Hawaii Single Audit of Federal Financial Assistance, FY 2023
- Issuer
- Source documents
- Document type
- Audit Report
- Date
- 2024-04-01
- Case
- 2024 04 01 Statewide Single Audit
Summary
The State of Hawaii's Single Audit of Federal Financial Assistance Programs for the fiscal year ended June 30, 2023, an independent audit contracted and administered by the Office of the State Auditor, with auditors' reports dated March 27, 2024. On the financial statements, the auditors report no material weaknesses and identify significant deficiencies in Finding Nos. 2023-001 through 2023-003. On federal programs, they give qualified opinions on Assistance Listing No. 17.225 Unemployment Insurance, COVID-19 Unemployment Insurance and the WIOA Cluster, citing findings 2023-010, 2023-012 and 2023-013, and unmodified opinions on the other major programs. The report notes that approximately $5,696,388,000 in federal awards spent by other departments and agencies is not included in the schedule. It closes with a corrective action plan for late FFATA subaward reports.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
STATE OF HAWAII
SINGLE AUDIT OF FEDERAL FINANCIAL
ASSISTANCE PROGRAMS
FOR THE FISCAL YEAR ENDED JUNE 30, 2023
KEITH A. REGAN
COMPTROLLER
Independent Audit Contracted and Administered by
Office of the State Auditor
State of Hawaii
Single Audit of Federal Financial Assistance Programs
Table of Contents
Year Ended June 30, 2023
Page(s)
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND
UNIFORM GUIDANCE COMPLIANCE REPORTS
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
Report of Independent Auditors on Compliance for Each Major Program, Internal Control
Over Compliance, and the Schedule of Expenditures of Federal Awards Required by the
Uniform Guidance
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS ............................................................................................ 8‒12
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS ........................................................................ 13‒15
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Section I – Summary of Auditors’ Results .............................................................................................................. 16‒17
Section II – Financial Statement Findings .............................................................................................................. 18‒22
Section III – Federal Award Findings and Questioned Costs.................................................................................. 23‒34
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
CORRECTIVE ACTION PLAN
SCHEDULE OF EXPENDITURES OF
FEDERAL AWARDS AND UNIFORM
GUIDANCE COMPLIANCE REPORTS
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
The Auditor
State 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 aggregate discretely presented component units, each major
fund, and the aggregate remaining fund information of the State of Hawaii (the State) as of and for the
year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise
the State’s basic financial statements and have issued our report thereon dated March 27, 2024.
Our report includes a reference to other auditors who audited the financial statements of the Department
of Transportation – Airports Division, which is a major enterprise fund; the Hawaii Employer‐Union Health
Benefits Trust Fund, the Water Pollution Control Revolving Fund, and the Drinking Water Treatment
Revolving Loan Fund, which are nonmajor enterprise funds; and the Hawaii Housing Finance and
Development Corporation, the Hawaii Public Housing Authority, the Hawaii Community Development
Authority, and the Hawaii Health Systems Corporation, which are discretely presented component units,
as described in our report on the State’s financial statements. This report does not include the results of
the other auditors’ testing of internal control over financial reporting or compliance and other matters
that are reported on separately by those auditors.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the State’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 State’s internal control. Accordingly,
we do not express an opinion on the effectiveness of the State’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 preceding paragraph
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. We identified certain deficiencies in internal control,
described in the accompanying schedule of findings and questioned costs as Finding Nos. 2023‐001
through 2023‐003 that we consider to be significant deficiencies.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the State’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.
State’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the State’s
response to the findings identified in our audit and described in the accompanying schedule of findings
and questioned costs. The State’s response was not subjected to the other auditing procedures applied
in the audit of the financial statements and, accordingly, we express no opinion on the response.
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 results of that testing, and not to provide an opinion on the effectiveness of the State’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 State’s internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
Honolulu, Hawaii
March 27, 2024
Report of Independent Auditors on Compliance
for Each Major Federal Program, Internal Control Over Compliance,
and the Schedule of Expenditures of Federal Awards
Required by the Uniform Guidance
The Auditor
State of Hawaii
Report on Compliance for Each Major Federal Program
Qualified and Unmodified Opinions
We have audited the State of Hawaii’s Department of Accounting and General Services, Department of
Agriculture, Department of Budget and Finance, Department of Business, Economic Development and
Tourism, Department of Commerce and Consumer Affairs, Department of Defense, Department of Human
Resources Development, Department of Labor and Industrial Relations, Department of Land and Natural
Resources, Department of Law Enforcement, Department of Public Safety, Department of Taxation, and
the Governor’s Office (collectively, the State) compliance with the types of compliance requirements
identified as subject to audit in the U.S. Office of Management and Budget (OMB) Compliance Supplement
that could have a direct and material effect on each of the State’s major federal programs for the year
ended June 30, 2023. The State’s major federal programs are identified in the summary of auditors’
results section of the accompanying schedule of findings and questioned costs.
Qualified Opinions on Assistance Listing No. 17.225, Unemployment Insurance, Assistance Listing No.
COVID‐19 17.225, COVID‐19 Unemployment Insurance, and the WIOA Cluster
In our opinion, except for the noncompliance described in the Basis for Qualified and Unmodified
Opinions section of our report, the State complied, in all material respects, with the compliance
requirements referred to above that could have a direct and material effect on Assistance Listing (AL)
No. 17.225, Unemployment Insurance, AL No. COVID‐19 17.225, COVID‐19 Unemployment Insurance,
and the WIOA Cluster for the year ended June 30, 2023.
Unmodified Opinion on Each of the Other Major Federal Programs
In our opinion, the State 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 other major federal programs
identified in the summary of auditors’ results section of the accompanying schedule of findings and
questioned costs for the year ended June 30, 2023.
Basis for Qualified and Unmodified Opinions
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America (GAAS); the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States (Government Auditing
Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). Our responsibilities under those standards and the Uniform Guidance are further described
in the Auditors’ Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the State and to meet our other ethical responsibilities,
in accordance with relevant ethical requirements relating to our audit. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our qualified and
unmodified opinions on compliance for each major federal program. Our audit does not provide a
legal determination of the State’s compliance with the compliance requirements referred to above.
Matters Giving Rise to Qualified Opinions on Assistance Listing No. 17.225, Unemployment Insurance,
Assistance Listing No. COVID‐19 17.225, Unemployment Insurance, and the WIOA Cluster
As described in the accompanying schedule of findings and questioned costs, the State did not comply
with requirements regarding:
Finding No. AL No. Program or Cluster Name Compliance Requirement
17.225
2023‐010 Unemployment Insurance Special Test and Provisions
COVID‐17.225
2023‐012 Various WIOA Cluster Reporting
2023‐013 Various WIOA Cluster Subrecipient Monitoring
Compliance with such requirements is necessary, in our opinion, for the State to comply with
requirements applicable to those programs.
Other Matter – Federal Expenditures Not Included in the Compliance Audit
The State of Hawaii’s basic financial statements include, among other departments and agencies, the
operations of: Department of the Attorney General, Department of Education, Department of Hawaiian
Home Lands, Department of Health, Department of Human Services, Department of Transportation,
Drinking Water Treatment Revolving Loan Fund, Hawaii Community Development Authority, Hawaii
Employer‐Union Health Benefits Trust Fund, Hawaii Health Systems Corporation, Hawaii Housing Finance
and Development Corporation, Hawaii Hurricane Relief Fund, Hawaii Public Housing Authority, Hawaii
Tourism Authority, Judiciary, University of Hawaii, and the Water Pollution Control Revolving Fund which
expended approximately $5,696,388,000 in federal awards, which are not included in the accompanying
schedule of expenditures of federal awards for the year ended June 30, 2023. Our compliance audit,
described in the Qualified and Unmodified Opinions section of our report, did not include the operations
of the Department of the Attorney General, Department of Education, Department of Hawaiian Home
Lands, Department of Health, Department of Human Services, Department of Transportation, Drinking
Water Treatment Revolving Loan Fund, Hawaii Community Development Authority, Hawaii Employer‐
Union Health Benefits Trust Fund, Hawaii Health Systems Corporation, Hawaii Housing Finance and
Development Corporation, Hawaii Hurricane Relief Fund, Hawaii Public Housing Authority, Hawaii Tourism
Authority, Judiciary, University of Hawaii, and the Water Pollution Control Revolving Fund, because these
units separately engaged auditors to perform audits in accordance with the Uniform Guidance or did not
require an audit in accordance with the Uniform Guidance.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design,
implementation and maintenance of effective internal control over compliance with the requirements of
laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the State’s
federal programs.
Auditors’ Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express an
opinion on the State’s compliance based on our audit. Reasonable assurance is a high level of assurance
but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance
with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material
noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud
is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control. Noncompliance with the compliance
requirements referred to above is considered material if there is a substantial likelihood that, individually
or in the aggregate, it would influence the judgment made by a reasonable user of the report on
compliance about the State’s compliance with the requirements of each major federal program
as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform
Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, whether due to fraud or error, and design
and perform audit procedures responsive to those risks. Such procedures include examining, on a
test basis, evidence regarding the State’s compliance with the compliance requirements referred to
above and performing such other procedures as we considered necessary in the circumstances.
Obtain an understanding of the State’s internal control over compliance relevant to the audit in order
to design audit procedures that are appropriate in the circumstances and to test and report on
internal control over compliance in accordance with the Uniform Guidance, but not for the purpose
of expressing an opinion on the effectiveness of the State’s internal control over compliance.
Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and any significant deficiencies and material weaknesses in
internal control over compliance that we identified during the audit.
Other Matters
The results of our auditing procedures disclosed other instances of noncompliance which are required
to be reported in accordance with the Uniform Guidance and which are described in the accompanying
schedule of findings and questioned costs as Finding Nos. 2023‐004 through 2023‐009, 2023‐011 and
2023‐14. Our opinion on each major federal program is not modified with respect to these matters.
