HomeMy WebLinkAboutSingle Audit of Federal Financial Assistance Programs (2)SLP
CERTIFIED PUBLIC ACCOUNTANTS
County of Hawaii
State of Hawaii
Single Audit of Federal Financial Assistance Programs
June 30, 2011
140
County of Hawar
State of Hawaii
Index
June 30, 2011
Page(s)
Introduction
Audit Objectives 1
Scope of Audit 2
Organization of Report 2
Compliance and Internal Control over Financial Reporting
Report of Independent Auditors 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
Compliance and Internal Control over Federal Awards
Report of Independent Auditors on Compliance with Requirements That Could
Have a Direct and Material Effect on Each Major Program and on Internal Control
Over Compliance in Accordance with OMB Circular A-133
Schedule of Expenditures of Federal Awards 7-17
Notes to Schedule of Expenditures of Federal Awards 18-19
Schedule of Findings and Questioned Costs 20-27
Corrective Action Plan
SECTION 1
Introduction
CER'I'II<I '1I) PUB IC ACCOUNTANTS
December 27, 2011
To the Chair and Members of the County Council
County of Flawai`i
We have completed our audit of the basic financial statements of the County of Hawaii, State of Hawaii
(the "County"), as of and for the year ended June 30, 2011. Our report containing our opinion on those
basic financial statements is included in the County's Comprehensive Annual Financial Report. We
have also audited the County's compliance with requirements applicable to its major federal financial
assistance programs. We submit herein our reports on compliance and on internal control over financial
reporting and over federal awards, the County's schedule of expenditures of federal awards, and the
schedule of findings and questioned costs.
The audit objectives and scope of the audit were as follows:
Audit Ob ectives
1. To provide opinions on the fair presentation of the County's basic financial statements and the
schedule of expenditures of federal awards as of and for the year ended June 30, 2011 in accordance
with accounting principles generally accepted in the United States of America.
2. To consider the County's internal control over financial reporting in order to design our auditing
procedures for the purpose of expressing our opinions on the financial statements.
3. To perform tests of the County's compliance with certain provisions of laws, regulations, contracts,
and grant agreements that could have a direct and material effect on the determination of financial
statement amounts.
4. To consider the County's internal control over compliance with the requirements that could have a
direct and material effect on a major federal program in order to determine our auditing procedures
for the purpose of expressing our opinion on compliance and to test and report on internal control
over compliance in accordance with U.S. Office of Management and Budget ("OMB") Circular A-133,
Audits of States, Local Governments, and Non -Profit Organizations.
5. To provide an opinion on the County's compliance with the requirements of laws, regulations,
contracts, and grants that could have a direct and material effect on each major program.
6. To report on the status of prior year findings and questioned costs.
999 BJSHOP STREET, SUITE 1900
HONOLULU, HAWAII 96813
TELEPHONE: 808 531 3400 F csrM
{:o 808 5.3433
To the Chair and Members
of the County Council
County of Hawaii
December 27, 2011
Page 2
Scope of Audit
We performed an audit of the County's basic financial statements and schedule of expenditures of federal
awards as of and for the year ended June 30,' 2011, in accordance with auditing standards generally
accepted in the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and the
provisions of OMB Circular A-133.
Organization of Report
Our report is organized into three sections as follows:
Section 1, entitled "Introduction," describes the objectives and scope of our audit and the organization
and contents of this report.
2. Section II, entitled "Compliance and Internal Control over Financial Reporting," contains our report
on the County's internal control over financial reporting and on compliance and other matters based
upon our audit of the County's basic financial statements.
3. Section III, entitled "Compliance and Internal Control over Federal Awards," contains our report on
the County's compliance with requirements that could have a direct and material effect on each major
program and on the internal control over compliance in accordance with OMB Circular A-133, the
County's schedule of expenditures of federal awards, and the schedule of findings and questioned
costs.
Our report on the basic financial statements of the County as of and for the year ended June 30, 2011 is
included under a separate cover. A separate management letter containing our observations regarding
the County's internal controls dated December 27, 2011 has also been issued to the County Council.
We would like to take this opportunity to express our appreciation to the personnel of the County of
Flawai`i for the cooperation and assistance extended to us during our audit. We will be pleased to
discuss any questions that you or your associates may have regarding our recommendations.
Very truly yours,
uArd--
SECTION 11
Compliance and Internal Control
Over Financial Reporting
•
•
•
0
r
Report of Independent Auditors 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 Chair and Members of the County Council
County of Hawaii
We have audited the financial statements of the governmental activities, the business -type activities, the
discretely presented component unit, each major fund, and the aggregate remaining fund information of
the County of Hawaii, State of Hawaii (the "County") as of and for the year ended June 30, 2011, which
collectively comprise the County's basic financial statements, and have issued our report thereon dated
December 27, 2011. We conducted our audit 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.
Internal Control over Financial Reporting
Management of the County is responsible for establishing and maintaining effective internal control over
financial reporting. In planning and performing our audit, we considered the County's internal control
over financial reporting as a basis for designing our auditing procedures for the purpose of expressing
our opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the County's internal control over financial reporting. Accordingly, we do not express
an opinion on the effectiveness of the County's internal control over financial reporting.
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 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.
Our consideration of the internal control over financial reporting was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal control over
financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did
not identify any deficiencies in internal control over financial reporting that we consider to be material
weaknesses, as defined above. However, we identified a deficiency in internal control over financial
reporting, described in Finding No. 2011-1 in the accompanying schedule of findings and questioned
costs that we consider to be a significant deficiency in internal control over financial reporting. 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.
999 BISHOP STREET, SUITE 1900
HONOLULU, HAWAII 681
TELEPHONE: 808 531 3400 ACSI-11 I.,It:; 8) . 3433
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the County's financial statements are free of
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
determination of financial statement amounts. 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.
