Financial Audit & Management Review Discussion of BOT Ac.on - - PowerPoint PPT Presentation

Financial Audit & Management Review

Discussion of BOT Ac.on Item #17-03 Office of Hawaiian Affairs February 2, 2017 Prepared by Trustee Keli‘i Akina

Ac.on Item #17-03 2

• 1. Intent of Ac9on Item

The proposed ac9on item DOES NOT call for the following:

• The collec.on of evidence for use as evidence in

court.

• The targe.ng of any Trustee or Execu.ve for fraud
• r other financial claims.

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The proposed ac9on item DOES call for the following:

• Iden.fica.on of areas of waste, abuse and fraud

in procurement

• Enhanced assurances that financial decisions are

in full compliance with applicable laws and internal policies

• Recommenda.ons on policies to strengthen the

Board’s fiduciary oversight

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• 2. Current Audit Requirements

Audit Scope of the audit Auditor

Financial Statement Audit (Annual) Limited to presenta.on of financial statements CPA Firm Federal Funds Audit (Annual) Limited to presenta.on of financial statements & compliance with grant requirements CPA Firm State Audit (4-years) Limited to the assessment of the efficiency and effec.veness of certain programs. Office of the State Auditor

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There are currently three different audit requirements

Why Do We Need A Financial Audit & Management Review?

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• Exis.ng audits (FY 2005-2015) suggest issues

that need to be researched

• 1. Federal Funds Audits

§ Pa_ern of significant internal control deficiencies § Procurement viola.ons

• 2. State Audits

§ Non compliances with state repor.ng requirements § Lack of grant oversight and accountability § Need for improved strategic planning process

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• 3. Specific Areas of Concern

Management:

• OHA’s net assets declined by $46.8 million in the

last two fiscal years

• Fewer resources are allocated towards beneficiary

programs

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0% 10% 20% 30% 40% 50% 60% 70% 80% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Beneficiary Programs as % of Total Expenses

Procurement:

• Financial consul.ng/fiscal sustainability planning

contract

• Kaka‘ako Makai development contract
• Both contracts raise significant concerns with respect

to:

• Compliance with procurement law and policies
• Contract management & administra.on
• Cost management

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Fiduciary Oversight:

• Trust funds are increasingly diverted to OHA’s

subsidiary LLCs without proper accountability and

• versight

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$0.10 $2.85 $1.46 $1.48 $2.07 $1.25 $1.47 $2.65

2007 2008 2009 2010 2011 2012 2013 2014

OHA Grants to Hi'ilei Aloha LLC (Millions of $)

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• 4. Conclusion

Goals:

• 1. Improve and strengthen rela.onship between

Trustees and the Administra.on through improved governance policies

• 2. Improve OHA’s reputa.on by providing a higher

level of assurance to the public

• 3. Restore beneficiary confidence in the Board’s

transparency & management

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