HomeMy WebLinkAboutSingle Audit Report - Final 2013•
C Aui LLP
CERTIFIED PUBLIC ACCOUNTANTS
County of Hawaii
State of H awa i `i
Single Audit of Federal Financial Assistance Programs
June 30, 2013
Quality Integrity Insight
County of Hawaii
State of Hawaii
Index
June 30, 2013
Introduction
AuditObjectives.........................................................................................................
Scopeof Audit............................................................................................................
Organization of Report...............................................................................................
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 for Each Major Program,
Internal Control Over Compliance and the Schedule of Expenditures of
Federal Awards Required by OMB Circular A-133
Schedule of Expenditures of Federal Awards............................................................
Notes to Schedule of Expenditures of Federal Awards .............................................
Schedule of Findings and Questioned Costs.............................................................
Corrective Action Plan
Page(s)
1►
2
8-18
19
20-25
SECTION I
Introduction
ACcuityLP
CERTIFIED PUBLIC ACCOUNTANTS
December 24, 2013
To the Chair and Members of the County Council
County of Hawaii
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, 2013. 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 Objectives
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, 2013 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 for each major federal program in order to
determine our auditing procedures for the purpose of expressing our opinion on compliance, to test
and report on internal control over compliance and report on the schedule of expenditures of federal
awards required by 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 BisHOP STREET, SUITE 1900
an independent member of
HONOLULU, HAWAII 96813
BAKE R T '11 LY TELEPHONE: 808 5313400 FACSIMILE: 808 5313433
INTERNATIONAL
To the Chair and Members
of the County Council
County of Hawaii
December 24, 2013
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, 2013, 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:
1. Section I, 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 for each major program, internal control over compliance and the schedule
of expenditures of federal awards required by 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, 2013 is
included under a separate cover. A separate management letter containing our observations regarding
the County's internal controls dated December 24, 2013 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
Hawaii 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,
11�,� L Lp
SECTION II
Compliance and Internal Control
Over Financial Reporting
•
C Aui LLP
CERTIFIED PUBLIC ACCOUNTANTS
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, in accordance with the 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, 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, 2013, and the related notes to the financial statements, which collectively
comprise the County's basic financial statements, and have issued our report thereon dated
December 24, 2013.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the County's internal
control over financial reporting ("internal control") to determine the audit procedures that are appropriate
in the circumstances 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. Accordingly,
we do not express an opinion on the effectiveness of the County'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.
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. However, material weaknesses may exist
that have not been identified. We did identify a deficiency in internal control, described in Finding No.
2013-001 in the accompanying schedule of findings and questioned costs that we consider to be a
significant deficiency.
999 BISHOP STREET, SUITE 1900
an independent member of
HONOLULU, HAWAII 96813
BAKER T I L LY TELEPHONE: 808 5313400 FACSIMILE: 808 5313433
INTERNATIONAL
Comnliance and Other Matters
As part of obtaining reasonable assurance about whether the County'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
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.
County's Response to Finding
The County's response to the finding identified in our audit is described in the accompanying corrective
action plan. The County's response was not subjected to the auditing procedures applied in the audit of
the financial statements and, accordingly, we express no opinion on it.
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 result 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.
hcr.t�L�P
0
Honolulu, Hawaii
December 24, 2013
SECTION III
Compliance and Internal Control
Over Federal Awards
•
C Aui LLP
CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Auditors on Compliance for Each Major Program, Internal Control Over
Compliance and the Schedule of Expenditures of Federal Awards Required by OMB Circular A-133
To the Chair and Members of the County Council
County of Hawaii
Report on Compliance for Each Maior Federal Program
We have audited the County of Hawaii, State of Hawaii's (the "County") compliance with the types of
compliance requirements described in the 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,
2013. The County's major federal programs are identified in the summary of auditors' results section of
the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and
grants applicable to its federal programs.
