HomeMy WebLinkAboutAnnual Audit Plan FY 2018-2019Fiscal Year 2018-2019
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County of Hawai"i
Office of the Legislative Auditor
Bonnie Nims, CLAP, Legislative Auditor
June 26, 2018
Aloha,
It is our mission to serve the County Council and citizens of Hawai"i County by promoting accountability,
fiscal integrity, and openness in local government. Through performance and financial audits of County
agencies and programs, we examine the use of public funds, evaluate operations and activities, and
provide findings and recommendations to elected officials and citizens in an objective manner. Our work is
intended to assist County government and its management of public resources, delivery of public services,
and stewardship of public trust.
I am pleased to present the Office of the Legislative Auditor's annual audit plan for fiscal year 2018-2019.
The purpose of the audit plan is to identify particular County agencies, departments, funds, programs, or
other matters we have scheduled for audit in the fiscal year. Our annual audit plan includes five
performance audits and three follow up audits. We also coordinate the financial statement and federal
single audit of the County of Hawaii with a contracted CPA firm. In addition, we may also consider County-
wide surprise cash counts and ongoing monitoring of County -issued purchasing cards and travel
expenditures.
This audit plan facilitates an efficient allocation of limited audit resources on a risk -basis; provides a flexible
mechanism for managing competing audit needs; eliminates the potential overlapping of audits with other
audit organizations, and provides a sound foundation for obtaining sufficient budgetary funds required to
execute our mission.
Respectfully,
Bonnie Nims, CGAP
Legislative Auditor
What is a performance audit?
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Audit Plan Risk
A performance audit typically examines the effectiveness, economy, or
efficiency of a government program. They can include analyzing the services of
Assessment Criteria
an entire department or activity, identifying possible cost savings, identifying
the outcomes achieved by a program, or comparing actual department
Using a risk-based audit
practices against the practices called for in law or policy. Types of questions
approach to identify and
we may attempt to answer include:
prioritize potential audit topics
that pose the greatest potential
• Is this program accomplishing its goals and objectives? (Are there
risk and liability to the County,
other ways to achieve this goal?) (Is this goal still relevant?) (How do
The Office of the Legislative
other counties achieve this goal or fulfill this need?)
Auditor considers the following
• How well does the program do what it is intended to do? (How
risk factors:
many are served?) (What does it cost per unit?) (How does the County
of Hawaii compare to other counties in this regard?)
0 Size of Department or
Operational Area
• Is this program complying with all applicable laws and
regulations? (Does the program meet all federal grant requirements?)
0 Compliance and
(Is the program fulfilling any obligations mandated by state or county
Regulations
law?)
0 Public Sensitivity
Performance audits have a broader focus on the organization than more
• Complexity of Transactions
traditional financial audits. Financial audits are conducted to provide an opinion
about whether an entity's financial statements are fairly presented and in
0Management
conformity with generally accepted accounting principles. Financial audits do
Accountability
not focus on an entity's performance per se, but rather whether it has taken
0 Quality of Known Internal
appropriate actions to control and safeguard its finances and accurately report
Control System
on its financial conditions.
• Age of Program or
Operation
Our objective is to improve public services. We do this by recommending
specific actions that will address the issues we raise, and by providing valuable
Audit History
information to the public, program leadership, the Mayor, and the County
0 Public Health and Safety
Council.
0 Critical Infrastructure
Preparing the Annual Audit Plan
0Emerging Risk Areas
• Inherent Risk Areas
Audits included in the annual audit plan are selected and prioritized using a risk-0
Departmental Requests
based approach. Risk assessment is a process used to identify and prioritize
audits based upon specific risk factors related to the quality of internal controls
and the estimated potential liability and level of risk exposure to the County of
Adherence to
Hawai'i related to various County departments, programs, activities, and
contracts. The OLA utilizes several techniques to identify and prioritize audits in
Government
the annual plan. These techniques include:
Auditing Standards
• Analysis of operations and internal controls derived from previous internal
audits formal audit follow-up
We conduct all audits in
• Assessment of operations and controls derived from previous external
accordance with Generally
audits including information in the County's Comprehensive Annual
Accepted Government Auditing
Financial Reports (CAFRs) and Single Audit Reports
Standards promulgated by the
• Input from elected officials, operational management, peer audit groups,
United States Comptroller
and members of the public
General.
• Benchmarking against the audit priorities of other governmental entities
• Consideration of current local events, financial conditions, and public policy
issues
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Fiscal Year 2018-2019
Audit Department
Planned Audit
Financial
and Single Audit
In accordance with Hawaii County Charter Section 10-13,
Financial audit of
Department of Finance
our Office will monitor the conduct of the external auditor,
the County's
and other departments
N&K CPA's Inc. (RFP #3544) who will complete the
Comprehensive
as required
following:
Annual Financial
Report (CAFR) for
0 Single Audit of Federal Financial Assistance Programs
Fiscal Year Ended
for Fiscal Year Ended June 30, 2018.
June 30, 2018
Department of Water
Supply
0Financial Audit of the Department of Water Supply for
Fiscal Year Ended June 30, 2018.
• Report for Landfill Financial Assurance; and
• Financial Assessment Electronic Submission of
Section 8 — Housing Choice Vouchers.
Department of Public Works
We will evaluate internal controls; identify opportunities to
Building Permits
Building Division (DPW)
improve efficiency and effectiveness of DPW's continuous
system for permitting, plan review, and inspection process.
We will evaluate preventative maintenance and repair,
Facilities
Department of Parks &
identify P&R's approach and strategy for park maintenance;
Maintenance
Recreation (P&R)
review and evaluate procedures, practices, and controls of
P&R's various divisions on a selective basis.
Department of Finance
We will determine how effective is RPTD's collection of
Real Property Tax
Real Property Tax Division
delinquent taxes, authorizing exemptions, and cash
(RPTD)
receipting process.
Department of Public Works
We will evaluate the timing and effectiveness of pot -hole
Road Maintenance
Highway Division
repair and type of concrete mix used; identify opportunities
to improve preventative road maintenance.
We will evaluate internal controls; compliance with safety
County -wide departments
and staffing standards; identify opportunities to better
Overtime
identified during audit
control overtime expenditures. We may also assess
planning
whether it is less expensive to pay overtime or fill new
positions.
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IT Assessment
Department of Information &
We will follow up on recommendations made in the 2015
Management
Technology
Performance Audit on Information Technology Asset
Management.
Cash Handling
Department of Parks &
We will follow up on recommendations made in the 2016
Recreation
Performance Audit on P&R's cash handling.
Inventory
Department of Public Works
We will follow up on recommendations made in the 2017
Management
Highway Division
Performance Audit on inventory management.
IN I - F-1 i
Pursuant to Resolution No. 287-17 (October 4, 2017), we
Contingency plans
Department of Water Supply
will determine if DWS has adequate contingency plans
for deep wells
(DWS)
during disruption of deep well operations; identify
operations
opportunities to improve communication during disruption of
deep well operations.
am .L:j
i" Salim
County -wide departments
Conduct surprise cash counts of cash and cash equivalents
Surprise Cash
identified during audit
to determine if all cash was receipted and deposited timely
Counts
planning
and intact; monitor safeguarding of assets to prevent and
detect fraud and misuse.
Purchasing Card
County -wide departments
Review internal controls over pCard use and compliance
(pCard)
identified during audit
with applicable procurement laws and County policies and
planning
procedures.
Travel
County -wide departments
identified during audit
Review travel authorization; compliance with applicable
planning
laws and County policies and procedures.
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