Government Auditing Standards requires the auditors to perform limited procedures on the State’s
response to the noncompliance findings identified in our compliance audit described in the accompanying
schedule of findings and questions costs. The State’s response was not subjected to the auditing
procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control Over Compliance
Our consideration of internal control over compliance was for the limited purpose described in the
Auditors’ Responsibilities for the Audit of Compliance section above and was not designed to identify
all deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies in internal control over compliance and therefore, material weaknesses or significant
deficiencies may exist that were not identified. However, as discussed below, we did identify certain
deficiencies in internal control over compliance that we consider to be material weaknesses and
significant deficiencies.
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. We consider the deficiencies in internal
control over compliance described in the accompanying schedule of findings and questioned costs as
Finding Nos. 2023‐010, 2023‐012 and 2023‐013 to be material weaknesses.
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. We consider the deficiencies in internal control over
compliance described in the accompanying schedule of findings and questioned costs as Finding Nos.
2023‐004 through 2023‐009, 2023‐011 and 2023‐14 to be significant deficiencies.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed.
Government Auditing Standards requires the auditors to perform limited procedures on the State’s
response to the internal control over compliance findings identified in our audit described in the
accompanying schedule of findings and questioned costs. The State’s response was not subjected to the
auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the
response.
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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, the business‐type activities,
the aggregate discretely presented component units, each major fund, and the aggregate remaining fund
information of the State of Hawaii as of and for the year ended June 30, 2023, and the related notes to
the financial statements, which collectively comprise the State of Hawaii’s basic financial statements.
We issued our report thereon dated March 27, 2024, which contained unmodified opinions on those
financial statements. We did not audit the financial statements of the Department of Transportation –
Airports Division, the Hawaii Employer‐Union Health Benefits Trust Fund, the Water Pollution Control
Revolving Fund, the Drinking Water Treatment Revolving Loan Fund, the Hawaii Housing Finance and
Development Corporation, the Hawaii Public Housing Authority, the Hawaii Community Development
Authority, and the Hawaii Health Systems Corporation. 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 the Uniform Guidance and is not a required part of the basic financial statements.
As described in Note 4 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 basic 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 basic financial statements as a whole.
Honolulu, Hawaii
March 27, 2024
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
Amount
Federal Grantor / Pass‐through Grantor and Program Title Federal Federal Provided to
(Pass‐through Identifying Number) AL Number Expenditures Subrecipients
U.S. DEPARTMENT OF AGRICULTURE
U.S. Department of Agriculture Direct Programs
Plant and Animal Disease, Pest Control and Animal Care 10.025 $ 133,727 $ ‐
Inspection Grading and Standardization 10.162 7,536 ‐
Market Protection and Promotion 10.163 7,800 ‐
Specialty Crop Block Grant Program – Farm Bill 10.170 401,710 ‐
Micro‐Grants for Food Security Program 10.179 1,839,767 ‐
Pandemic Relief Activities: Farm and Food Worker Relief Grant 10.181 200,000 ‐
Farm and Ranch Stress Assistance Network 10.525 118,672 ‐
Senior Farmers Market Nutrition Program 10.576 412,475 392,558
Cooperative Forestry Assistance 10.664 616,484 ‐
Wood Utilization Assistance 10.674 80,870 ‐
Urban and Community Forestry Program 10.675 303,066 243,319
Forest Legacy Program 10.676 229,353 ‐
Forest Stewardship Program 10.678 88,921 ‐
Forest Health Protection 10.680 456,780 ‐
State and Private Forestry Cooperative Fire Assistance 10.698 167,234 ‐
Feral Swine Eradication and Control Pilot Program 10.934 130,941 ‐
Food Distribution Cluster
Commodity Supplemental Food Program 10.565 1,527,118 1,491,420
Emergency Food Assistance Program (Administrative Costs) 10.568 542,666 472,512
Emergency Food Assistance Program (Food Commodities) 10.569 4,611,691 4,611,691
Total Food Distribution Cluster 6,681,475 6,575,623
Total U.S. Department of Agriculture Direct Programs 11,876,811 7,211,500
Pass‐through from the State Department of Education
Child Nutrition Cluster
School Breakfast Program (1420‐C) 10.553 48,445 ‐
National School Lunch Program (1420‐C) 10.555 91,497 ‐
Total Child Nutrition Cluster 139,942 ‐
Pass‐through from the State Department of Human Services
State Administrative Matching Grants for the Supplemental Nutrition
Assistance Program (SNAP Cluster) (DHS‐18‐SNAP‐0038 and DHS‐18‐SNAP‐0038 SA1) 10.561 369,633 ‐
Total U.S. Department of Agriculture Pass‐through Programs 509,575 ‐
Total U.S. Department of Agriculture 12,386,386 7,211,500
U.S. DEPARTMENT OF COMMERCE
U.S. Department of Commerce Direct Programs
National Oceanic and Atmosphere Administration – Management Support
for Hawaiian Islands Humpback Whale, Joint Enforcement Agreement 11.U01 44,551 ‐
State Digital Equity Planning and Capacity Grant 11.032 118,203 ‐
Broadband Equity, Access and Deployment Program 11.035 10,982 10,982
Interjurisdictional Fisheries Act of 1986 11.407 48,951 ‐
Fishery Products Inspection and Certification 11.413 4,816 ‐
Coastal Zone Management Administration Awards 11.419 2,397,727 1,593,365
Marine Sanctuary Program 11.429 147,308 ‐
Pacific Fisheries Data Program 11.437 409,661 ‐
Marine Mammal Data Program 11.439 13,655 ‐
Unallied Industry Projects 11.452 43,450 ‐
Unallied Management Projects 11.454 35,000 ‐
Meteorologic and Hydrologic Modernization Development 11.467 682,988 442,318
Congressionally Identified Awards and Projects 11.469 140,014 ‐
Unallied Science Program 11.472 463,845 ‐
(continued)
See accompanying notes to the schedule of expenditures of federal awards.
8
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
Amount
Federal Grantor / Pass‐through Grantor and Program Title Federal Federal Provided to
(Pass‐through Identifying Number) AL Number Expenditures Subrecipients
Office for Coastal Management 11.473 511,265 ‐
Coral Reef Conservation Program 11.482 749,420 ‐
Manufacturing Extension Partnership 11.611 813,472 ‐
Marine Debris Program 11.999 40,097 ‐
Economic Development Cluster
Economic Adjustment Assistance 11.307 1,648,426 305,142
Total Economic Development Cluster 1,648,426 305,142
Total U.S. Department of Commerce 8,323,831 2,351,807
U.S. DEPARTMENT OF DEFENSE
U.S. Department of Defense Direct Programs
Readiness and Environmental Protection Integration Program 12.017 50,214 ‐
Collaborative Research and Development 12.114 294,915 ‐
National Guard Military Operations and Maintenance Projects 12.401 20,009,157 ‐
National Guard ChalleNGe Program 12.404 4,497,397 ‐
Economic Adjustment Assistance for State Governments 12.617 394,157 ‐
Legacy Resource Management Program 12.632 254,826 ‐
Total U.S. Department of Defense 25,500,666 ‐
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
U.S. Department of Housing and Urban Development Direct Program
Fair Housing Assistance Program – State and Local 14.401 69,337 ‐
Total U.S. Department of Housing and Urban Development 69,337 ‐
U.S. DEPARTMENT OF THE INTERIOR
U.S. Department of the Interior Direct Programs
Fish and Wildlife Management Assistance 15.608 120,840 ‐
Coastal Wetlands Planning, Protection and Restoration 15.614 1,462,036 ‐
Cooperative Endangered Species Conservation Fund 15.615 3,736,156 ‐
North American Wetlands Conservation Fund 15.623 44,487 ‐
Coastal Program 15.630 39,997 ‐
Partners for Fish and Wildlife 15.631 1,551 ‐
State Wildlife Grants 15.634 2,098,798 604,077
Endangered Species Conservation – Recovery Implementation Funds 15.657 1,044,269 ‐
Candidate Species Conservation 15.660 299,464 ‐
Adaptive Science 15.670 64,782 ‐
Economic, Social and Political Development of the Territories 15.875 294,372 ‐
Historic Preservation Fund Grants‐In‐Aid 15.904 534,319 ‐
Outdoor Recreation – Acquisition, Development and Planning 15.916 352,960 ‐
Natural Resource Stewardship 15.944 34,181 ‐
Fish and Wildlife Cluster
Sport Fish Restoration 15.605 2,804,043 264,479
Wildlife Restoration and Basic Hunter Education 15.611 3,697,507 ‐
Total Fish and Wildlife Cluster 6,501,550 264,479
Total U.S. Department of the Interior 16,629,762 868,556
U.S. DEPARTMENT OF JUSTICE
U.S. Department of Justice Direct Programs
State Criminal Alien Assistance Program 16.606 163,317 ‐
Stop School Violence 16.839 78,130 ‐
Equitable Sharing Program 16.922 349,404 ‐
Total U.S. Department of Justice Direct Programs 590,851 ‐
(continued)
See accompanying notes to the schedule of expenditures of federal awards.