Auditors' Responsibility
Our responsibility is to express an opinion on compliance for each of the County's major federal programs
based on our audit of the types of compliance requirements referred to above. 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 on compliance for each major
federal program. However, our audit does not provide a legal determination of the County's compliance.
Opinion on Each Major Federal Program
In our opinion, the County complied, in all material respects, with the types of 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, 2013.
999 BisHOP STREET, SUITE 1900
an independent member of
HONOLULU, HAWAII 96813
VBAKE R T '11 LY TELEPHONE: 808 5313400 FACSIMILE: 808 5313433
INTERNATIONAL
Resort on Internal Control Over Comoliance
Management of the County is responsible for establishing and maintaining effective internal control over
compliance with the types of compliance requirements referred to above. In planning and performing our
audit of compliance, we considered the County's internal control over compliance with the types of
requirements that could have a direct and material effect on each major federal program to determine the
auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on
compliance for each major federal program 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.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance 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. A significant deficiency in
internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance.
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 material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133
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, 2013, and the related notes to the financial statements,
which collectively comprise the County's basic financial statements. We have issued our report thereon
dated December 24, 2013, which contained unmodified opinions on those financial statements. Our audit
was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the 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 financial statements. As described in Note 1 to the schedule of expenditures of federal
awards, the accompanying schedule of expenditures of federal awards was prepared on the cash basis of
accounting, which is a comprehensive basis of accounting other than accounting principles generally
accepted in the United States of America. Such information is the responsibility of management and was
derived from and relates directly to the underlying accounting and other records used to prepare the
financial statements. The information has been subjected to the auditing procedures applied in the audit
of the financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our opinion,
the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the
financial statements as a whole.
Honolulu, Hawaii
December 24, 2013
r..
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
Federal
Program
CFDA Award Federal
Federal Grantor/Pass-through Grantor/Program Title Number Grant Number Amount Expenditures
Office of National Drug Control Policy
Hawai'i Impact
07.000
G11H10004A
$ 163,542 $
131,945
G12H10004A
90,578
9,076
Total Office of National Drug Control Policy
141,021
U.S. Department of Agriculture
Food and Nutrition Service
Passed through the State Department of Education
Summer Food Service Program for Children
10.559
N/A
63,995
26,228
N/A
59,174
32,561
Subtotal CFDA 10.559
58,789
Forest Service
Passed through the State Department of Land and Natural Resources
Cooperative Forestry Assistance
10.664
11 -DG -11052012-31
96,457
91,413
Total U.S. Department of Agriculture