We noted certain matters that we reported to the County Council in a separate letter dated December 27,
2011.
The County's response to the finding identified in our audit is described in the accompanying corrective
action plan. We did not audit the County's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the County Council, Legislative Auditor,
management, others within the entity, federal awarding agencies and pass-through entities and is not
intended to be and should not be used by anyone other than these specified parties.
LSP
Honolulu, Hawaii
December 27, 2011
SECTION III
Compliance and Internal Control
Over Federal Awards
A C1JItJ
CERT PUBLIC, ACC,OIJN TAN"I'S
Report of Independent Auditors on Compliance with Requirements
That Could Have a Direct and Material Effect on Each Major Program and on
Internal Control Over Compliance in Accordance with OMB Circular A-133
To the Chair and Members of the County Council
County of -lawai`i
Compliance
We have audited the compliance of the County of Hawaii, State of Fiawai`i (the "County"), with the types
of compliance requirements described in the U.S. Office of Management and Budget ("OMB") Circular
A-133 Compliance Supplement that could have a direct and material effect on each of the County's major
federal programs for the year ended June 30, 2011. The County's major federal programs are identified
in the summary of auditors' results section of the accompanying schedule of findings and questioned
costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each
of its major federal programs is the responsibility of the County's management. Our responsibility is to
express an opinion on the County's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of
States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133
require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance
with the types of compliance requirements referred to above that could have a direct and material effect
on a major federal program occurred. An audit includes examining, on a test basis, evidence about the
County's compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Our audit does not provide a legal determination of the County's compliance with those requirements.
in our opinion, the County complied, in all material respects, with the compliance requirements referred
to above that could have a direct and material effect on each of its major federal programs for the
year ended June 30, 2011.
Internal Control over Compliance
Management of the County is responsible for establishing and maintaining effective internal control
over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal
programs. In planning and performing our audit, we considered the County's internal control over
compliance with the requirements that could have a direct and material effectona major federal program
to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test
and report on internal control over compliance in accordance with OMB Circular A-133, but not for the
purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,
we do not express an opinion on the effectiveness of the County's internal control over compliance.
999 SIS -HOP STREET, SUITE 1900
I ONOLU ., , 1-1AwArt 95813
TELEPHONE: 808 531 3400 FACSIMu ij. 0( 53 3433
A deficiency in internal control over compliance 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, noncompliance with a type of compliance requirement of a federal program on a
timely basis. A material weakness in internal control over compliance is a deficiency, or combination of
deficiencies, in internal control over compliance, such that there is a reasonable possibility that material
noncompliance with a type of compliance requirement of a federal program will not be prevented, or
detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above.
Schedule of Expenditures of Federal Awards
We have audited the financial statements of the governmental activities, the business -type activities,
the discretely presented component unit, each major fund, and the aggregate remaining fund information
of the County as of and for the year ended June 30, 2011, and have issued our report thereon dated
December 27, 2011. Our audit was performed for the purpose of forming our opinions on the financial
statements that collectively comprise the County's basic financial statements. The accompanying
schedule of expenditures of federal awards is presented for purposes of additional analysis as required
by OMB Circular A-133 and is not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic financial statements and, in
our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as
a whole.
This report is intended solely for the information and use of the County Council, Legislative Auditor,
management, others within the entity, federal awarding agencies and pass-through entities and is not
intended to be and should not be used by anyone other than these specified parties.
Honolulu, Hawaii
December 27, 2011
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor/Pass-through Grantor/Program Title
Office of National Drug Control Policy
Hawaii Impact
Total Office of National Drug Control Policy
U.S. Department of Agriculture
Food and Nutrition Service
Passed through the State Department of Education
Summer Food Service Program for Children
Forest Service
Passed through the State Department of Land and Natural Resources
Cooperative Forestry Assistance
Subtotal CFDA 10.664
Natural Resources Conservation Service
Watershed Protection and Flood Prevention
Wailuku-Alenaio Watershed Kaumana Drive Flood Protection