9
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
Amount
Federal Grantor / Pass‐through Grantor and Program Title Federal Federal Provided to
(Pass‐through Identifying Number) AL Number Expenditures Subrecipients
Pass‐through from the State Department of the Attorney General
COVID‐19 – Coronavirus Emergency Supplemental Funding Program (20‐VD‐11) COVID‐19 – 16.034 77,964 ‐
Crime Victim Assistance (19‐V2‐10, 20‐V2‐05 and 21‐V2‐05) 16.575 145,469 ‐
Residential Substance Abuse Treatment for State Prisoners (19‐J2‐01) 16.593 89,211 ‐
Edward Byrne Memorial Justice Assistance Grant Program (19‐DJ‐05 and 20‐DJ‐05) 16.738 40,134 ‐
Total U.S. Department of Justice Pass‐through Programs 352,778 ‐
Total U.S. Department of Justice 943,629 ‐
U.S. DEPARTMENT OF LABOR
U.S. Department of Labor Direct Programs
Labor Force Statistics 17.002 760,790 ‐
Unemployment Insurance 17.225 205,061,854 ‐
COVID‐19 – Unemployment Insurance COVID‐19 − 17.225 3,589,308 ‐
Total Unemployment Insurance 208,651,162 ‐
Senior Community Service Employment Program 17.235 972,124 ‐
Trade Adjustment Assistance 17.245 71,501 ‐
Reentry Employment Opportunities 17.270 217 ‐
Work Opportunity Tax Credit Program 17.271 84,172 ‐
Temporary Labor Certification for Foreign Workers 17.273 99,817 ‐
WIOA National Dislocated Workers Grants / WIA National Emergency Grants 17.277 1,157,404 ‐
Occupational Safety and Health – State Program 17.503 1,713,797 ‐
Consultation Agreements 17.504 532,220 ‐
Employment Service Cluster
Employment Service / Wagner‐Peyser Funded Activities 17.207 1,926,127 ‐
Disabled Veterans’ Outreach Program 17.801 456,478 ‐
Total Employment Service Cluster 2,382,605 ‐
WIOA Cluster
WIOA Adult Program 17.258 94,517 ‐
WIOA Youth Activities 17.259 5,959,486 4,227,914
WIOA Dislocated Worker Formula Grants 17.278 81,319 ‐
Total WIOA Cluster 6,135,322 4,227,914
Total U.S. Department of Labor 222,561,131 4,227,914
U.S. DEPARTMENT OF TRANSPORTATION
U.S. Department of Transportation Direct Program
Highway Planning and Construction 20.205 606,278 ‐
Pass‐through from the State Department of Transportation
Federal Transit Administration
Federal Transit – Capital Investment Grants (Federal Transit Cluster) (HI‐03‐0038‐00) 20.500 2,973,030 ‐
Total U.S. Department of Transportation 3,579,308 ‐
U.S. DEPARTMENT OF THE TREASURY
U.S. Department of Treasury Direct Programs
Equitable Sharing 21.016 93,822 ‐
COVID‐19 – Emergency Rental Assistance Program COVID‐19 − 21.023 13,628,624 13,628,624
COVID‐19 – Coronavirus State and Local Fiscal Recovery Funds COVID‐19 − 21.027 383,036,741 287,171,053
COVID‐19 – Coronavirus Capital Projects Funds COVID‐19 − 21.029 289,274 289,274
COVID‐19 – State Small Business Credit Initiative
Technical Assistance Grant Program COVID‐19 − 21.031 2,827,267 ‐
Total U.S. Department of the Treasury 399,875,728 301,088,951
(continued)
See accompanying notes to the schedule of expenditures of federal awards.
10
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
Amount
Federal Grantor / Pass‐through Grantor and Program Title Federal Federal Provided to
(Pass‐through Identifying Number) AL Number Expenditures Subrecipients
U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
U.S. Equal Employment Opportunity Commission Direct Program
Employment Discrimination – State and Local Fair Employment
Practices Agency Contracts 30.002 173,841 ‐
Total U.S. Equal Employment Opportunity Commission 173,841 ‐
U.S. GENERAL SERVICES ADMINISTRATION
U.S. General Services Administration Direct Program
Donation of Federal Surplus Personal Property 39.003 1,615,017 ‐
Total U.S. General Services Administration 1,615,017 ‐
U.S. NATIONAL ENDOWMENT FOR THE ARTS
U.S. National Endowment for the Arts Direct Program
Promotion of the Arts – Partnership Agreements 45.025 833,203 530,279
Total U.S. National Endowment for the Arts 833,203 530,279
U.S. SMALL BUSINESS ADMINISTRATION
U.S. Small Business Administration Direct Program
State Trade Expansion 59.061 601,223 ‐
Total U.S. Small Business Administration 601,223 ‐
U.S. DEPARTMENT OF VETERANS AFFAIRS
U.S. Department of Veterans Affairs Direct Programs
Grants to States for Construction of State Home Facilities 64.005 20,995,278 ‐
Veterans Cemetery Grants Program 64.203 5,071,003 ‐
Total U.S. Department of Veterans Affairs 26,066,281 ‐
U.S. ENVIRONMENTAL PROTECTION AGENCY
U.S. Environmental Protection Agency Direct Programs
Regional Wetland Program Development Grants 66.461 142,715 ‐
Performance Partnership Grants 66.605 471,896 ‐
Total U.S. Environmental Protection Agency Direct Programs 614,611 ‐
Pass‐through from the State Department of Health
Nonpoint Source Implementation Grant (17‐195) 66.460 283,656 ‐
Total U.S. Environmental Protection Agency Pass‐through Program 283,656 ‐
Total U.S. Environmental Protection Agency 898,267 ‐
U.S. DEPARTMENT OF ENERGY
U.S. Department of Energy Direct Programs
State Energy Program 81.041 734,192 ‐
Weatherization Assistance for Low‐Income Persons 81.042 513,558 468,466
Renewable Energy Research and Development 81.087 93,067 ‐
Total U.S. Department of Energy 1,340,817 468,466
U.S. DEPARTMENT OF EDUCATION
Pass‐through from the University of Hawaii
Career and Technical Education – Basic Grants to States (V048A20011) 84.048A 134,234 ‐
Total U.S. Department of Education Pass‐through Program 134,234 ‐
Total U.S. Department of Education 134,234 ‐
(continued)
See accompanying notes to the schedule of expenditures of federal awards.
11
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
Amount
Federal Grantor / Pass‐through Grantor and Program Title Federal Federal Provided to
(Pass‐through Identifying Number) AL Number Expenditures Subrecipients
U.S. ELECTION ASSISTANCE COMMISSION
U.S. Election Assistance Commission Direct Programs
Help America Vote Act Requirements Payments 90.401 533,380 ‐
HAVA Election Security 90.404 1,455,810 ‐
Total U.S. Election Assistance Commission 1,989,190 ‐
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
U.S. Department of Health and Human Services Direct Programs
Food and Drug Administration Research 93.103 197,435 ‐
1332 State Innovation Waivers 93.423 433,368 ‐
Refugee and Entrant Assistance – State Administered Programs 93.566 125,301 95,770
Community Services Block Grant 93.569 3,589,390 3,353,703
COVID‐19 ‒ Community Services Block Grant COVID‐19 ‒ 93.569 1,151,762 1,111,863
Total Community Services Block Grant 4,741,152 4,465,566
Total U.S. Department of Health and Human Services Direct Programs 5,497,256 4,561,336
Pass‐through from the State Department of Health
Injury Prevention and Control Research and State Community Based Programs
(NU17CE925009‐03‐02) 93.136 296,894 ‐
Epidemiology & Laboratory Capacity for Infectious Diseases (NU50CK000553) 93.323 145,513 ‐
Total U.S. Department of Health Pass‐Through Programs 442,407 ‐
Pass‐through from the State Department of Human Services
Temporary Assistance for Needy Families
(2201HRCM, DHS‐21‐ETPO‐0049 2 and DHS‐21‐ETPO‐0049) 93.558 949,604 125,972
Low‐Income Home Energy Assistance (G‐2101HILIEA and G‐2201HILIEA) 93.568 451,326 421,075
Total U.S. Department of Health and Human Services Pass‐through Programs 1,400,930 547,047
Total U.S. Department of Health and Human Services 7,340,593 5,108,383
U.S. DEPARTMENT OF HOMELAND SECURITY
U.S. Department of Homeland Security Direct Programs
Non‐profit Security Grant Program 97.008 264,508 264,508
Boating Safety Financial Assistance 97.012 544,644 ‐
Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 54,576,492 6,923,603
National Dam Safety Program 97.041 302,851 ‐
Emergency Management Performance Grants 97.042 4,788,283 1,467,275
Cooperating Technical Partners 97.045 99,391 ‐
Pre‐Disaster Mitigation 97.047 328,846 ‐
Port Security Grant Program 97.056 386,278 48,195
Homeland Security Grant Program 97.067 4,863,997 3,610,523
Earthquake Consortium 97.082 30,248 ‐
Regional Catastrophic Preparedness Grant Program 97.111 241,116 ‐
Financial Assistance for Targeted Violence and Terrorism Prevention 97.132 210,478 ‐
Total U.S. Department of Homeland Security 66,637,132 12,314,104
Total Expenditures of Federal Awards $ 797,499,576 $ 334,169,960
(concluded)
See accompanying notes to the schedule of expenditures of federal awards.
12
State of Hawaii
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
1. Reporting Entity
The accompanying schedule of expenditures of federal awards (SEFA) includes the federal grant activity of
the following State of Hawaii departments and agencies:
Department of Accounting and General Services
Department of Agriculture
Department of Budget and Finance
Department of Business, Economic Development and Tourism
Department of Commerce and Consumer Affairs
Department of Defense
Department of Human Resources Development
Department of Labor and Industrial Relations
Department of Land and Natural Resources
Department of Law Enforcement
Department of Public Safety
Department of Taxation
Governor’s Office
Certain other departments and agencies within the State of Hawaii obtained separate audits performed
in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and
accordingly, separate Uniform Guidance submissions are made. (See Note 2.)
