
11, 020, 814
19.49%
$ 8357477
$
1077137826
11.30%
$ --
$
10, 266, 331
19.26%
$ --
$
10, 264, 425
19.39%
$ (3, 548)
$
10, 212, 595
18.96%
$ (788)
$
977917132
19.08%
$ 796
$
974647649
20.21%
$ 17611
$
974267509
19.61%
$ (17758)
$
876357402
22.01%
$ 267
$
779667529
23.02%
See accompanying notes to required supplementary information.
50
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
REQUIRED BY GASB STATEMENT NO. 75
Fiscal Year Ended June 30, 2022
NOTE A - SIGNIFICANT METHODS AND ASSUMPTIONS
The actuarially determined annual required contributions ("ARC") for the fiscal year ending
June 30, 2022 was developed in the July 1, 2019 valuation. The following summarizes the
significant methods and assumptions used to determine the actuarially determined
contribution for the fiscal year ended June 30, 2022:
Actuarial valuation date
July 1, 2019
Actuarial cost method
Entry Age Normal
Amortization method
Level percent, closed
Equivalent single amortization period
15.9 as of June 30, 2022
Asset valuation method
4 -year smoothed market
Inflation rate
2.50%
Investment rate of return
7.00%
Payroll growth
3.50%
Salary increases
3.50% to 7.00% including inflation
Demographic assumptions
Based on the experience study covering the five year
period ending June 30, 2018 as conducted for the
Hawaii Employees' Retirement System (ERS)
Mortality
System -specific mortality tables utilizing scale BB to
project generational mortality improvement
Participation rates
98% healthcare participation assumption for retirees
that receive 100% of the base monthly contribution.
Healthcare participation rates of 25%, 65%, and 90%
for retirees that receive 0%, 50%, or 75% of the base
monthly contribution, respectively. 100% for life
insurance and 98% for Medicare Part B
Healthcare cost trend rates
PPO Initial rate of 8.00%, declining to a rate of 4.86%
after 12 years
HMO Initial rate of 8.00%, declining to a rate of 4.86%
after 12 years
Part B Initial rate of 5.00%, declining to a rate of
4.70% after 11 years
Dental Initial rate of 5.00% for the first 2 years, followed by
4.00%
Vision Initial rate of 0.00% for the first 2 years, followed by
2.50%
Life Insurance 0.00%
51
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
REQUIRED BY GASB STATEMENT NO. 75
Fiscal Year Ended June 30, 2022
NOTE A -SIGNIFICANT METHODS AND ASSUMPTIONS (Continued)
Prior to the fiscal year ended June 30, 2022, there were no other factors, including the use of
different assumptions that significantly affected trends in the amounts reported in the schedule
of changes in the net OPEB liability and related ratios or the schedule of contributions (OPEB).
52
� N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
999 BISHOP STREET, SUITE 2200
HONOLULU, HAWAII 96813
T (808) 524-2255 F (808) 523-2090
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Water Board
County of Hawaii, Department of Water Supply
We have audited, in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in
Government Auditing Standards issued by the Comptroller General of the United States
(Government Auditing Standards), the financial statements of the County of Hawaii,
Department of Water Supply (Department), a component unit of the County of Hawaii,
State of Hawaii, as of and for the fiscal year ended June 30, 2022, and the related notes
to the financial statements, which collectively comprise the Department's basic financial
statements, and have issued our report thereon dated December 22, 2022.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the
Department's internal control over financial reporting (internal control) as a basis for
designing audit procedures that are appropriate in the circumstances for the purpose of
expressing our opinion on the financial statements, but not for the purpose of expressing
an opinion on the effectiveness of the Department's internal control. Accordingly, we do
not express an opinion on the effectiveness of the Department's internal control.
A deficiency in internal control exists when the design or operation of a control does not
allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, misstatements on a timely basis. A material
weakness is a deficiency, or a combination of deficiencies, in internal control, such that
there is a reasonable possibility that a material misstatement of the entity's financial
statements will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness yet important enough to merit attention by
those charged with governance.
53
N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
Our consideration of internal control was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal
control that might be material weaknesses or significant deficiencies and therefore,
material weaknesses or significant deficiencies may exist that were not identified. Given
these limitations, during our audit we did not identify any deficiencies in internal control
that we consider to be material weaknesses. We identified a deficiency in internal control,
described in the accompanying schedule of findings and responses as item 2022-001
that we consider to be a significant deficiency.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Department's financial
statements are free from material misstatement, we performed tests of its compliance
with certain provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the financial
statements. 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 or other matters that are required
to be reported under Government Auditing Standards.