Total U.S. Department of Agriculture
U.S. Department of Commerce
Economic Development Administration
Economic Adjustment Assistance — Disaster Recovery Coordinators
National Oceanic and Atmospheric Administration
Passed through the State Department of Business, Economic
Development and Tourism
Coastal Zone Management Administration Awards
Hawaii Coastal Zone Management Program
Subtotal CFDA 11.419
Passed through the State Department of Defense
Meteorologic and Hydrologic Modernization Development
Federal
Program
CFDA Award Federal
Number Grant Number Amount Expenditures
07.000 GO9HI0004A $ 112,718 $ 2,224
G1OH10004A 99,578 67,728
69,952
10.559 N/A 61,378 61,378
10.664 08 -DG -11052012-180 84,187 27,550
09 -DG -11052011-255 97,364 73,088
10.904
65-9251-5-707
100,638
310,000 105,300
267,316
11.307 07-79-06009 160,250 12,016
11.419
NAO9NOS4190120
NA10NO54190180
25,000 15,000
306,152 301,074
316,074
11.467 NOAA-NWS-NWSOP-2008-
2001311 20,000 17,227
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
n •
Federal Grantor/Pass-through Grantor/Program Title
National Telecommunications and Information Administration
Passed through the State Department of Defense
Public Safety Interoperable Communications Grants Program
Total U.S. Department of Commerce
U.S. Department of Housing and Urban Development
Office of Housing
Section 8 — Housing Assistance Payments Program — Special Allocations
00 Kulaimano Elderly Housing
Office of Community Planning and Development
CDBG — State -Administered Small Cities Program Cluster
Community Development Block Grant/State's Program and
Non -Entitlement Grants in Hawaii
Passed through the Hawaii Housing Finance and Development Corporation
Neighborhood Stabilization Program
ARRA — Community Development Block Grant/State's Program and
Non -Entitlement Grants in Hawaii
Subtotal CDBG — State -Administered Small Cities Program Cluster
Passed through the Hawaii Housing Finance and Development Corporation
HOME Investment Partnerships Program
Subtotal CFDA 14.239
Economic Development Initiative — Special Project, Neighborhood
CFDA
Number
Grant Number
11.555 2007 -GS -H7-0005
14.195
H110-0002001
Federal
Program
Award Federal
Amount Expenditures
1,275,000 673,895
1,019,212
250,800 133,215
14.228 B -09 -DH -15-0002 2,428,883 2,222,332
B -10 -DH -15-0002 2,998,922 137,354
Program Income 177,014
B -08 -DN -15-0001 5,374,200 4,867,652
14.255 B-09-HY-15-0002 647,364 242,434
7,646,786
14.239 M08 -SG -150102 989,346 10,000
M09 -SG -150102 996,793 561,130
M10 -SG -150102 999,573 18,583
Program income 42,519
632,232
Initiative and Miscellaneous Grant 14.251 B -06 -SP -H1-0273 198,000 76,828
• a am nwrh. nroxiiimmo
County of Hawail
State of Hawail
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor/Pass-through Grantor/Program Title
Office of Public and Indian Housing
Section 8— Housing Choice Vouchers
Section 8— Housing Choice Vouchers — Family Self Sufficiency Program
Subtotal CFDA 14.871
Passed through the State Department of Hawaiian Home Lands
CFDA
Number
14.871
Grant Number
Federal
Program
Award Federal
Amount Expenditures
H1002V0 2010 15,143,758 8,719,817
H1002V0 2011 16,271,570 8,526,509
H1002 FSF005 32,775 29,473
H1002 FSF006 33,102 26,797
17,302,596 *
Native Hawaiian Housing Block Grants 14.873
Native American Housing and Self Determination Act 03NHGH1001 65,000 15,000
Subtotal CFDA 14.873
Total U.S. Department of Housing and Urban Development
U.S. Department of the Interior
Bureau of Land Management
National Fire Plan — Rural Fire Assistance
Total Department of the Interior
U.S. Department of Justice
Drug Enforcement Administration
Drug Forfeitures
Office of Juvenile Justice and Delinquency Prevention
Passed through the State Department of Human Services
Juvenile Accountability Incentive Block Grant
Office for Victims of Crime
Passed through the State Department of the Attorney General
Crime Victim Assistance
Subtotal CFDA 16.575
15.242
08HBGH10001 125,000 8,705
23,705
25,815,362
H8140100025 15,600 15,600
H83000500001 18,000 18,000
33,600
16.000 2011 122,182 122,182
16.523 DHS-06-0YS-3112 SA 5&6 58,032 31,240
16.575 07 -VA -4 331,447 173,374
08 -VA -4 309,717 156,806
330,180
0
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor/Pass-through Grantor/Program Title
Recovery Act - State Victim Assistance Formula Grant Program
ARRA - State Victim Assistance Formula Grant Program
Bureau of Justice Assistance
Passed through the Hawaii County Economic Opportunity Council
Community Capacity Development Office - The Weed and Seed Program
Pahoa Weed and Seed
JAG Program Cluster
Edward Byrne Memorial Justice Assistance Grant Program
Justice Assistance Grant
Elder Abuse and Exploitation Program
Passed through the State Department of the Attorney General
Hawaii Narcotics Task Force
Passed through the State Department of Attorney General
Recovery Act - Edward Byrne Memorial Justice Assistance Grant
Program/Grants to States and Territories
ARRA - Courthouse Booking Program
Recovery Act - Edward Byrne Memorial Justice Assistance Grant
Program/Grants to Units of Local Government
ARRA - Justice Assistance Grant
Subtotal JAG Program Cluster
Violence Against Women Office
Passed through the State Department of the Attorney General
Violence Against Women Formula Grants
Violence Against Women Formula Grants Recovery
Specialized Investigative Training
Sexual Assault Forensic Examiner Stand by Pay
Sexual Assault Forensic Examiners Training
inirr'dc'"n"`""
CFDA
Number
16.801
16.595
16.738
16.803
16.804
16.588
Grant Number
09 -SG -04
N/A
Federal
Program
Award Federal
Amount Expenditures
108,459 63,688
63,933 52,910