2. Other State of Hawaii Departments and Agencies Not Included in the
Accompanying Schedule of Expenditures of Federal Awards
The following is a summary of State of Hawaii departments and agencies that obtain separate Uniform
Guidance audits or do not receive federal grants and, therefore, do not obtain an audit under the Uniform
Guidance. Awards listed in these audit reports are not included in the accompanying SEFA:
Department of the Attorney General
Department of Education
Department of Hawaiian Home Lands
Department of Health
Department of Human Services
Department of Transportation
Drinking Water Treatment Revolving Loan Fund
Hawaii Community Development Authority
Hawaii Employer‐Union Health Benefits Trust Fund
Hawaii Health Systems Corporation
Hawaii Housing Finance and Development Corporation
Hawaii Hurricane Relief Fund
Hawaii Public Housing Authority
Hawaii Tourism Authority
Judiciary
University of Hawaii
Water Pollution Control Revolving Fund
13
State of Hawaii
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
3. Basis of Accounting
The basic financial statements of the State of Hawaii have been prepared in conformity with accounting
principles generally accepted in the United States of America (GAAP). The Governmental Accounting
Standards Board is the accepted standard‐setting body for establishing governmental accounting and
financial reporting principles.
4. Basis of Presentation
The information in this schedule is presented in accordance with the requirements of the Uniform
Guidance. Expenditures reported in the schedule are reported on the cash basis of accounting.
5. Nonmonetary Assistance
The SEFA contains values of a nonmonetary assistance program. As provided by program regulations,
property received under AL No. 39.003, Donation of Federal Surplus Personal Property, and food
commodities received under AL No. 10.553, School Breakfast Program, AL No. 10.555, National School
Lunch Program, and AL No. 10.569, Emergency Food Assistance Program (Food Commodities), are
presented at the estimated fair value at the time of donation.
6. Unemployment Insurance
State unemployment tax revenues and government contributions are used to pay benefits under federally
approved State unemployment law. Of the $208,651,162 reported as expenditures for AL No. 17.225,
Unemployment Insurance, and AL No. COVID‐19 – 17.225, COVID‐19 – Unemployment Insurance,
$180,763,187 represented expenditures of the State.
7. Relationship to Federal and State Financial Reports
The regulations and guidelines governing the preparation of Federal and State financial reports vary
by Federal and State agency and among programs administered by the same agency. Accordingly, the
amounts reported in the Federal and State financial reports do not necessarily agree with the amounts
reported in the accompanying SEFA which is prepared as explained in Notes 3 and 4 above.
8. Indirect Costs
The State does not use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
14
State of Hawaii
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
9. Research and Development Cluster Expenditures
The SEFA includes the following Research and Development amounts:
Federal Federal
Federal Grantor and Program Title AL Number Expenditures
U.S. Department of Commerce
Interjurisdictional Fisheries Act of 1986 11.407 $ 48,951
Marine Sanctuary Program 11.429 147,308
Pacific Fisheries Data Program 11.437 409,661
Marine Mammal Data Program 11.439 13,655
Unallied Industry Projects 11.452 43,450
Unallied Management Projects 11.454 35,000
Coral Reef Conservation Program 11.482 749,420
Total U.S. Department of Commerce 1,447,445
U.S. Department of Defense
Collaborative Research and Development 12.114 294,915
Total U.S. Department of Defense 294,915
U.S. Department of the Interior
Fish and Wildlife Management Assistance 15.608 120,840
Coastal Program 15.630 39,997
State Wildlife Grants 15.634 2,098,798
Endangered Species Conservation – Recovery Implementation Funds 15.657 1,044,269
Candidate Species Conservation 15.660 299,464
Adaptive Science 15.670 64,782
Natural Resource Stewardship 15.944 34,181
Total U.S. Department of the Interior 3,702,331
U.S. Environmental Protection Agency
Regional Wetland Program Development Grants 66.461 142,715
Total U.S. Environmental Protection Agency 142,715
U.S. Department of Health and Human Services
Food and Drug Administration Research 93.103 197,435
Total U.S. Department Health and Human Services 197,435
Total Research and Development Cluster $ 5,784,841
15
SCHEDULE OF FINDINGS
AND QUESTIONED COSTS
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
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? X yes no
• Significant deficiencies identified? X yes none reported
Type of auditors’ report issued on compliance for major programs Qualified
An unmodified opinion was issued on the State of Hawaii’s compliance
with its major federal programs for the year ended June 30, 2023,
except for the requirements regarding special tests and provisions for
AL No. 17.225, Unemployment Insurance, and AL No. COVID‐19 – 17.225,
COVID‐19 – Unemployment Insurance, and reporting and subrecipient
monitoring for the WIOA Cluster for which the opinion on compliance
was qualified.
Any audit findings disclosed that are required to be reported in
accordance with the Uniform Guidance? X yes no
Dollar threshold used to distinguish between type A and type B program $3,000,000
Auditee qualified as low‐risk auditee? yes X no
16
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Identification of Major Programs
Federal
AL Number Name of Federal Program or Cluster
12.404 National Guard ChalleNGe Program
15.615 Cooperative Endangered Species Conservation Fund
20.500 Federal Transit – Capital Investment Grants (Federal Transit Cluster)
COVID‐19 – 21.023 COVID‐19 – Emergency Rental Assistance Program
COVID‐19 – 21.027 COVID‐19 – Coronavirus State and Local Fiscal Recovery Funds
COVID‐19 – 21.031 COVID‐19 – State Small Business Credit Initiative
64.203 Veterans Cemetery Grants Program
97.042 Emergency Management Performance Grants
97.067 Homeland Security Grant Program
WIOA Cluster
17.258 WIOA Adult Program
17.259 WIOA Youth Activities
17.278 WIOA Dislocated Worker Formula Grants
Research and Development (R&D) Cluster
11.407 Interjurisdictional Fisheries Act of 1986
11.429 Marine Sanctuary Program
11.437 Pacific Fisheries Data Program
11.439 Marine Mammal Data Program
11.452 Unallied Industry Projects
11.454 Unallied Management Projects
11.482 Coral Reef Conservation Program
12.114 Collaborative Research and Development
15.608 Fish and Wildlife Management Assistance
15.614 Coastal Wetlands Planning, Protection and Restoration
15.630 Coastal Program
15.634 State Wildlife Grants
15.657 Endangered Species Conservation – Recovery Implementation Funds
15.660 Candidate Species Conservation
15.670 Adaptive Science
15.944 Natural Resource Stewardship
66.461 Regional Wetland Program Development Grants
93.103 Food and Drug Administration Research
Unemployment Insurance
17.225 Unemployment Insurance
COVID‐19 – 17.225 COVID‐19 – Unemployment Insurance
Food Distribution Cluster
10.565 Commodity Supplemental Food Program
10.568 Emergency Food Assistance Program (Administrative Costs)
10.569 Emergency Food Assistance Program (Food Commodities)
17
FINANCIAL STATEMENT FINDINGS
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Section II – Financial Statement Findings
Finding No. 2023‐001: Internal Control over Financial Reporting (Significant Deficiency)
State Department of Accounting and General Services
Condition
The State’s internal control over financial reporting could be improved. During our audit of the fiscal year 2023
financial statements, we identified multiple deficiencies that, when considered in the aggregate, indicated a
material weakness in the State’s internal control over financial reporting.
The process used by the State Department of Accounting and General Services (DAGS) Accounting Division
to consolidate required information from State departments and agencies to prepare the State’s Annual
Comprehensive Financial Report (ACFR) (e.g., preparing Governmental Funds financial statements on a modified
accrual basis and the Government‐Wide financial statements on an accrual basis) is inefficient, time consuming,
and causes delays in statewide financial reporting.
Information necessary to prepare such accounting entries must be obtained from other State departments and
agencies. For the year ended June 30, 2023, DAGS requested formal reporting information packages to obtain the
financial information from State departments but did not receive timely responses from some of the departments,
including information for the implementation of Governmental Accounting Standards Board Statement No. 96,
Subscription‐Based Information Technology Arrangements.
A similar finding was reported as a material weakness in the prior year as Finding No. 2022‐001.
Criteria
Management is responsible for establishing and maintaining internal control over financial reporting, the
objectives of which are to provide management with reasonable, but not absolute, assurance that transactions
are executed in accordance with management’s authorization and recorded properly to permit the preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America
(GAAP). The DAGS Accounting Division is responsible for preparing the ACFR in accordance with GAAP.
Effect
Due to the untimely submission of information to DAGS, inadequate review of journal entries by the departments,
and issues in accounting for capital assets at the department‐level, audit adjustments and reclassifications were
necessary to properly report the fiscal year 2023 financial statements.
Other misstatements identified were not corrected as they were deemed to be immaterial to the financial
statements.
Cause and View of Responsible Officials
The deficiencies are due to inefficiencies in the financial statement preparation process, the lack of timely
information from various departments, the lack of review at the departments, and inadequate staffing within
DAGS Accounting Division.
18
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Recommendation
DAGS should continue to develop well‐defined, systematic, efficient and orderly processes for financial reporting
that include a comprehensive set of policies and procedures necessary to establish internal control over financial
reporting. The process and its key attributes (e.g., overall timing, methodology, format and frequency of analyses)
should be formally documented, approved, communicated to other departments and agencies, and monitored on
a regular basis.
DAGS should also develop plans for the adoption of new accounting standards that may have a material effect on
the State’s financial statements well in advance of effective dates to allow for timely and accurate implementation.
DAGS should ensure adequate staffing within the Accounting Division or procure for professional services.
Furthermore, individuals who perform reviews of journal entries at the departments should be adequately trained
to review for proper source codes, appropriations, and object codes being used. Departments should perform
a thorough review of post‐closing journal entries to ensure all items from various schedules are reflected in the
post‐closing journal entries. Departments should also ensure construction projects are properly classified as in
progress, transferred to the proper depreciable asset class when placed in service, or written off as expenses if
abandoned or otherwise not capitalizable. Departments should ensure capital assets schedules provided to DAGS
are complete and accurate.