150,202
U.S. Department of Commerce
National Oceanic and Atmospheric Administration
Passed through the State Department of Business, Economic
Development and Tourism
Coastal Zone Management Administration Awards
11.419
Hawai'i Coastal Zone Management Program
NA11 NOS4190095
299,567
8,355
NA12NOS4190097
299,567
237,835
Total U.S. Department of Commerce
246,190
Me]
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
Federal
Program
CFDA Award Federal
Federal Grantor/Pass-through Grantor/Program Title Number Grant Number Amount Expenditures
U.S. Department of Housing and Urban Development
Office of Housing
Section 8 — Housing Assistance Payments Program — Special Allocations 14.195
Kulaimano Elderly Housing H110-0002001 257,400 123,853
Office of Community Planning and Development
Community Development Block Grant/State's Program and
Non -Entitlement Grants in Hawai'i
14.228
B -11 -DH -15-0002
2,532,287
1,704,942
Program Income
162,431
Passed through the Hawai'i Housing Finance and Development Corporation
Neighborhood Stabilization Program
B -08 -DN -15-0001
5,774,200
400,000
B -11 -DN -15-0001
4,275,000
2,598,586
Subtotal CFDA 14.228
4,865,959
Passed through the Hawai'i Housing Finance and Development Corporation
HOME Investment Partnerships Program
14.239
M10 -SG -150102
999,573
404,538
M11 -SG -150102
975,363
635,265
Subtotal CFDA 14.239
1,039,803
Economic Development Initiative — Special Project, Neighborhood
Initiative and Miscellaneous Grant
14.251
B -06 -SP -HI -0273
198,000
6,394
B -09 -SP -HI -0253
475,000
475,000
Subtotal CFDA 14.251
481,394
Office of Public and Indian Housing
Section 8 — Housing Choice Vouchers
14.871
H1002VO 2012
14,511,613
6,607,295
H1002AF2012
1,432,245
722,538
Program Income
512,198
H1002VO 2013
12,295,245
6,786,567
H 1002A F 2013
1,267,161
458,395
Program Income
533,732
Section 8 — Housing Choice Vouchers — Family Self Sufficiency Program
H1002 FSF007
66,204
30,387
H1002 FSF008
66,204
28,057
Subtotal CFDA 14.871
15,679,169
0
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
Federal
Program
CFDA
Award
Federal
Federal Grantor/Pass-through Grantor/Program Title
Number
Grant Number
Amount
Expenditures
Passed through the State Department of Hawaiian Home Lands
Native Hawaiian Housing Block Grants
14.873
Native American Housing and Self Determination Act
08HBGH10001
125,000
19,211
Total U.S. Department of Housing and Urban Development
22,209,389
U.S. Department of the Interior
Payment in Lieu of Taxes
National Park in Lieu of Taxes
15.226
N/A
297,067
297,067
U.S. Fish and Wildlife Service
Wildlife in Lieu of Taxes
15.659
N/A
53,315
53,315
Total Department of the Interior
350,382
U.S. Department of Justice
Drug Enforcement Administration
Drug Forfeitures
16.000
2013
219,006
219,006
Office of Juvenile Justice and Delinquency Prevention
Passed through the State Department of Defense
Juvenile Accountability Incentive Block Grant
16.523
2009 -JB -FX -8027
61,581
61,581
Passed through the State Department of Human Services
Juvenile Justice and Delinquency Prevention -Allocation to States
16.540
2009 -JF -FX -8003
200,000
21,530
Office for Victims of Crime
Passed through the State Department of the Attorney General
Crime Victim Assistance
16.575
09 -VA -4
332,033
108,705
10 -VA -4
326,385
172,892
Subtotal CFDA 16.575
281,597
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
Federal
Program
CFDA
Award
Federal
Federal Grantor/Pass-through Grantor/Program Title
Number
Grant Number
Amount
Expenditures
Bureau of Justice Assistance
JAG Program Cluster
Edward Byrne Memorial Justice Assistance Grant Program
16.738
Justice Assistance Grant
2010 -DJ -BX -0336