2007 -DJ -BX -0275 109,370 42,032
2008 -DJ -BX -0509 41,602 32,005
2009 -DJ -BX -0614 101,815 70,849
09 -DJ -13 150,000 37,904
07 -DJ -13 42,500 17,774
09 -DJ -10 100,000 30,597
09 -SU -20 113,885 83,021
09 -SU -15 99,000 11,960
2009 -DB -B9-2403
216,489 119,468
445,610
09 -EF -08 81,678 81,678
09 -EF -09 43,822 39,611
06 -WF -03 39,865 1,494
07 -WF -03 31,298 18,404
08 -WF -12 47,438 30,067
09 -EF -04 43,800 41,950
07-W F-06 24,193 4,044
•,:•••••,
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal
Program
CFDA Award Federal
Federal Grantor/Pass-through Grantor/Program Title Number Grant Number Amount Expenditures
Domestic Violence/Sexual Assault 08 -WF -08 65,304 35,856
Cell Phone/PDA Violence Against Women 08 -WF -07 40,110 27,192
Enforcement of Protective Orders 08 -GP -01 42,610 13,875
Sexual Assault/DNA Analysis 09 -EF -05 125,000 96,944
Naauao Where Knowledge is Learned 09 -DJ -04 145,457 72,729
Subtotal CFDA 16.588 463,844
Office of Community Oriented Policing Services
Public Safety Partnership and Community Policing Grants
Methamphetamine Initiative Grant
16.710
2007-CK-WX-0249
443,405 85,066
Total U.S. Department of Justice 1,594,720
U.S. Department of Labor
Employment and Training Administration
Passed through the State Department of Labor and Industrial Relations
Unemployment Insurance
Title IX Reed Act
Senior Community Service Employment Program
Special - Senior ComMunity Service Employment Program
Subtotal CFDA 17.235
WIA Cluster
WIA Adult Program
WIA Youth Activities
WIA Dislocated Workers
ARRA - WIA Dislocated Workers
Subtotal W1A Cluster
ARRA - Program of Competitive Grants for Worker Training and
Placement in High Growth and Emerging Industry Sectors
Total U.S. Department of Labor
17.225
Reed -08-H
2,000,000 434,219
17.235 AD -18704-09-60-A-15 367,981 77,041
AD -19975-10-60-A-15 386,765 351,628
AD -19975-10-60-A-15 78,814 76,755
17.258
17.259
17.260
AA -18635-09.55
AA -20190-10.55
AA -18635-09.55
AA -20190-10.55
AA -18635-09.55
AA -20190-10.55
AA -17117-08.55
505,424
470,993 217,825
527,605 306,867
479,857 81,076
496,124 405,533
361,297 186,935
607,025 480,201
378,105 70,082
1,748,519
17.275 GJ -19909-10-60-A-15 543,726 105,294
2,793,456
County of Hawah
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor/Pass-through Grantor/Program Title
CFDA
Number
Grant Number
Federal
Program
Award Federal
Amount Expenditures
U.S. Department of Transportation
Federal Highway Administration
Passed through the State Department of Transportation
Highway Planning and Construction 20.205
Bridge Inspection/Appraisals BR -0100(29) 80,000 37,054
Reeds Island Bridge on Kaiulani Street in Hilo BR -0100(47) 474,400 14,157
Route 2760 - Kawailani Street at Waiakea Stream BR -2760(3) 6,782,088 33,040
Bridge Inspection/Appraisals BR-NBIS(48) 80,000 75,679
Mamalahoa Highway Earthquake Repairs - MP4.4, MP8.9;
Palani Road Pedestrian Overpass Repairs ER -15(9) 4,264,123 256,114
Earthquake Repairs for Mamalahoa Highway - MP110.4 and
Napoopoo Road MP9 ER -15(11) 617,383 11,498
Alii Drive ROW RS -0187(1) 3,127,200 95,219
Alii Drive Design/Archaeological RS -0187(4) 6,441,250 110,613
Waimea Trails and Greenways STP -0100(51) 313,644 20,500
Kuakini Highway Improvements - Palani to Hualalai STP -0110(1) 11,914,263 2,833,264
Alii Drive Culvert Replacement STP -0186(1) 252,000 9,158
Alii Drive Improvements - Hualalai to Walua STP -0186(2) 240,000 11,570
Palani Road Safety Improvements STP -0190(14) 6,359,754 551,156
Lindsey Road Bridge/Waikoloa Stream STP -0191(43) 577,940 71,187
Kamehameha Avenue Resurfacing - Wailoa Bridge to Ponohawai Street STP -1910(1) 40,000 3,678
Puainako Street Extension - Kilauea Avenue to Upper Kaumana Drive STP -2000(3) 494,880 652
Puainako Street Extension - Komohana Street to Country Club Road STP -2000(4) 28,730,980 14,915
Kawailani Street Improvements - lwalani to Pohakulani Street STP -2760(2) 1,517,320 27,420
ARRA - Waimea ADA Sidewalks and Ramps ARRA-0191(42) 841,010 359,045
ARRA - Ane Keohokalole Highway ARRA-1880(1) 37,364,492 10,543,421
Puna Makai Alternate Road TCSP-0100(70) 188,084 2,254
Subtotal CFDA 20.205
Federal Transit Administration
Passed through the State Department of Transportation
Federal Transit - Capital Investment Grants
5309 Capital Grant
20.500
15,081,594
H1-03-0039 2,140,007 28,603
H1-04-0002 901,200 719,200
HI -04-0003 1,485,000 164,462
y
;!°;,,i,, •
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor/Pass-through Grantor/Program Title
Job Access Reverse Commute
Subtotal CFDA 20.500
Formula Grants for Other Than Urbanized Areas
Subtotal CFDA 20.509
National Highway Traffic Safety Administration
CFDA
Number
20.509
Passed through the State Department of Transportation
State and Community Highway Safety Program 20.600
Prosecutor's Training
Roadblock Program
Seatbelt Enforcement
Click It or Ticket
Speed Enforcement
Aggressive Driving Project
Traffic Investigation Program
Data Grant
Distracted Driving
Subtotal CFDA 20.600
Total U.S. Department of Transportation
Grant Number
Federal
Program
Award Federal
Amount Expenditures
HI -04-0004 2,152,133 454,806
H1 -37-X003 312,716 312,716
1,679,787
RTAP 20,000 10,863
HI -18-X025 465,131 87,709
Hl -18-X027 1,082,378 453,907
H1 -18-X020 25,154 21,306
HI -18-028 565,534 433,836
1,007,621
ALI 0-02(03-5-01) 80,000 44,921
N/A 66,287 11,473
ALI 0-02(01-H-02) 95,340 20,739
AU 1-02(01-H-02) 94,000 53,464
OP10-05(01-H-02) 72,000 23,374
OP11-05(01-H-02) 72,000 43,412
OP10-05(02-H-01) 14,800 14,645
OP11-05(02-H-01) 15,400 9,024
SC10-06(01-H-02) 78,000 37,971
SC11-06(01-H-02) 78,168 54,253
SC10-06(02-H-01) 36,000 7,903
SC11-06(02-H-01) 36,112 10,841