Adherence to these policies and procedures will facilitate the processing of complete, accurate and timely financial
information.
19
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Finding No. 2023‐002: Accounting for Component Units and Proprietary Funds (Significant Deficiency)
State Department of Accounting and General Services
Condition
During fiscal year 2008, DAGS implemented a financial statement policy on reporting material component units
(CU) and proprietary funds (PF), which indicated that only material CUs and PFs would be reported as discretely
presented CUs and major PFs in the ACFR. Materiality was determined based on certain quantitative criteria
determined by DAGS. During the year ended June 30, 2013, DAGS revised its financial reporting policy to comply
with GASB Statement No. 61, The Financial Reporting Entity: Omnibus – an Amendment of GASB Statements
No. 14 and 34.
Consequently, although DAGS determined that the Stadium Authority, Hawaii Strategic Development Corporation,
Hawaii Technology Development Corporation, Natural Energy Laboratory of Hawaii, and Agribusiness
Development Corporation met the definition of discretely presented CUs as defined in GASB Statement No. 61,
these CUs did not meet the materiality thresholds under the State’s policy, and thus were not disclosed
as discretely presented in the fiscal year 2023 ACFR. Instead, these entities were reported as blended component
units within the State’s governmental activities and the governmental funds to which they were administratively
attached.
DAGS also determined that the Department of Labor and Industrial Relations – Disability Compensation Fund, the
Department of Public Safety – Correctional Industries Fund, the Department of Accounting and General Services –
State Parking Revolving Fund, and the Department of Accounting and General Services – Motor Pool Fund met the
definition of PFs as defined in GASB Statement No. 34, Basic Financial Statements – and Management’s Discussion
and Analysis – for State and Local Governments. However, they did not meet the materiality threshold under the
State’s financial reporting policy. Therefore, these PFs were not reported as PFs in the fiscal year 2023 ACFR but
were reported as part of the State’s governmental activities and within the governmental funds to which they
were administratively attached.
A similar finding was reported in the prior year as Finding No. 2022‐002.
Criteria
CUs are legally separate organizations that the State must include as part of its financial reporting entity for fair
presentation in conformity with GAAP. CUs have unique accounting and reporting requirements as established
by GASB Statement No. 61. The GASB accounting standards provide defined criteria for determining whether a
particular legally separate entity is a discretely presented CU of the State.
Similarly, Enterprise Funds that meet the definition of proprietary funds established by GASB Statement No. 34
should be reported within the PF financial statements and the business‐type activities in the government‐wide
financial statements.
20
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Effect
In accordance with the State’s policy, the CUs and PFs noted above were incorrectly included in the governmental
activities and respective governmental funds in the State’s ACFR, rather than as discretely presented CUs or PFs,
despite meeting the discretely presented CU and PF criteria under GAAP. A summary of account balances and
funds that were incorrectly classified by State management is presented below (amounts expressed in millions):
Revenues Expenditures Assets
Discretely presented component units
Stadium Authority $ 10.3 $ 7.9 $ 26.2
Hawaii Strategic Development Corporation ‐ ‐ 0.1
Hawaii Technology Development Corporation 2.7 13.9 14.2
Natural Energy Laboratory of Hawaii 5.5 5.6 7.7
Agribusiness Development Corporation 3.0 3.0 87.4
Nonmajor proprietary funds
Department of Accounting and General Services – State Parking Revolving Fund $ 4.2 $ 3.3 $ 13.6
Department of Accounting and General Services – State Motor Pool Fund 2.2 1.8 2.7
Department of Public Safety – Correctional Industries Fund 3.7 5.8 3.5
Department of Labor and Industrial Relations – Disability Compensation Fund 16.3 14.6 12.7
Cause and View of Responsible Officials
In determining which CUs and PFs should be presented as discretely presented CUs and nonmajor PFs in the ACFR,
management did not follow the guidelines described in GASB Statements No. 61 and 34, respectively. DAGS also
determined that some of the potential CUs and PFs are unable to close their accounting records and to complete
audits in a timely manner, such that audited financial statements would not be available for the preparation of the
ACFR. Therefore, application of GASB Statements Nos. 34 and 61 would require time and resources to complete
and would likely delay the completion of the ACFR.
Recommendation
DAGS should consider changing the ACFR accounting and reporting policy to conform to the provisions of GASB
Statements No. 34 and 61.
21
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Finding No. 2023‐003: IT General Control Deficiencies (Significant Deficiency)
Condition
Information technology (IT) is a strategic element of the State’s operations. Because of the high volume of
transactions at the State, the establishment of internal controls over processes incorporating IT is critical to its
operations. As part of our financial statement audit of the State for the year ended June 30, 2023, we performed
an IT general controls review of selected State departments’ systems, including the following systems operated by
the Department of Labor and Industrial Relations (DLIR):
UI BPS
UI Tax
QWRS
UI Employer Website
Our review resulted in the following IT control deficiencies over change management:
Developers have access to the production environment.
No evidence to support that developers are properly segregated from the production environment for the
UI Employer Website and no monitoring control in place to detect unauthorized changes.
A similar finding was reported in the prior year as Finding No. 2022‐003.
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 areas of change management address the risk of unauthorized or untested changes
promoted to the production environment that could cause the financial systems to either process data differently
than intended or unexpectedly compromise the integrity of the data maintained.
Cause and View of Responsible Officials
The State’s IT policies and procedures do not include internal control procedures addressing the risks discussed
above or such controls are not consistently followed.
Recommendation
We recommend that DLIR perform the following:
Remove developers’ access to the production environment.
Ensure that developer access to the UI Employer Website is properly restricted from the production
environment.
22
FEDERAL AWARD FINDINGS
AND QUESTIONED COSTS
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Section III – Federal Award Findings and Questioned Costs
Finding No. 2023‐004: SEFA (Significant Deficiency)
Condition
The State’s current accounting process for certain departments does not track federal funds individually within
the general ledger system. Instead, one appropriation account is often created and assigned to the respective
department and multiple federal grants expended by the department are grouped within the one appropriation
account. For a department that receives and expends multiple federal awards, it must prepare and maintain
separate accounting records outside of FAMIS, the State’s accounting system, to segregate the cash balances,
receipts and expenditures by each grant. These separate accounting records are maintained by multiple
accountants in larger departments and are not combined and reconciled with FAMIS periodically.
A similar finding was reported in the prior year as Finding No. 2022‐004.
Criteria
The Office of Management and Budget (OMB) issued the Uniform Guidance, which is codified in Title 2 CFR
Part 200 and requires non‐federal entities that expend $750,000 or more in federal awards in a year to have
a Single Audit conducted on its federal award programs and SEFA.
The Uniform Guidance established responsibilities for auditees, including:
Identify all federal awards received and expended and the federal programs under which they were received.
Maintain internal control over federal programs that provide reasonable assurance that the auditee is
managing federal awards in compliance with laws, regulations and provisions of contracts or grant agreements
that could have a material effect on each of its federal programs.
Prepare appropriate financial statements, including the SEFA.
Effect
Due to the deficiencies in internal control over SEFA preparation noted, there were misstatements in the SEFA
for the year ended June 30, 2023 and related notes to the SEFA that were not detected by management’s
internal controls, but was subsequently identified and corrected as part of our auditing procedures.
Cause and View of Responsible Officials
A thorough review of each department’s reconciliation of its separate accounting records that track federal
expenditures to FAMIS was not performed by someone knowledgeable to ensure that the expenditure amounts
were accurately reported. Although formal reporting instructions were created by DAGS to establish internal
control over preparing the SEFA and sent to other departments for the year ended June 30, 2023, certain
departments failed to follow the instructions and process established by DAGS.
Recommendation
We recommend DAGS enforce its established process for preparing the SEFA. We also recommend DAGS provide
training to the other departments to ensure proper information is provided by the departments for DAGS to
accurately prepare the State’s SEFA. We also recommend DAGS and other departmental personnel review and
keep abreast of reporting guidance issued by the OMB.
23
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐005: Suspension and Debarment (Significant Deficiency) $ –
State Agency: Department of Land and Natural Resources (“DLNR”)
Federal Agency: Department of the Interior
AL Number and Title: 15.615 – Cooperative Endangered Species Conservation Fund
Award Number and F22AP03217 2022
Award Year:
Repeat Finding? No
Condition
During our audit, we tested a non‐statistical sample of two subawards and found no evidence indicating that
program personnel verified whether any of the contractors were federally suspended or debarred.
Criteria
According to 2 CFR 200.214, regulations restrict awards, subawards and contracts with certain parties that
are debarred, suspended, or otherwise excluded from, ineligible from, or ineligible for participation in federal
assistance programs or activities. Therefore, verification is required by checking the System for Award
Management (SAM), an official website for the U.S. Government, obtaining a certification from the contractor,
or adding a clause or condition to the contract.
Effect
Without evaluating the contractors’ status on the SAM before executing agreements, the State may contract with
suspended or debarred entities.
Cause and View of Responsible Officials
Program personnel responsible for procurement indicated that a review for the federal SAM website was
performed prior to the execution of the contract, however, no formal documentation of the review was retained.
Recommendation
We recommend that program management retain evidence of the suspension and debarment review, including
who performed the procedure and the date performed, prior to entering into the agreement.
24
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐006: Reporting (Significant Deficiency) $ –
State Agency: DLNR
Federal Agency: Department of the Interior
AL Number and Title: 15.615 – Cooperative Endangered Species Conservation Fund
Award Number and F22AP03217 2022
Award Year:
Repeat Finding? No
Condition
During our audit, we tested a non‐statistical sample of one subaward and found that the reporting required by
Section 2, Full Disclosure of Entities Receiving Federal Funding, of the Federal Funding Accountability and
Transparency Act (“FFATA”) was not completed timely.