123,121
15,452
2011 -DJ -BX -2828
105,029
35,821
2012 -DJ -BX -1226
88,650
7,156
Passed through the State Department of the Attorney General
Elder Abuse and Exploitation Program
09 -DJ -13
150,000
23,840
10 -DJ -01
150,000
95,305
Hawai'i Narcotics Task Force
09 -DJ -10
100,000
9,567
10 -DJ -13
75,000
41,591
Passed through the State Department of Attorney General
Recovery Act - Edward Byrne Memorial Justice Assistance Grant
Program/Grants to States and Territories
16.803
Integrated Criminal Justice System Information Sharing Project
09 -SU -28
192,691
192,691
Subtotal JAG Program Cluster
421,423
Violence Against Women Office
Passed through the State Department of the Attorney General
Violence Against Women Formula Grants
16.588
STOP Violence Against Women
10 -WF -08
52,068
52,068
Specialized Investigative Training
09 -WF -03
68,964
51,095
Sexual Assault Forensic Examiner Standby Pay
11 -WF -03
52,061
9,040
Enforcement of Protective Orders
08 -GP -01
42,610
8,130
Pu Malu
08 -GP -02
33,002
33,001
Basic Needs to Improve Forensic
12 -CD -12
26,048
3,538
Working Towards Crime Lab Accreditation
11 -CD -01
13,300
4,839
SAFE Coordinator
10 -WF -15
52,068
10,188
Subtotal CFDA 16.588
171,899
Office of Community Oriented Policing Services
Public Safety Partnership and Community Policing Grants
16.710
Methamphetamine Initiative Grant
2007-CK-WX-0249
443,405
23,004
COPS
2011ULWX0013
1,392,336
231,330
Subtotal CFDA 16.710
254,334
Total U.S. Department of Justice
1,431,370
N
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
Federal Grantor/Pass-through Grantor/Program Title
U.S. Department of Labor
Employment and Training Administration
Passed through the State Department of Labor and Industrial Relations
Senior Community Service Employment Program
Subtotal CFDA 17.235
WIA Cluster
WIA Adult Program
WIA Youth Activities
WIA Dislocated Workers
Subtotal WIA Cluster
ARRA — Program of Competitive Grants for Worker Training and
Placement in High Growth and Emerging Industry Sectors
Total U.S. Department of Labor
Federal
Program
CFDA Award Federal
Number Grant Number Amount Expenditures
17.235
AD -21819-11-55-A-15
339,237
33,075
AD -22877-12-55-A-15
373,028
370,218
403,293
17.258
AA -21391-11-55-A-15
510,421
115,325
AA -22391-12-55-A-15
550,350
439,594
17.259
AA -21391-11-55-A-15
486,029
57,571
AA -22391-12-55-A-15
520,576
360,023
17.278
AA -21391-11-55-A-15
381,782
18,399
AA -22391-12-55-A-15
450,306
348,981
1,339,893
17.275
GJ -19909-10-60-A-15
543,725
70,796
1,813,982
w
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
Federal
Program
CFDA
Award
Federal
Federal Grantor/Pass-through Grantor/Program Title
Number
Grant Number
Amount
Expenditures
U.S. Department of Transportation
Federal Highway Administration
Passed through the State Department of Transportation
Highway Planning and Construction
20.205
Old Mamalahoa Hwy, Kaahakini Bridge Replacement
BR -0100(44)
114,400
1,175
Reeds Island Bridge on Kaiulani Street in Hilo
BR -0100(47)
6,932,169
1,125,479
Bridge Inspection/Appraisals
BR-NBIS(52)
80,000
2,483
Mamalahoa Highway Earthquake Repairs MP4.4, MP8.9;
Palani Road Pedestrian Overpass Repairs
ER -15(9)
4,264,123
65,778
Mamalahoa Hwy Widening, Mana Road
NH -019-1(044)
56,000
7,046
Alii Drive ROW
RS -0187(1)
3,127,200
(5,000)
Alii Drive ROW
RS -0187(4)
6,441,250
11,574
Kuakini Highway Improvements, Palani to Hualalai
STP -0110(1)
15,170,067
190,154
Kuakini Highway Improvements, Hualalai to Alii Highway
STP -0110(2)
24,000
2,780
Alii Drive Culvert Replacement
STP -0186(1)
252,000
(6,242)
Alii Drive Improvements, Hualalai to Walua
STP -0186(2)
320,000
12,886
Kaiminani Drive Roadway Improvements Ph I