PT10-01(02-H-01) 8,125 1,506
PT11-01(02-H-01) 13,510 4,974
TRIO -03 (05-I-1-01) 78,000 1,393
TR11-03(05-H-01) 78,000 3,346
DD1-10(02-H-02) 25,278 7,897
351,136
18,120,138
•
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor/Pass-through Grantor/Program Title
U.S. Environmental Protection Agency
Office of Water
Passed through the State Department of Health
CFDA
Number
Grant Number
Federal
Program
Award Federal
Amount Expenditures
Capitalization Grants for Clean Water State Revolving Funds 66.458
ARRA — Komohana Heights Large Capacity Cesspool Replacement C15006219 1,085,800 88,709
ARRA — Honokaa Large Capacity Cesspool Conversion NPS007200 5,332,346 2,932,655
Subtotal CFDA 66.458
Capitalization Grants for Drinking Water State Revolving Funds 66.468
3,021,364 *
... Honomu Production Well DW105-0001 3,263,438 274,549
.i.. Pahala Production Well DW 109-0001 1,870,832 4,974
Kapulena Well Development Phase I DW 133-0002 799,516 761,165
ARRA — Ahualoa Well Development DW 130-0005 4,742,200 2,242,136
Subtotal CFDA 66.468
Surveys, Studies, Investigations, and Special Purpose Grants 66.606
3,282,824 "
South Kona Watershed Irrigation Program X-96956801-0 347,200 121,029
Special Appropriation — Kau Cesspool Replacement Project XP -96942401-1 1,842,150 113,853
Water Infrastructure — Upgrade of Drinking Water System XP -97951001-1 970,000 620,554
Subtotal CFDA 66.606
Total U.S. Environmental Protection Agency
U.S. Department of Energy
Passed through the State Department of Business, Economic Development and Tourism
State Energy Program
Energy Conservation Program
Energy Efficiency and Conservation Block Grant Program
Total U.S. Department of Energy
81.041
DE-FG26-05R021608
81.128 DE-SC0002799
•
• : • • •..:. • • • •• • • • .. • : :•• •..• • • • ..„•. • .• ....... „ ..• ............ ........
70,920
737,800
855,436
7,159,624
67,756
177,000
244,756
41
County of Hawar
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor/Pass-through Grantor/Program Title
U.S. Department of Health and Human Services
Administration on Aging
Passed through the State Executive Office on Aging
Special Programs for the Aging - Title HI, Part D -
Disease Prevention and Health Promotion Services
Subtotal CFDA 93.043
Aging Cluster
CFDA
Number
93.043
Grant Number
Federal
Program
Award Federal
Amount Expenditures
3D-4-2008 16,800 3,260
3D-4-2009 16,800 4,073
3D-4-2010 16,800 1,814
9,147
Special Programs for the Aging - Title III, Part 8 -
Grants for Supportive Services and Senior Centers 93.044 3B-4-2009 403,185 9,313
3B-4-2010 437,970 292,864
3B-4-2011 437,970 71,646
Special Programs for the Aging - Title III, Part C - Nutrition Services 93.045 3C1-4-2009 284,933 2,380
3C1-4-2010 304,332 101,367
3C1-4-2011 322,264 211,328
3C2-4-2009 126,903 22,468
3C2-4-2010 83,084 79,982
3C2-4-2011 196,190 42,195
Nutrition Services Incentive Program 93.053 N/A 103,740 17,929
N/A 103,267 64,363
Subtotal Aging Cluster
Special Programs for the Aging - Title IV and Title 1 - Discretionary Projects 93.048
915,835
Chronic Disease Self -Management Program H1-EBI-08-N-CDSMP 110,358 28,429
Community Living Program 90CD1207 55,848 2,269
Subtotal CFDA 93.048 30,698
National Family Caregiver Support, Title 11, Part E
Subtotal CFDA 93.052
93.052 3E-4-2010 126,578 45,860
3E-4-2011 136,502 38,368
84,228
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor/Pass-through Grantor/Program Title
Substance Abuse and Mental Health Services Administration
Passed through the State Department of Health
Substance Abuse and Mental Health Services —
Projects of Regional and National Significance
Hawaii Strategic Prevention Framework — State Incentive
Grant ("HI -SPF") Non -Competitive Funding
Subtotal CFDA 93.243
Centers for Medicare and Medicaid Services
Passed through the State Executive Office on Aging
Centers for Medicare and Medicaid Services Research, Demonstrations,
and Evaluations
Hospital Discharge
Total U.S. Department of Health and Human Services
CFDA
Number
93.243
93.779
Corporation for National and Community Service
Retired and Senior Volunteer Program 94.002
Grant Number
5U79SP013944-4
5U79SP013944-5
1LOCMS030434
10SRPH1002
Federal
Program
Award Federal
Amount Expenditures
313,950 140,166
2,103,140 436,192
576,358
92,735 15,970
1,632,236
85,318 85,318
U.S. Department of Homeland Security
Passed through the State Department of Defense
Disaster Grants — Public Assistance (Presidentially Declared Disasters) 97.036
Kiholo Earthquake FEMA -1664 -DR -HI 4,187,848 479,685
Honshu (Tohoku), Japan Earthquake and Tsunami FEMA -1967 -DR -H I 334,370 313,373
Subtotal CFDA 97.036 793,058
Emergency Management Performance Grants
Assistance to Firefighters Grants
Health and Wellness
Protective Clothing
Subtotal CFDA 97.044
97.042 2010 -EP -E0-0042 139,000 139,000
97.044
EMW-2008-FO-05181 424,963 101,263
EMW-2009-FO-07593 303,738 282,073
383,336
4
414,
County of Hawail
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
CFDA
Federal Grantor/Pass-through Grantor/Program Title Number
Cooperating Technical Partners 97.045
North Kona Flood Study
Digital Flood Insurance Rate Map
Subtotal CFDA 97.045
Passed through the State Department of Defense
Pre -Disaster Mitigation 97.047
Multi Hazard Mitigation Plan Update
Homeland Security Grant Program 97.067
Law Enforcement Terrorism Prevention Program
Citizen Corps
State Homeland Security Program
Subtotal CFDA 97.067
Recovery Act — Assistance to Firefighters
ARRA-Fire Station Construction
Total U.S. Department of Homeland Security
Total Expenditures of Federal Awards
(*) Denotes major federal financial assistance program as defined by OMB Circular A-133.