Department's Response to Finding
Government Auditing Standards requires the auditor to perform limited procedures on the
Department's response to the finding identified in our audit and described in the
accompanying schedule of findings and responses. The Department's response was not
subjected to the other auditing procedures applied in the audit of the financial statements
and, accordingly, we express no opinion on the response.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control
and compliance and the results of that testing, and not to provide an opinion on the
effectiveness of the entity's internal control or on compliance. This report is an integral
part of an audit performed in accordance with Government Auditing Standards in
considering the entity's internal control and compliance. Accordingly, this communication
is not suitable for any other purpose.
Honolulu, Hawaii
December 22, 2022
54
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
SCHEDULE OF FINDINGS AND RESPONSES
Fiscal Year Ended June 30, 2022
Ref. No. Description
2022-001 Improve Internal Controls Over Accounting for Constructed Capital Assets
(Significant Deficiency)
Criteria:
Once constructed capital assets are completed and placed into operations, they
should be depreciated over their estimated useful lives.
Condition:
During the fiscal year ended June 30, 2022, management began working to implement
processes and procedures in response to prior year's finding 2021-001 and noted
several projects that should have been accounted for as completed projects.
Management made adjustments to correct the errors they discovered.
Cause:
In prior years, policies and procedures over the monitoring of the status of constructed
capital assets did not prevent or detect these errors in a timely manner.
Effect:
The following adjustments were necessary:
• Increase accumulated depreciation by $1,289,752, decrease construction
work in progress by $91,666, decrease preliminary survey and investigation
charges by $608,633, and decrease beginning net position by $1,990,051 as
of July 1, 2021.
• Increase utility plant in service by $22,057,519, decrease accumulated
depreciation by $65,000, decrease construction work in progress by
$20,471,313, and decrease preliminary survey and investigation charges by
$1,651,206 as of July 1, 2021.
Recommendation:
Management should continue to monitor construction work in progress to ensure
constructed capital assets placed into operations are being accounted for properly in
a timely manner.
Views of Responsible Officials and Planned Corrective Action:
The Department agrees with the finding and recommendation. See Corrective Action
Plan.
55
CORRECTIVE ACTION PLAN
56
DEPARTMENT 1T FWATER SUPPLY COUNTY OFH 11AVI
345 KEKDANA iA STREET, SUITE 20 HILO, HAWAVI 96720
TELEPHONE (808) 961-8050 • FAX (808) 961-8657
December 22, 2022
Mr. Chad K. Funasaki, CPA, C MA
K CPAs Inc.
999 Bishop Street Suite 2200
Honolulu, ISI 9681
Subject: N&K CPAs Independent Auditor's Report, Schedule of Findings and
Responses, Fiscal Year Ended, June 30, 2022
Dear Mr. Funasaki :
ICK CPAs Independent Auditor's Deport of the Department of water Supply (DWS) has been
reviewed. The findings included in your report will be addressed in accordance with your
recommendations as follows:
2022-001 Improve Internal Controls Over Accounting for Constructed Capital Assets
Management's response:
The department intends to implement the auditor's recommendation. In FY 2022, processes and
procedures were implemented in response to the prior year's finding which includes a standard
form to confirm the status of the projects and to determine if major components have or have not
been placed in service during the fiscal year. Management will continue to review the current
accounting system and workflow for construction work in progress and implement necessary
coordination and improvements to ensure timely shifting of assets to fixed asset account(s) once
they're placed in service.
We appreciate your review and recommendations. If you have any questions, please do not
hesitate to contact us at (808)961-8050.
C
Sincerely Yours,
A114wv
Keith Okamoto, P.E.
Manager -Chief Engineer
... Water, Our most Trecious &source. . . 2(a WaiA ane .. .
The Department of Water supper is an Equal Opportunity provider and employer.
57
County of Hawaii
Department of Water Supply
(A component unit of the County of Hawaii, State of Hawaii)
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS - STATUS REPORT
Fiscal Year Ended June 30, 2022
This section contains the current status of the prior audit recommendations. The recommendations
are referenced to the pages of the previous audit report for the fiscal year ended June 30, 2021,
dated January 21, 2022.
Reference
Number Recommendation
2021-001 Improve Internal Controls Over Accounting for
Constructed Capital Assets (page 54)
Management should monitor construction work in progress
to ensure constructed capital assets placed into operations
are being accounted for properly.
2022-001 Improve Internal Controls Over Accounting for
Significant Nonroutine Transactions (page 55)
Management should identify significant, nonroutine
accounting transactions and ensure that a process is
established whereby management -level fiscal personnel
are actively involved in both the determination of the proper
accounting treatment and the timely review of the
transactions posted to the Department's accounting
system.
W
Current Status
Partially accomplished. Refer to current
year finding 2022-001 for management's
response.
Accomplished.