STP -0198(1)
9,434,330
4,314,637
Kamehameha Avenue Resurfacing, Wailoa Bridge to Ponohawai Street
STP -1910(1)
11,849,446
51,829
Puainako Street Extension, Komohana St to Country Club Rd
STP -2000(4)
26,886,000
353,626
Kawailani Street Improvements, Iwalani to Pohakulani Street
STP -2760(2)
1,453,564
617,762
Manono St Improv, Lanikaula to Kekuanaoa
STP -2770(004)
496,000
55,672
ARRA — Ane Keohokalole Highway
ARRA-1880 (1)
35,515,615
2,259,879
Intelligent Transportation System Architecture Project
SPR -0010(33)
150,000
26,215
Subtotal CFDA 20.205
9,087,733
Federal Transit Administration
Passed through the State Department of Transportation
Federal Transit — Capital Investment Grants
20.500
5309 Capital Grant
HI -03-0039
2,140,007
54,907
HI -04-0003
1,485,000
81,325
HI -04-0004
2,152,133
878,283
Subtotal CFDA 20.500
1,014,515
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
Federal
Program
CFDA
Award
Federal
Federal Grantor/Pass-through Grantor/Program Title
Number
Grant Number
Amount
Expenditures
Formula Grants for Other Than Urbanized Areas
20.509
HI-18-X027
20,940
4,339
H 1-18-29
589,395
189,852
HI-18-29
52,255
52,255
HI-18-30
28,490
28,490
HI-37-X001
62,305
62,305
Subtotal CFDA 20.509
337,241
National Highway Traffic Safety Administration
Passed through the State Department of Transportation
4�1 State and Community Highway Safety Program
20.600
Prosecutor's Training
AL12-02(03-S-01)
97,715
53,948
AL13-02(03-S-01)
102,000
9,939
Roadblock Program
AL1 2-02(01 -H-02)
144,000
52,281
AL1 3-02(01 -H-02)
155,925
110,046
Youth Deterrence
AL1 3-02(16-H-02)
22,956
7,792
Seatbelt Enforcement
OP1 2-05(01 -H-02)
72,000
14,646
OP1 3-05(01 -H-02)
72,000
68,553
Click It or Ticket
OP12-05(02-H-01)
15,400
1,494
OP13-05(02-H-01)
18,935
1,558
Speed Enforcement
SC1 2-06(01 -H-02)
98,050
50,186
SC1 3-06(01 -H-02)
101,041
79,398
Aggressive Driving Project
SC12-06(02-H-01)
36,112
11,517
Flex 2013-Project #2
48,112
28,479
Traffic Investigation Program
PT12-01(02-H-01)
20,000
7,286
Data Grant
TR12-03(05-H-01)
102,615
1,657
TR13-03(05-H-01)
126,000
5,927
Distracted Driving
DD1 2-10(01 -H-02)
38,278
18,138
DD13-10(02-H-01)
37,917
23,038
Subtotal CFDA 20.600
545,883
Total U.S. Department of Transportation
10,985,372
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
Federal
Program
CFDA
Award
Federal
Federal Grantor/Pass-through Grantor/Program Title
Number
Grant Number
Amount
Expenditures
U.S. Environmental Protection Agency
Office of the Chief Financial Officer
Congressionally Mandated Projects
Special Appropriation - Kau Cesspool Replacement Project
66.202
XP -96942401-1
1,842,150
156,673
Office of Water
Passed through the State Department of Health
Capitalization Grants for Clean Water State Revolving Funds
66.458
Honokaa Wastewater Treatment Plant Upgrade
NPS0072 01
3,662,449
618,035
Kalanianaole Avenue Interceptor System Rehabilitation Phase 11
C150062 38
6,000,000
2,449,119
Subtotal CFDA 66.458
3,067,154
Capitalization Grants for Drinking Water State Revolving Funds
66.468
Kulaimano Production Well
DW106-0001
1,344,599
280,364
ARRA — Ahualoa Well Development
DW130-0005
4,742,200
275,792
Source WaterM/ellhead Protection
ASO 12-116
200,000
9,444
Honokaa Sewer Connection Program
FS99986507
143,930
66,050
FS99986508
106,070
48,676
Subtotal CFDA 66.468
680,326
Total U.S. Environmental Protection Agency
3,904,153
rn
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
Federal
Program
CFDA
Award
Federal
Federal Grantor/Pass-through Grantor/Program Title
Number
Grant Number
Amount
Expenditures
U.S. Department of Health and Human Services
Administration for Community Living