97.115
Grant Number
EMF -2008 -GR -0810
EMF -2009 -GR -0916
Federal
Program
Award Federal
Amount Expenditures
250,000 2,590
71,300 49,692
52,282
EMF-2008-PC003 361,448 50,197
2007 -GE -T7-0013 400,310 52,610
2007 -GE -T7-0013 10,000 3,696
2008 -GE -T8-0022 18,281 4,917
2007 -GE -T7-0013 663,868 190,879
2008 -GE -T8-0022 1,077,180 296,573
2009-SS-ET9-0006 931,487 86,983
635,658
EMW-2009-FC-02761R 4,113,686 525,723 *
2,579,254
$ 61,414,944
County of Hawaii
State of Hawai'i
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
1. Basis of Presentation
The accompanying schedule of expenditures of federal awards includes the federal grant activity
of the County of Hawaii, State of Hawaii (the "County") and its discretely presented component
unit, the Department of Water Supply (the "Department") and is presented on the accrual basis of
accounting. The information in this schedule is presented in accordance with the requirements
of OMB Circular A-1 33, Audits of States, Local Governments, and Non -Profit Organizations.
Therefore, some amounts presented in this schedule may differ from amounts presented in,
or used in the preparation of, the basic financial statements.
18
County of Hawar
State of Hawail
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
2. Subrecipients
Of the federal expenditures presented in the schedule, the County provided federal awards to
subrecipients as follows:
Amount
CFDA Provided to
Program Title Number Subrecipients
U.S. Department of Housing and Urban Development
Community Development Block Grant/State's Program and
Non -Entitlement Grants in Hawaii 14.228 $ 1,150,007
ARRA - Community Development Block Grant/State's Program
and Non -Entitlement Grants in Hawaii 14.255 237,602
HOME Investment Partnerships Program 14.239 224,750
Total U.S. Department of Housing and
Urban Development 1,612,359
U.S. Department of Justice
Juvenile Accountability Incentive Block Grant 16.523 28,994
Crime Victim Assistance 16.575 117,853
ARRA - State Victim Assistance Formula Grant Program 16.801 53,128
Total U.S. Department of Justice 199,975
U.S. Department of Labor
Unemployment Insurance - Title IX Reed Act 17.225 385,863
W IA Adult Program 17.258 486,375
W IA Youth Activities 17.259 457,938
WIA Dislocated Workers 17.260 623,526
ARRA - WIA Dislocated Workers 17.260 33,576
ARRA - Program of Competitive Grants for Worker Training and
Placement in High Growth and Emerging Industry Sectors 17.275 64,293
Total U.S. Department of Labor 2,051,571
U.S. Department of Health and Human Services
Substance Abuse and Mental Health Services - Projects of
Regional and National Significance 93.243 331,007
Total U.S. Department of Health and
Human Services
331,007
Total Provided to Subrecipients $ 4,194,912
19
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Section 1 — Summary of Auditors' Results
Financial Statements
Type of auditors' report issued
Internal control over financial reporting
• Material weaknesses identified? yes X no
• Significant deficiencies identified? X yes none reported
Noncompliance material to financial statements noted? yes X no
Federal Awards
Internal control over major programs
• Material weaknesses identified?
• Significant deficiencies identified?
Type of auditors' report issued on compliance for major programs
Any audit findings disclosed that are required to be reported
in accordance with section 510(a) of Circular A-133?
Identification of major programs
Unqualified
CFDA
Numbers
14.871
20.205
66.458
66.468
97.115
yes X no
yes X none reported
Unqualified
yes X no
Name of Federal Program or Cluster
Section 8 — Housing Choice Vouchers
Highway Planning and Construction
Capitalization Grants for Clean Water State Revolving Funds
Capitalization Grants for Drinking Water State Revolving Funds
Assistance to Firefighters
Dollar threshold used to distinguish between type A and
type B programs
Auditee qualified as low-risk auditee?
$1,842,000
X yes no
County of Hawai`i
State of Hawai
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Section Il — Financial Statement Findings
Finding No. 2011-01: Information Technology (Significant Deficiency)
Condition
Information technology ("IT") is a strategi
County of Hawai'i
State of Hawai'i
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Criteria
When IT is used to initiate, record, process and report on transactions included in the financial
statements, the systems and related processes should include internal controls to prevent or detect
potential misstatements.
Effect
Internal controls in the following areas address the following risks:
Physical and logical security
Unauthorized access to these systems could result in either the destruction or theft of data, unauthorized
or nonexistent transactions being made or transactions being inaccurately recorded.
Change management
Unauthorized or untested changes promoted to the production environment could cause the systems
to either process data differently than intended or unexpectedly compromise the integrity of the data
maintained.
Backup and Recovery
The loss of data as a result of backups not being performed.
Cause
The primary cause was due to the lack of IT policies and procedures which include internal controls to
address the IT risks discussed above.