Subaward Not Subaward Amount Subaward Missing
Transactions Tested Reported Report Not Timely Incorrect Key Elements
1 0 1 0 0
Dollar Amount of Subaward Not Subaward Amount Subaward Missing
Tested Transactions Reported Report Not Timely Incorrect Key Elements
$224,000 $0 $224,000 $0 $0
Criteria
Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report
subcontracts made under federally‐awarded contracts by the end of the month following the month in which
the prime recipient awards any subgrant greater than or equal to $30,000.
Effect
Failure to file required reports reduces transparency on the use of program funds and represents an instance of
noncompliance with the requirements of 2 CFR Part 200.
Cause and View of Responsible Officials
The department experienced a staffing shortage and was unable to file the report in a timely manner.
Recommendation
We recommend that program personnel ensure that required FFATA reports are filed timely.
25
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐007: Suspension and Debarment (Significant Deficiency) $ –
State Agency: DLNR
Federal Agency: Department of the Interior
AL Number and Title: 15.634 – State Wildlife Grants (R&D Cluster)
Award Number and F21AP00578 2022
Award Year: F22AP03438 2022
Repeat Finding? No
Condition
During our audit, we tested a non‐statistical sample of two subawards and found no evidence indicating that
program personnel verified whether the contractors were federally suspended or debarred.
Criteria
According to 2 CFR 200.214, regulations restrict awards, subawards and contracts with certain parties that are
debarred, suspended, or otherwise excluded from, ineligible from, or ineligible for participation in federal
assistance programs or activities. Therefore, verification is required by checking the SAM, an official website for
the U.S. Government, obtaining a certification from the contractor, or adding a clause or condition to the contract.
Effect
Without evaluating the contractors’ status on the SAM before executing agreements, the State may contract with
suspended or debarred entities.
Cause and View of Responsible Officials
Program personnel responsible for procurement indicated that a review for the federal SAM website was
performed prior to the execution of the contract, however, no formal documentation of the review was retained.
Recommendation
We recommend that program management retain evidence of the suspension and debarment review, including
who performed the procedure and the date performed, prior to entering into the agreement.
26
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐008: Subrecipient Monitoring (Significant Deficiency) $ –
State Agency: DLNR
Federal Agency: Department of the Interior
AL Number and Title: 15.634 – State Wildlife Grants (R&D Cluster)
Award Number and F21AP00578 2022
Award Year: F22AP03438 2022
Repeat Finding? No
Condition
During our audit, we examined a non‐statistical sample of two subawards and noted the following instances of
noncompliance:
Subaward agreements did not include certain required federal award information.
No evidence of pass‐through entity verifying that subrecipients are audited as required by 2 CFR Section 200,
Subpart F.
Criteria
2 CFR Section 200.332(a) requires subawards to clearly identify information, such as Federal Award Identification
Number (FAIN), identification of whether the award is R&D, period of performance, and indirect costs.
2 CFR Section 200.332(f) requires a pass‐through entity to verify that every subrecipient is audited as required
by 2 CFR Section 200, Subpart F, when it is expected that the subrecipient’s expenditures exceed applicable
thresholds.
Effect
By not including the required information in the subaward and verifying whether the subrecipient is audited,
the State may not be providing the appropriate level of monitoring over its subrecipients.
Cause and View of Responsible Officials
Program personnel responsible indicated that subaward information was provided and verification of audit was
performed, however, no formal documentation of the review was retained.
Recommendation
We recommend that program management retain evidence of process, including who performed the procedure
and the date performed.
27
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐009: Eligibility (Significant Deficiency) $ 1,643
State Agency: Department of Labor and Industrial Relations (DLIR)
Federal Agency: Department of Labor
AL Number and Title: 17.225 – Unemployment Insurance
COVID‐19 – 17.225 – COVID‐19 – Unemployment Insurance
Award Number and UI‐39318‐23‐55‐A‐15 2023
Award Year:
Repeat Finding? Yes
Condition
During our audit, we selected a non‐statistical sample of sixty benefit payments made during the year and
identified two payments where the recipients did not make the minimum number of work search contacts.
Criteria
Pursuant to State Handbook of Unemployment Benefits, the following requirements must be met to become
eligible for benefit payments:
1) Be totally or partially unemployed;
2) File an application to establish an unemployment insurance claim;
3) File a claim certification on a weekly or bi‐weekly basis to request payment of benefits;
4) Register for work with the State Workforce Development Division;
5) Participate in re‐employment services;
6) Be physically and mentally able to work;
7) Be ready and willing to seek and accept work by making three or more work search contacts every week;
8) Serve a one‐week waiting period; and
9) Report for interviews.
Effect
Failure to comply with the eligibility requirements results in noncompliance with the terms of the award and
may result in recapture of funds by the awarding agency.
Cause and View of Responsible Officials
The department experienced a staffing shortage and was unable to investigate cases within a timely manner.
Recommendation
We recommend that the State department follow the policies and procedures established to comply with eligibility
requirements. Furthermore, we recommend that the department formalize any modifications to the work search
requirements used in practice as allowed under HRS Section 12‐5‐34.
28
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐010: Special Tests and Provisions (Material Weakness) $ –
State Agency: DLIR
Federal Agency: Department of Labor
AL Number and Title: 17.225 – Unemployment Insurance
COVID‐19 – 17.225 – COVID‐19 – Unemployment Insurance
Award Number and UI‐39318‐23‐55‐A‐15 2023
Award Year:
Repeat Finding? Yes
Condition
During our audit, we examined the Benefit Accuracy Measurement (BAM) summary report and identified that
minimum cases and timeliness requirements were not met for paid and denied claims.
Criteria
Pursuant to 20 CFR Part 602, the BAM system requires the State department to complete a minimum number
of unemployment cases timely in order to maintain a current database. The required number of cases and the
timeliness percentages for completing paid and denied claims are as follows:
Paid Claims
Minimum cases: 480 paid cases
Timeliness percentages: Complete 70% within 60 days, 95% within 90 days, and 98% within 120 days
Denied Claims
Minimum cases: 450 denied cases (150 cases for each category: monetary, separation and non‐separation)
Timeliness percentages: Complete 60% within 60 days, 85% within 90 days, and 98% within 120 days
Effect
Failure to meet timeliness requirements prevents the granting agency from maintaining a current database.
Cause and View of Responsible Officials
Due to the COVID‐19 pandemic, the department experienced a staffing shortage and was unable to process the
minimum number of cases and/or investigate cases within a timely manner.
Recommendation
We recommend that the State department address staffing shortages and develop new policies and procedures
to handle the increase in unemployment claims and follow existing policies and procedures established to comply
with claim handling requirements, as necessary.
29
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐011: Earmarking (Significant Deficiency) $ –
State Agency: DLIR
Federal Agency: Department of Labor
AL Number and Title: 17.258 – WIOA Adult Program
17.259 – WIOA Youth Activities
17.278 – WIOA Dislocated Worker Formula Grant
(WIOA Cluster)
Award Number and AA‐33225‐15‐55A‐15 2019
Award Year:
Repeat Finding? No
Condition
During our audit, we noted the following instances of noncompliance:
A total of 15.61% of funds were allocated for employment and training activities for adults and dislocated
workers.
A total of 74.60% of funds were allocated for services to out‐of‐school youth.
Criteria
According to Section 129(b) of the Workforce Innovation and Opportunity Act, not more than 15% of funds
allocated shall be used to provide employment and training activities for adults and dislocated workers.
According to Section 129(c) of the Workforce Innovation and Opportunity Act, not less than 75% of funds allocated
to the local area, except for local area administrative costs, shall be used to provide out‐of‐school youth.
Effect
Failure to comply with the award’s earmarking requirements results in noncompliance with the terms of the award
and could result in sanctions by the awarding agency.
Cause and View of Responsible Officials
When the initial award is provided to the various subrecipients, program personnel allocate amounts in
accordance with earmarking requirements. However, as actual results differ from the budget, program personnel
became aware of noncompliance at the close of the award.
Recommendation
We recommend that program management establish policies and procedures with subrecipients to ensure
earmarking requirements are met.
30
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐012: Reporting (Material Weakness) $ –
State Agency: DLIR
Federal Agency: Department of Labor
AL Number and Title: 17.258 – WIOA Adult Program
17.259 – WIOA Youth Activities
17.278 – WIOA Dislocated Worker Formula Grant
(WIOA Cluster)
Award Number and AA‐38525‐22‐55‐A‐15 2022
Award Year:
Repeat Finding? No
Condition
During our audit, we tested a non‐statistical sample of two subawards and found no evidence that the reporting
required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA was completed.
Subaward Not Subaward Amount Subaward Missing
Transactions Tested Reported Report Not Timely Incorrect Key Elements
3 3 0 0 0
Dollar Amount of Subaward Not Subaward Amount Subaward Missing
Tested Transactions Reported Report Not Timely Incorrect Key Elements
$3,890,043 $3,890,043 $0 $0 $0
Criteria
Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report
subcontracts made under federally‐awarded contracts by the end of the month following the month in which
the prime recipient awards any subgrant greater than or equal to $30,000.
Effect
Failure to file required reports reduces transparency on the use of program funds and represents an instance of
noncompliance with the requirements of 2 CFR Part 200.
Cause and View of Responsible Officials
Due to changes in program personnel, there was miscommunication between the parties responsible for filing the
FFATA reports.
Recommendation
We recommend that program personnel ensure that required FFATA reports are filed timely.
31
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐013: Subrecipient Monitoring (Material Weakness) $ –
State Agency: DLIR
Federal Agency: Department of Labor
AL Number and Title: 17.258 – WIOA Adult Program
17.259 – WIOA Youth Activities
17.278 – WIOA Dislocated Worker Formula Grant
(WIOA Cluster)
Award Number and AA‐38525‐22‐55‐A‐15 2022
Award Year:
Repeat Finding? No
Condition
During our audit, we examined a non‐statistical sample of three subawards and noted the following instances of
noncompliance:
No evidence of evaluation of the subrecipients’ risk of noncompliance at the time of the subawards.
