Reid Ginoza at 03:20, 5 June 2006

2006-06-05T03:20:53Z

Reid Ginoza at 02:59, 11 March 2006

2006-03-11T02:59:47Z

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Financial Statements
Complete financial statements are
not prepared; therefore, the overall
financial condition of DHHL is not
readily apparent. Partial statements
are prepared for the DHHL annual
report and for the monthly Commission
meetings. But these statements only
contain selected financial data for
certain fund accounts. The last
complete financial statements that we
could locate were for the fiscal year
ended June 30, 1972.
Because the overall financial
condition is not apparent, inappropriate
management decisions may have
been made. An example is the
previously discussed management of
DHHL's cash resources.
Complete financial statements
provide a degree of visibility
pertaining to the management of DHHL
resources, from the perspective of
both management and outside parties.
And, review of financial statements by
management can serve as the basis for
questions concerning certain account
balances or other sensitive financial
matters.
One such account balance that
should have raised a question was an
accounts receivable balance of
$365,781 in the Hawaiian Home Loan
Fund, that is due from the Borrowed
Money Fund. This type of interfund
transaction is questionable because it
is conceivable that the Borrowed Money
Fund was used so the funds could be
loaned at a higher rate of interest,
since the Act sets the rate of
interest on loans from the Hawaiian
Home Loan Fund at 2.5 percent. DHHL
fiscal office personnel could not
provide us with information as to when
or why the transaction(s) was made.
Another problem related to the
financial reports and records is that
they do not separately identify the
expenses of the Molokai water system.
Thus, there is no assurance that water
rates are adequate to recover the
operating expenses of the water
system.
We were informed by DHHL officials
that there have not been any requests
for DHHL financial statements, and
that DHHL has higher priorities for
its limited staff resources. However,
we believe that annual financial
statements, and quarterly or monthly
statements, if practical, should be
available, especially for a
governmental organization with cash
balances of about $10 million and
loans/accounts receivable in excess of
$32 million.
Accounting System Is Not Auditable
There has not been any financial
audit of DHHL's funds and accounts
conducted since the Hawaii Legislative
Auditor attempted to audit the DHHL
loan funds for the fiscal year ended
June 30, 1978. The last audit of all
DHHL funds and accounts was performed
by the Hawaii Comptroller, for the
10-year period ended June 30, 1972.
The Legislative Auditor's report on
the attempted audit of the fiscal year
1978 loan funds concluded that "the
department's financial records are
inaccurate and unverifiable," and that
the records "were not in an auditable
condition." Accordingly, the auditors
were unable to express an opinion on
the financial statements.
In our opinion, the accounting
system is still in an unauditable
condition. In addition, there are no
financial statements (combined balance
sheet, statement of revenues and
expenses, and statement of changes in
fund balances) prepared by DHHL upon
which an opinion could be expressed.
The main deficiency in the accounting
system is that key reconciliations
are not performed. As noted in the
Legislative audit report, there were
394

@@ Line 1: / Line 1: @@
-Financial Statements
+=====Financial Statements=====
 Complete financial statements are
 not prepared; therefore, the overall
@@ Line 12: / Line 12: @@
 could locate were for the fiscal year
 ended June 30, 1972.
 Because the overall financial
 condition is not apparent, inappropriate
@@ Line 18: / Line 19: @@
 previously discussed management of
 DHHL's cash resources.
 Complete financial statements
 provide a degree of visibility
@@ Line 28: / Line 30: @@
 balances or other sensitive financial
 matters.
 One such account balance that
 should have raised a question was an
@@ Line 44: / Line 47: @@
 provide us with information as to when
 or why the transaction(s) was made.
 Another problem related to the
 financial reports and records is that
@@ Line 52: / Line 56: @@
 operating expenses of the water
 system.
 We were informed by DHHL officials
 that there have not been any requests
@@ Line 65: / Line 70: @@
 loans/accounts receivable in excess of
 $32 million.
 Accounting System Is Not Auditable
 There has not been any financial
 audit of DHHL's funds and accounts
@@ Line 75: / Line 81: @@
 by the Hawaii Comptroller, for the
 -year period ended June 30, 1972.
 The Legislative Auditor's report on
 the attempted audit of the fiscal year
@@ Line 84: / Line 91: @@
 were unable to express an opinion on
 the financial statements.
 In our opinion, the accounting
 system is still in an unauditable
@@ Line 92: / Line 100: @@
 fund balances) prepared by DHHL upon
 which an opinion could be expressed.
 The main deficiency in the accounting
 system is that key reconciliations
 are not performed. As noted in the
 Legislative audit report, there were
+{{p|394}}

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Reid Ginoza at 03:20, 5 June 2006

Reid Ginoza at 02:59, 11 March 2006