Passed through the State Executive Office on Aging
Special Programs for the Aging - Title III, Part D -
Disease Prevention and Health Promotion Services
93.043
3D-4-2010
16,800
5,822
3D-4-2011
16,766
15,430
21,252
Aging Cluster
Special Programs for the Aging - Title III, Part B -
Grants for Supportive Services and Senior Centers
93.044
313-4-2011
414,164
39,959
313-4-2012
413,279
275,940
313-4-2013
336,393
41,700
Special Programs for the Aging - Title III, Part C - Nutrition Services
93.045
3C1-4-2012
322,263
104,770
3C1-4-2013
300,420
118,058
3C2-4-2012
137,557
56,203
Nutrition Services Incentive Program
93.053
N/A
96,604
22,319
N/A
86,349
44,794
Subtotal Aging Cluster
703,743
Special Programs for the Aging - Title IV and Title II - Discretionary Projects
93.048
Community Living Program
90CD1207
55,848
53,579
ADRC Expansion
90DR0036
58,285
2,700
Subtotal CFDA 93.048
56,279
National Family Caregiver Support, Title III, Part E
93.052
3E-4-2010
126,578
1,124
3E-4-2011
136,778
34,848
3E-4-2012
136,502
25,094
Subtotal CFDA 93.052
61,066
v
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
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
Hawai'i Strategic Prevention Framework — State Incentive
Grant ("HI -SPF") Non -Competitive Funding
Administration for Children and Families
Passed through the State Department of Health
Affordable Care Act Personal Responsibility Education Program
Subtotal CFDA 93.092
Community -Based Child Abuse Prevention Program
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
U.S. Corporation for National and Community Service
Retired and Senior Volunteer Program
Subtotal CFDA 94.002
Total U.S. Corporation for National and Community Service
CFDA
Number
93.243
93.092
93.590
Grant Number
5U79SPO13944-05 (Rev)
Federal
Program
Award Federal
Amount Expenditures
2,235,269 189,364
1001 HIPREP 98,000 98,000
1101 HIPREP 150,000 62,010
160,010
N/A 4,995 343
93.779 1 LOCMS030434(1)
94.002 10S R P H 1002
13SRPH1001
92,735 57,840
1,249,897
68,254 63,722
69,754 5,561
69,283
69,283
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
(') Denotes major federal financial assistance program as defined by OMB Circular A-133.
Federal
Program
CFDA
Award
Federal
Federal Grantor/Pass-through Grantor/Program Title
Number
Grant Number
Amount
Expenditures
U.S. Department of Homeland Security
Passed through the State Department of Defense
Disaster Grants — Public Assistance (Presidentially Declared Disasters)
Kiholo Earthquake
97.036
FEMA -1664 -DR -HI
3,909,354
132,001
Emergency Management Performance Grants
97.042
EMW-2012-EP-00072
265,000
65,994
Assistance to Firefighters Grants
97.044
Staffing SAFER
EMW-2010-FF-00331
100,000
429
EKG Units
EMW-201 1 -FO-06915
148,758
139,550
Subtotal CFDA 97.044
139,979
Passed through the State Department of Defense
Pre -Disaster Mitigation
97.047
Multi Hazard Mitigation Plan Update
EMF-2008-PC003
361,448
5,296
Homeland Security Grant Program
97.067
State Homeland Security Program
2008 -GE -T8-0022
1,077,180
135,365
2009 -SS -T9-0006
1,000,000
423,990
2010 -SS -TO -0006
931,487
121,853
2011 -SS -00129
600,000
2,870
Subtotal CFDA 97.067
684,078
Total U.S. Department of Homeland Security
1,027,348
Total Expenditures of Federal Awards
$ 43,578,589
(') Denotes major federal financial assistance program as defined by OMB Circular A-133.
County of Hawaii
State of Hawaii
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2013
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 cash basis of
accounting. The information in this schedule is presented in accordance with the requirements
of OMB Circular A-133, 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.