Recommendation
We recommend that the County and the Department perform the following:
• Develop or update IT policies and procedures to include internal control procedures addressing the
IT risks above.
• Identify procedures to ensure that IT policies and procedures are consistently followed.
22
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Section Ill — Federal Award Findings and Questioned Costs
None
''..1.ii''''..:'!..,,!!.,'.•.'1,,:...'''.'..'"'.1,:,,'.•.'''...'..•....if'.:)...'li'i••• '.:.,:.!i,,.'."1!:''' ...''i'iii,...'',...'.'.!'' 14...:7...•..!,i1..."....'.) ..',$.:::.:'' .......:1,,:("'!"!!,'.i.."..:':...'":.''!''
County of Hawai'i
State of Hawa'i
Schedule of Fundings and Questioned Costs
Year Ended June 30, 2011
Section IV — Status of Prior Year Findings and Questioned Costs
Financial Statement Findings
Finding No. 2010-01: Information Technology (Significant Deficiency)
During our prior year audit, we performed an IT general controls review of the following systems operated
by the County and the Department:
County
• Windows Domain
• Eden
• Integrated Assessment System
e Revenue Collection
Department
• Windows Domain
• Select Financial System
• Public Utility Billing System
® ARB N_Sight Mobile System
Our review resulted in several IT control deficiencies over physical and logical security, change
management, and backup and recovery.
Status
Partially resolved. In fiscal year 2011, the County and the Department took the following actions to
address the control deficiencies fisted above:
• The County enabled password complexity for the Windows Domain.
• The County performed a full restoration test for the Eden application.
® The Department migrated the Select Financial System to the Department's IT division to segregate
the duties of systems and application administration.
* The Department also adopted a formal backup and retention policy.
The remaining IT control deficiencies have not been resolved, however, the County and the Department
are in the process of developing policies and procedures to address them. As the unresolved
deficiencies are reported in current year Finding 2011-01, this finding will not carry forward.
24
County of Hawaii
State of Hawai'i
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Finding No. 2010-02: Accounting for Capital Assets Should Be Improved (Significant Deficiency)
During our prior year audit, we identified various issues related to the County's accounting for capital
assets including capital outlays that were improperly expensed, capital assets that were misclassified
or not capitalized, and depreciation expense taken on fully depreciated assets. Additionally, we noted a
lack of procedures to periodically reevaluate the estimated useful lives and to ensure that infrastructure
disposals are properly recorded.
Status
Resolved. During our current year audit, we noted that management has implemented proper accounting
practices to prevent material misstatements as noted above. The County has made progress on the
conversion of the manual infrastructure records to the accounting system and should continue to focus on
completing the conversion.
f_.
Finding No. 2010-03: Restatement of Beginning Net Assets (Significant Deficiency)
During our prior year audit, t, a identified the following errors that required the restatement of the
Department's beginning net assets in the June 30, 2010 financial statements:
® Unbilled amounts earned as of year end were not accrued for.
• Invoices for services spanned two fiscal years but the expenses were not allocated between fiscal
years.
•
• The Department continued to record depreciation expense on fully depreciated assets.
•
• Consulting project costs were improperly capitalized as deferred charges and the construction costs
of an abandoned project were not written off from construction work in progress.
Status
Resolved. The County restated the Department's beginning net assets in its financial statements for
the year ended June 30, 2010 to correct the errors identified. We also noted that management of the
Department implemented proper accounting practices and policies to prevent material misstatements
as noted above.
25
•
• County of Hawar
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
•
Federal Award Findings and Questioned Costs
Questioned
Cost
Finding No. 2010-04: Suspension and Debarment (Significant Deficiency)
Federal Agency: U.S. Department of Transportation
U.S. Environmental Protection Agency
CFDA Number and Title: 20.205 — Highway Planning and Construction
20.509 — Formula Grants for Other Than Urbanized
Areas
66.458 — Capitalization Grants for Clean Water State
Revolving Funds
66.468 — Capitalization Grants for Drinking Water State
Revolving Funds
During our prior year audit, for 7 out of 27 items we tested, either a suspension and debarment
certification was not obtained or the County did not perform a verification check.
Status
Resolved. No similar instances of noncompliance were noted during our current year audit. The County
formalized procedures that assigned responsibility at the department level for the performance of
suspension and debarment verification checks.
Questioned
Cost
Finding No, 2010-05: Subrecipient Central Contractor Registration
Federal Agency: U.S. Department of Housing and Urban Development
CFDA Number and Title:
14.255 — ARRA — Community Development Block
Grant/State's Program and Non -Entitlement Grants
in Hawaii
During our prior year audit, we noted that the County did not monitor the subrecipients receiving
American Recovery and Reinvestment Act ("ARRA") funds to ensure that subrecipients were properly
registered on the Central Contractors Registration ("CCR").
Status
Resolved. No similar instances of noncompliance were noted during our current year audit. The Office
of Housing and Community Development formalized procedures to notify all potential subrecipient
applicants of the CCR registration requirement, to include an addendum to the subrecipient agreements
specifying the requirements, to require subrecipients to submit proof of current registration with any
application for funding, and to ensure prior to executing contracts that the subrecipients' CCR registration
are valid for the duration of the contract period.
26
• CountyofHawai'
State of Hawai'
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Finding No. 2009-01: Activities Allowed and Unallowed — Calculation of
Federal Expenditures
Federal Agency:
CFDA Number and Title: 97.036 — Disaster Grants — Public Assistance
(Presidentially Declared Disasters) Kiholo
Earthquake
Award Number and Award FEMA -1664 -DR -HI 10/15/06 10/15/10
Year:
Per the prior auditor's testing of the activities allowed and unallowed compliance requirement, it
was noted that the County overstated the federal share of eligible costs related to the Ikuo Hisaoka
Gymnasium by $27,965. The amount the County reported was based on the actual expenditures,
however, as the Ikuo Hisaoka Gymnasium was insured at the time of loss, the expenditures should
have been based on the insurance deductible in accordance with Title 44 Code of Federal Regulations
(44 CFR) §206.250(c).