No evidence of on‐site monitoring procedures of the subrecipients.
Criteria
2 CFR Section 200.332(b) requires a pass‐through entity to evaluate each subrecipient’s risk of noncompliance
for purposes of determining the appropriate subrecipient monitoring related to the subaward.
2 CFR Section 200.332(d) requires a pass‐through entity to monitor the activities of the subrecipient as necessary
to ensure that the subaward is used for authorized purposes, in accordance with federal statutes and regulations.
Effect
Without evaluating the subrecipient’s risk of noncompliance and determining the appropriate subrecipient
monitoring procedures necessary, the State may not provide the appropriate level of monitoring over its
subrecipients.
Cause and View of Responsible Officials
Due to resource constraints, program personnel were unable to perform the subrecipient’s risk of noncompliance
and on‐going monitoring procedures.
32
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Recommendation
We recommend that program management ensure that program personnel are familiar with all grant
requirements, including compliance with 2 CFR Part 200, which requires the reporting of all necessary federal
award information to subrecipients and risk assessments of subrecipients. Management should develop
procedures that ensure the State department’s responsibilities as a pass‐through entity are fulfilled, including a
formal analysis of each subrecipient’s risk of noncompliance with each of the respective subaward requirements.
This evaluation of risk may include consideration of such factors as the following:
The subrecipient’s prior experience with the same or similar subawards;
The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance
with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a
major program;
Whether the subrecipient has new personnel or new or substantially changed systems; and
The extent and results of federal awarding agency monitoring.
33
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Questioned
Cost
Finding No. 2023‐014: Reporting (Significant Deficiency) $ –
State Agency: Department of Defense
Federal Agency: Department of Homeland Security
AL Number and Title: 97.067 – Homeland Security Grant Program
Award Number and EMW‐2022‐SS‐0036 2022
Award Year:
Repeat Finding? No
Condition
During our audit, we tested a non‐statistical sample of three subawards and found that the reporting required by
Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA were not filed timely.
Subaward Not Subaward Amount Subaward Missing
Transactions Tested Reported Report Not Timely Incorrect Key Elements
3 0 3 0 0
Dollar Amount of Subaward Not Subaward Amount Subaward Missing
Tested Transactions Reported Report Not Timely Incorrect Key Elements
$1,775,500 $0 $1,775,500 $0 $0
Criteria
Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report
subcontracts made under federally‐awarded contracts by the end of the month following the month in which
the prime recipient awards any subgrant greater than or equal to $30,000.
Effect
Failure to file required reports timely reduces transparency on the use of program funds and represents an
instance of noncompliance with the requirements of 2 CFR Part 200.
Cause and View of Responsible Officials
Due to changes in program personnel, there was miscommunication between the parties responsible for filing
the FFATA reports.
Recommendation
We recommend that program personnel ensure that required FFATA reports are filed timely.
34
JOSH GREEN M.D. KEITH A REGAN
GOVERNOR COMPTROLLER
MEOH-LENG SILLIMAN
DEPUTY COMPTROLLER
STATE OF HAWAI I | KA
DEPARTMENT OF ACCOUNTING AND GENERAL SERVICES | KA
P.O. BOX 119, HONOLULU, HAWAII 96810-0119
March 27, 2024
ACC 24.U007
Accuity LLP
999 Bishop Street, Suite 1900
Honolulu, HI 96813
Gentlemen:
Thank you for the opportunity to provide comments on the Schedule of Findings
and Questioned Costs issued in connection with the Single Audit of Federal
Financial Assistance Programs for the fiscal year ended June 30, 2023. We have
also attached our comments on the status of prior audit findings.
they conducted themselves during this audit.
If you have any questions, please call Ms. Ladea Nash, Accounting Division at
(808) 586-0600.
Sincerely,
KEITH A. REGAN
Comptroller
Attachments
SUMMARY SCHEDULE OF
PRIOR AUDIT FINDINGS
State of Hawaii
Summary Schedule of Prior Audit Findings
Year Ended June 30, 2023
Finding Status Current Year
No. Description Department Classification Resolved Unresolved Finding No.
2022‐001 Internal Control Over DAGS Material X 2023‐001
Financial Reporting Weakness
2022‐002 Accounting for Component DAGS Significant X 2023‐002
Units and Proprietary Funds Deficiency
2022‐003 IT General Control Deficiencies DLIR; Material X 2023‐003
DAGS Weakness
2022‐004 Schedule of Expenditures DAGS Significant X 2023‐004
of Federal Awards Deficiency
2022‐005 Eligibility DLIR Significant X 2023‐009
Deficiency
2022‐006 Special Tests and Provisions DLIR Material X 2023‐010
Weakness
2022‐007 Subrecipient Monitoring Governor’s Significant X
Office Deficiency
2022‐008 Cash Management Governor’s Significant X
Office Deficiency
2022‐009 Reporting Governor’s Significant X
Office Deficiency
2022‐010 Subrecipient Monitoring Governor’s Significant X
Office Deficiency
2022‐011 Suspension and Debarment Governor’s Significant X
Office Deficiency
2022‐012 Subrecipient Monitoring Governor’s Significant X
Office Deficiency
2022‐013 Reporting Governor’s Material X
Office Weakness
2022‐014 Subrecipient Monitoring Governor’s Material X
Office Weakness
2022‐015 Special Tests and Provisions Governor’s Significant X
Office Deficiency
2022‐016 Subrecipient Monitoring DOD Significant X
Deficiency
2019‐010 Earmarking DLNR Material X
Weakness
09‐01 Improve Controls over DPS Material X
Inmate Agency Accounts Weakness
State of Hawaii
Summary Schedule of Prior Audit Findings
Year Ended June 30, 2023
Corrective Actions Taken for Unresolved Findings
Finding No. 2022‐001: Internal Control Over Financial Reporting
In fiscal year 2023, DAGS requested formal reporting information packages from State departments but did not
receive timely and accurate responses from some departments. As a current year finding (Finding No. 2023‐001)
is reported, Finding No. 2022‐001 will not be carried forward.
Finding No. 2022‐002: Accounting for Component Units and Proprietary Funds
No corrective action was taken in fiscal year 2023. As a current year finding (Finding No. 2023‐002) is reported,
Finding No. 2022‐002 will not be carried forward.
Finding No. 2022‐003: IT General Control Deficiencies
Corrective action is still ongoing. As a current year finding (Finding No. 2023‐003) is reported, Finding No.
2022‐003 will not be carried forward.
Finding No. 2022‐004: Schedule of Expenditures of Federal Awards
Formal reporting instructions were created by DAGS and sent to other departments and agencies for the year
ended June 30, 2023. As a current year finding (Finding No. 2023‐004) is reported, Finding No. 2022‐004 will not
be carried forward.
Finding No. 2022‐005: Eligibility
DLIR continues to improve its internal controls to comply with eligibility requirements. As a current year finding
(Finding No. 2023‐009) is reported, Finding No. 2022‐005 will not be carried forward.
Finding No. 2022 006: Special Tests and Provisions
DLIR continues to improve its internal controls to comply with requirements. As a current year finding (Finding No.
2023‐010) is reported, Finding No. 2022‐006 will not be carried forward.
Finding No. 2019‐010: Earmarking
DLNR continues to work with the National Park Service to receive timely grant approvals to comply with
earmarking requirements.
Finding No. 09‐01: Improve Controls over Inmate Agency Accounts
A new system is being developed to assist the programs in addressing Inmate Accounts issues. Implementation of
the new system is anticipated to be completed by fiscal year 2024.
CORRECTIVE ACTION PLAN
SECTION II – FINANCIAL STATEMENT FINDINGS
Finding No. 2023‐001 – Internal Control over Financial Reporting (Significant Deficiency)
State Department of Accounting and General Services
Condition
The State’s internal control over financial reporting could be improved. During our audit of the fiscal year 2023
financial statements, we identified multiple deficiencies that, when considered in the aggregate, indicated a
significant deficiency in the State’s internal control over financial reporting.
The process used by DAGS Accounting Division to consolidate required information from State departments and
agencies to prepare the State’s Annual Comprehensive Financial Report (ACFR) (e.g., preparing Governmental
Funds financial statements on a modified accrual basis and the Government‐Wide financial statements on an
accrual basis) is inefficient, time consuming, and causes delays in statewide financial reporting.
Information necessary to prepare such accounting entries must be obtained from other State departments and
agencies. For the year ended June 30, 2023, DAGS requested formal reporting information packages to obtain
the financial information from State departments but did not receive timely responses from some departments,
including information for the implementation of Government Accounting Standard Boards Statement No. 96,
Subscription‐Based Information Technology Arrangements.
A similar finding was reported in the prior year as Finding No. 2022‐001.
Current Status of Corrective Action Plan
Concur.
The Department of Accounting and General Services (DAGS) will continue to develop a well‐defined, systematic,
efficient, and orderly process for financial reporting that will include a comprehensive set of policies and
procedures necessary to establish internal control over financial reporting. The process will be formally
documented, approved, communicated to other departments and agencies, and monitored on a regular basis.
DAGS will review audit entries for use of proper source codes, object codes, and appropriation accounts and work
with individuals who perform reviews of journal entries at the identified departments on specific issues relating
to proper use of such codes and accounts. Departments will be reminded to perform a thorough review of post‐
closing journal entries to ensure all items from various schedules are reflected in the post‐closing journal entries
and all the journal entries properly reflect what is shown on the schedules.