2. Subrecipients
Of the federal expenditures presented in the schedule, the County provided federal awards to
subrecipients as follows:
U.S. Department of Labor
WIA Adult Program 17.258 466,385
WIA Youth Activities 17.259 355,552
WIA Dislocated Workers 17.278 317,857
ARRA — Program of Competitive Grants for Worker Training and
Placement in High Growth and Emerging Industry Sectors 17.275 65,103
Total U.S. Department of Labor 1,204,897
U.S. Department of Health and Human Services
Substance Abuse and Mental Health Services — Projects of
Regional and National Significance 93.243 81,702
Total U.S. Department of Health and
Human Services 81,702
Total Provided to Subrecipients $ 1,971,259
19
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
$ 75,763
HOME Investment Partnerships Program
14.239
484,464
Total U.S. Department of Housing and
Urban Development
560,227
U.S. Department of Justice
Juvenile Accountability Incentive Block Grant
16.523
58,900
Juvenile Justice and Delinquency Prevention —Allocation to States
16.540
19,800
Crime Victim Assistance
16.575
45,733
Total U.S. Department of Justice
124,433
U.S. Department of Labor
WIA Adult Program 17.258 466,385
WIA Youth Activities 17.259 355,552
WIA Dislocated Workers 17.278 317,857
ARRA — Program of Competitive Grants for Worker Training and
Placement in High Growth and Emerging Industry Sectors 17.275 65,103
Total U.S. Department of Labor 1,204,897
U.S. Department of Health and Human Services
Substance Abuse and Mental Health Services — Projects of
Regional and National Significance 93.243 81,702
Total U.S. Department of Health and
Human Services 81,702
Total Provided to Subrecipients $ 1,971,259
19
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2013
Section I — Summary of Auditors' Results
Financial Statements
Type of auditors' report issued
Unmodified
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?
yes X no
• Significant deficiencies identified?
yes X none reported
Type of auditors' report issued on compliance for major programs
Unmodified
Any audit findings disclosed that are required to be reported
in accordance with section 510(a) of Circular A-133?
yes X no
Identification of major programs
CFDA
Numbers Name of Federal Program or Cluster
14.228 Community Development Block Grants/State's
Program and Non -Entitlement Grants in Hawaii
17.258/17.259/17.278 WIA Cluster
20.205 Highway Planning and Construction
66.458 Capitalization Grants for Clean Water State Revolving Funds
66.468 Capitalization Grants for Drinking Water State Revolving Funds
Dollar threshold used to distinguish between type A and
type B programs
$1,307,000
Auditee qualified as low-risk auditee?
X yes no
20
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2013
Section II — Financial Statement Findings
Finding No. 2013-001: Information Technology (Significant Deficiency)
Condition
Information technology ("IT") is a strategic element of the operations of the County of Hawaii (the
"County") and the Department of Water Supply (the "Department"), a component unit of the County.
Because of the high volume of transactions at the County and the Department, the establishment of
internal controls over processes incorporating IT is critical to its operations. As part of our financial
statement audits for the year ended June 30, 2013, we performed IT general controls reviews of the
following systems operated by the County and the Department:
County
• Windows Domain
• Eden
• Integrated Assessment System
• 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 in the areas of physical and logical security, change
management, and IT operations as follows:
Physical and logical security
• Lack of formal security administration policies and procedures addressing:
o New, transferred and terminated user account administration
o Maintenance of audit evidence to support approval of employee access to the system
o Identification of terminated employees who continue to have access to the system
o Identification of employees whose access to system resources are not commensurate
with theirjob responsibilities
o Minimum password security settings
o Network security reviews
o Minimum environmental security requirements
o Physical access to the servers
• Weak password security settings or the lack of system functionality to enforce strong password
policies for certain applications.
• System databases are not appropriately restricted and monitored for unauthorized changes.
• Appropriate user access reviews are not performed for certain applications and security groups.
Change management
• Lack of a formalized change management process for certain applications and firewall configuration
settings.
• Lack of segregation of duties for developers and security administrators.
IT Operations
• Test restorations not performed.
21
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2013
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.
IT Operations
Lack of restoration testing could result in the inability to recover from data loss, corruption, or data
integrity concerns.