Status
Unresolved. We understand that the County has sought the assistance of the Hawaii State Civil Defense
in determining the correct portion eligible for federal aid and is currently awaiting a response.
U.S. Department of Homeland Security
Questioned
Cost
$
27,965
Corrective Action Plan
CORRECTIVE ACTION PLAN
Financial Statement Findings:
Finding 201101 Information Technology (Significant Deficiency)
Recommendation: We recommend that the County and the Department perform the following:
• Develop or update IT policies and procedures to include internal control procedures addressing
the IT risks above.
• Identify procedures to ensure that IT policies and procedures are consistently followed.
General Comment: Not all the comments applied to both entities which have separate IT
environments and staff. We have broken out the response into two pieces and have done our best to
respond fully to the comment. We acknowledge the importance of good internal controls especially
in the area of information technology.
Water Department's Comment: The Department has implemented several IT internal controls which
address the concerns raised by the auditors. Controls over user access and passwords have been
improved with the creation of unique logins and passwords for each user that are no longer shared.
Passwords must now be changed every 3 months and terminals are automatically locked after 3
minutes of inactivity. The number of users with administrative permissions has been reduced to 2
in the accounting application and 5, who are all supervisors, in the billing application.
The accounting application and operating system has been moved to a new server located in a locked
and air conditioned room under the control of IT. The Department is currently moving the billing
system to this new server as well. IT is responsible for backing up the server and storing backup
tapes off site, while Finance will continue to serve as administrator for logons, passwords, and access
permissions.
County's Comment: The County has worked to address the concerns raised by the auditor and
will continue to do so in the upcoming fiscal year. Internal controls regarding user access are being
improved as procedures requiring the Department of Human Resources to notify IT of all employee
terminations are being developed. IT has also implemented an Active Directory password policy
requiring that complex passwords must be changed every 90 days and the system disallows the reuse
of the last 5 passwords.
The County's rmss on -critical servers are housed in secure, environmentally monitored locations,
which are protected by cipher lock and/or badge access.
The Eden application change management is governed by the County's FRESH Oversight
Committee. The committee reviews upgrades to the Eden system, such as version changes and hot
fixes, from the vendor Tyler Technologies. The committee considers the feasibility of implementing
a system change, and if approved, authorizes the Eden test systems to be updated. The test systems
are then assessed until all modules are checked for accuracy, and perform as expected within the
context of County procedures in processing data. Once all Eden modules and functions are tested
and performing satisfactorily, the committee approves moving the tested version into production.
Mission critical data is continuously backed -up to disk and tape backups provide supplemental
archives and have proven capable of restoring folders, files and entails when necessary. Backup logs
provide monitoring, and indexes of stored data.
IT's Disaster Recovery plan was reviewed and updated to conform to ongoing infrastructure,
personnel, and technology changes. IT has begun moving some of the County's mission -critical IT
equipment from Locations that are prone to damage from natural disaster to secure, hardened
locations.
We acknowledge that there are some areas for improvement and we will work towards addressing
these. In many cases we need to formalize our procedures already in place which we will also work
Page 1
on. However, we are not aware of any situations or issues that arose due to our lack of written
policies and procedures.
Anticipated Completion Date: Some items have already been implemented, others will be
implemented by June 30, 2012 and for a few items this will be an ongoing effort as we strive to
improve our internal controls over information technology.
Contact People: Rick Sumada, Waterworks Controller
Department of Water Supply
Burt Tsuchiya, Director of Information Technology
County of Hawaii
Status of Prior Year Findings:
Finding 2010®01 Information Technology (Significant Deficiency)
.Recommendation: We recommend that the County and the Department perform the following:
Develop or update IT policies and procedures to include internal control procedures addressing
the IT risks above.
Identify procedures to ensure that IT policies and procedures are consistently followed.
•
Work with vendor programmers to address any internal control deficiencies due to system
limitations.
County's Comment: Refer to County's comment to Current Year Finding 2011-01 for status update.
Anticipated Completion Dated Some items have already been implemented, others will be
implemented by June 30, 2012 and for a few items this will be an ongoing effort as we strive
to improve our internal controls over information technology.
Contact People: Rick Sumada, Waterworks Controller
Department of Water Supply
Burt Tsuchiya, Director of Information Technology
County of Hawaii
_
Federal Award Findings:
5 U.S. Department of Homeland Security
= Disaster Grants — Public Assistance (Presidentially Declared Disasters): Iholo Earthquake
CFDA No, 97.036 Federal Award No.: FEMA -1664 -DR -HI
Award Period: July 1, 2008 to June 30, 2009
Finding 2009-01 Activities Allowed and Unallowed — Calculation of Federal Expenditures
Recommendation: We recommend that the County be more cognizant of deviations in the
calculation of the federal share to ensure that the expenditures are accurately reported, including
applying the applicable guidance.
County's Comment: The Countycontinues to strive to be more dilgent in meeting its activities
allowed and unallowed requirements, including the accurate reporting of the federal expenditures.
Repairs to the facility in question have now been completed and we have received our final insurance
proceeds — the amount of which impacts the allowed federal expenditures.
P p We are now awaiting the
final review by the Ilawai`i State Civil Defense in determining the final eligible portion for federal
aid.
Anticipated Completion Date: June 30, 2012
Contact Person: Kay Oshiro, Controller
County of Hawaii
Page 2