Causes
The primary cause of the internal control deficiencies identified 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 perform the following:
• Develop and implement IT policies and procedures to include internal control procedures addressing
the IT risks above.
• Indentify procedures to ensure that IT policies and procedures are consistently followed.
• Implement change management detective controls.
• Perform annual test restoration exercises.
22
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2013
Section III — Federal Award Findings and Questioned Costs
None
23
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2013
Section IV — Status of Prior Year Findings and Questioned Costs
Financial Statement Findings
Finding No. 2012-01: Information Technology (Significant Deficiency)
During our prior audits, we performed IT general controls reviews of the following systems operated by
the County and the Department:
County
• Windows Domain
• Eden
• Integrated Assessment System
• 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 and change
management.
Status
Partially resolved. In fiscal year 2013, the County and the Department took the following actions to
address the control deficiencies listed above:
• The County installed software designed to monitor its systems for unauthorized activity and was in
the process of testing the software at June 30, 2013.
• The County implemented a software program to generate reports for user access reviews of the
Windows domain and was developing a process to distribute the reports for review at June 30, 2013.
• The Department implemented formal backup and restore policies for the Public Utility Billing System.
• The Department moved the Public Utility Billing System to a physically secure server room.
• The Department performed a terminated user access review for the Select Financial System and the
Public Utility Billing System.
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 2013-001, this finding will not carry forward.
24
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2013
Questioned
Cost
Finding No. 2009-01: Activities Allowed and Unallowed — Calculation of
Federal Expenditures $ 27,965
Federal Agency: U.S. Department of Homeland Security
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 still awaiting a response.
25
Corrective Action Plan
CORRECTIVE ACTION PLAN
Financial Statement Findings:
Finding 2013-001 Information Technology (Significant Deficiency)
Recommendation: We recommend that the County and/or 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.
• Implement change management detective controls.
• Perform annual test restoration exercises.
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 addressed the IT related concerns as follows:
1) Physical Security — The Department migrated its billing and accounting applications to a new
server located in a secured office. Backups are performed daily with off-site storage updated
weekly.
2) Logical Security — The Department strengthened password settings for those systems that
allowed it by requiring users to change passwords every 90 days. In addition, unique user
ID's were issued to all ARB users.
3) Change Management — The Department implemented a reporting system to monitor all
access to the financial server by outside parties.
4) Restoration Testing — The Department is unable to conduct restoration tests due to the
absence of hardware on which to restore our applications and because recovery of the system
also requires coordination and the associated costs of the Department's software provider to
reestablish licensing.
County's Comment: The County has deployed "TripWire", a change management software package
used to monitor and alert on access and changes to the Eden and IAS applications. Test restoration is
performed on a regular basis for the Eden application, as part of the normal testing of updates to the
system, prior to deploying those updates to the production system. As of January 2014, the
Department's new management staff was finally in place and a review of the existing policies and
procedures has begun to ensure that that they are current and to better address internal control
procedures.
Anticipated Completion Date: Some items have already been implemented, others will be
implemented by June 30, 2014 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
Don Jacobs, Director of Information Technology
County of Hawaii
Page 1
Status of Prior Year Findings:
Finding 2012-01 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.
County's Comment. Refer to County's comment to Current Year Finding 2013-001 for status
update.
Anticipated Completion Date: Some items have already been implemented, others will be
implemented by June 30, 2014 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
Don Jacobs, Director of Information Technology
County of Hawaii
Federal Award Findings:
U.S. Department of Homeland Security
Disaster Grants — Public Assistance (Presidentially Declared Disasters): Kiholo 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 o f 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 County continues to strive to be more diligent 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. The County has submitted
all of the required documents pertaining to the project in question to the State Civil Defense and we
are still awaiting the final review by the Hawaii State Civil Defense in determining the final eligible
portion for federal aid.
Anticipated Completion Date: June 30, 2014
Contact Person: Kay Oshiro, Controller
County of Hawaii
Page 2