While DAGS will continue to improve efficiencies within the current system, significant efficiencies are not
anticipated to be achieved until implementation of a new financial system. A new financial system will improve
internal controls and facilitate a more efficient financial reporting process, allowing more time for review and
analysis of financial results.
The development of a new comprehensive accounting system, which will address or mitigate financial reporting
deficiencies, is on‐going. This effort is a collaborative undertaking of all state departments and spear‐headed by
the Comptroller, Director of Budget and Finance and the Chief Information Officer.
Person Responsible
Ladea Nash, Administrator, DAGS Accounting Division
Anticipated Date of Completion
June 30, 2026
1
SECTION II – FINANCIAL STATEMENT FINDINGS
Finding No. 2023‐002 – Accounting for Component Units and Proprietary Funds (Significant Deficiency)
State Department of Accounting and General Services
Condition
During fiscal year 2008, DAGS implemented a financial statement policy on reporting material component units
(CU) and proprietary funds (PF), which indicated that only material CUs and PFs would be reported as discretely
presented CUs and major PFs in the ACFR. Materiality was determined based on certain quantitative criteria
determined by DAGS. During the year ended June 30, 2013, DAGS revised its financial reporting policy to comply
with GASB Statement No. 61, The Financial Reporting Entity: Omnibus – an Amendment of GASB Statements No.
14 and 34.
Consequently, although DAGS determined that the Stadium Authority, Hawaii Strategic Development Corporation,
Hawaii Technology Development Corporation (HITDC), Natural Energy Laboratory of Hawaii, and Agribusiness
Development Corporation met the definition of discretely presented CUs as defined in GASB Statement No. 61,
these CUs did not meet the materiality thresholds under the State’s policy, and thus were not disclosed as
discretely presented in the June 30, 2023 ACFR. Instead, these entities were reported as blended component
units, within the State’s governmental activities and the governmental funds to which they were administratively
attached.
DAGS also determined that the Department of Accounting and General Services – State Parking Revolving Fund,
the Department of Accounting and General Services – State Motor Pool Fund, the Department of Public Safety –
Correctional Industries Fund, and the Department of Labor and Industrial Relations – Disability Compensation Fund
met the definition of PFs as defined in GASB Statement No. 34, Basic Financial Statements – and Management’s
Discussion and Analysis – for State and Local Governments. However, they did not meet the materiality threshold
under the State’s financial reporting policy. Therefore, these PFs were not reported as PFs in the June 30, 2023
ACFR but were reported as part of the State’s governmental activities and within the governmental funds to which
they were administratively attached.
A similar finding was reported in the prior year as Finding No. 2022‐002.
Current Status of Corrective Action Plan
Concur.
DAGS will review the State’s policy annually regarding the reporting of discretely presented Component Units and
nonmajor Proprietary Funds as compared with Governmental Accounting Standards Board Statement Nos. 34 and
61.
Person Responsible
Ladea Nash, Administrator, DAGS Accounting Division
Anticipated Date of Completion
June 30, 2026
2
SECTION II – FINANCIAL STATEMENT FINDINGS
Finding No. 2023‐003 – IT General Control Deficiencies (Significant Deficiency)
State Department of Labor and Industrial Relations
Condition
Review resulted in the following IT control deficiencies over change management:
Developers have access to the production environment.
No evidence to support that developers are properly segregated from the production environment for the
UI Employer Website and no monitoring control in place to detect unauthorized changes.
A similar finding was reported in the prior year as Finding No. 2022‐003.
Current Status of Corrective Action Plan
Concur.
• Developers do have access to the production environment as it is warranted for emergency purposes.
DLIR will work with ETS to create log files when access is attempted and successful. As UI moves towards
modernizing the UI Application, UI will take into account these vulnerabilities and implement appropriate
security controls.
The UI Employer Website developers have access to the production environment as it is warranted for daily
processing of web transactions to the production environment. DLIR will work with its contractor and ETS
to put into place a process to create log files to notate access. As UI moves towards modernizing the UI
Application, UI will take into account these vulnerabilities and implement appropriate security controls.
Person Responsible
Anne Perreira‐Eustaquio, Unemployment Insurance Administrator
Anticipated Date of Completion
Initial log process July 1, 2024. The UI Modernized system is slated to move to production in December 2026.
3
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Finding No. 2023‐004 – SEFA (Significant Deficiency)
State Department of Accounting and General Services
Condition
The State’s current accounting process for certain departments does not track federal funds individually within
the general ledger system. Instead, one appropriation account is often created and assigned to the respective
department and many federal grants expended by the department are grouped within the one appropriation
account. For a department that receives and expends multiple federal awards, it must prepare and maintain
separate accounting records outside of FAMIS, the State’s accounting system, to be able to segregate the cash
balances, receipts and expenditures by each grant that it receives. These separate accounting records are
maintained by multiple accountants in the larger departments and are not combined and reconciled into FAMIS
periodically.
A similar finding was reported in the prior year as Finding No. 2022‐004.
Current Status of Corrective Action Plan
Concur.
DAGS’ management has developed a well‐defined process for Federal financial reporting that includes
a comprehensive set of policies and procedures necessary to establish internal control over preparing the SEFA.
DAGS will remind the departments to follow these established policies and procedures when preparing the SEFA.
DAGS has completed a draft of a new chart of accounts for the state which will assist in the reporting and
compliance of the ACFR and SEFA reports. The development of a new comprehensive accounting system which
will address or mitigate financial reporting deficiencies is on‐going. This is a collaborative undertaking of all state
departments and spear‐headed by the Comptroller, Director of Budget and Finance, and the Chief Information
Officer.
Person Responsible
Ladea Nash, Administrator, DAGS Accounting Division
Anticipated Date of Completion
June 30, 2026
Finding No. 2023‐005 – Suspension and Debarment (Significant Deficiency)
State Department of Land and Natural Resources (DLNR)
AL Number: 15.615 Program Title: Cooperative Endangered Species Conservation Fund
Condition
The auditing firm tested a non‐statistical sample of two subawards and found no evidence indicating that program
personnel verified whether any of the contractors were federally suspended or debarred.
1
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Current Status of Corrective Action Plan
Concur.
DLNR Division of Forestry and Wildlife (DLNR DOFAW) has implemented procedures to ensure that a SAM.gov
verification is performed for all subrecipients, and that documentation is printed out from SAM.gov and retained
with the subrecipient file folder.
Person Responsible
Cynthia C. Gomez, Fiscal Management Officer
David Smith, DOFAW Administrator
Anticipated Date of Completion
Completed.
Finding No. 2023‐006 – Reporting (Significant Deficiency)
State Department of Land and Natural Resources
AL Number: 15.615 Program Title: Cooperative Endangered Species Conservation Fund
Condition
A prime recipient of a federal award is required to file a Federal Funding Accountability and Transparency Act
(FFATA) report to the FFATA Subaward Reporting System (FSRS) by a specific period for any subaward greater than
or equal to $30,000.
The auditing firm haphazardly tested the one subaward executed in FY 2023 and noted FFATA report was not
completed timely.
Current Status of Corrective Action Plan
Concur.
DLNR has procedures in place for the submission of FFATA reports and will ensure that the reports are filed timely.
Person Responsible
Cynthia C. Gomez, Fiscal Management Officer
Anticipated Date of Completion
Completed.
2
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Finding No. 2023‐007 – Suspension and Debarment (Significant Deficiency)
State Department of Land and Natural Resources
AL Number: 15.634 Program Title: State Wildlife Grants (R&D Cluster)
Condition
The auditing firm tested a non‐statistical sample of two subawards and found no evidence indicating that program
personnel verified whether any of the contractors were federally suspended or debarred.
Current Status of Corrective Action Plan
Concur.
DLNR DOFAW has implemented procedures to ensure that a SAM.gov verification is performed for all
subrecipients, and that documentation is printed out from SAM.gov and retained with the subrecipient file folder.
Person Responsible
Cynthia C. Gomez, Fiscal Management Officer
David Smith, DOFAW Administrator
Anticipated Date of Completion
Completed.
Finding No. 2023‐008 – Subrecipient Monitoring (Significant Deficiency)
State Department of Land and Natural Resources
AL Number: 15.634 Program Title: State Wildlife Grants (R&D Cluster)
Condition
The auditing firm examined a non‐statistical sample of two subawards and noted the following instances of
noncompliance:
• Subaward agreements did not include certain required federal award information.
• No evidence of pass‐through entity verifying that subrecipients are audited as required by 2 CFR Section 200,
Subpart F.
Current Status of Corrective Action Plan
Concur.
DLNR DOFAW does provide subaward information to subrecipients and will ensure to include all required federal
award information.
3
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
DLNR DOFAW will ensure that documentation is retained when performing verification that subrecipients are
audited as required by 2 CFR Section 200, Subpart F.
Person Responsible
Cynthia C. Gomez, Fiscal Management Officer
David Smith, DOFAW Administrator
Anticipated Date of Completion
Completed.
Finding No. 2023‐009 – Eligibility (Significant Deficiency)
State Department of Labor and Industrial Relations
AL Number: 17.225 Program Title: Unemployment Insurance
Condition
The audit identified two payments where the recipients did not make the minimum number of work search
contacts.
Current Status of Corrective Action Plan
Concur.
Hawaii UI issued a memo, dated September 22, 2023, reminding the local offices of the minimum work search
requirements under Administrative Rule 12‐5‐35(c) and for the adjudication unit to conduct a fact‐finding as to
the reasons for the claimant’s noncompliance.
Hawaii UI is currently working on a project to enhance the work search process and requirements using a grant
awarded to UI by US Department of Labor. The project will allow expansion to the work search reporting
requirement on the front‐end of the online weekly claim certification process to include employer job search
details. The process entails the use of Behavioral Insight techniques to encourage accurate reporting of the work
search requirement and provide a log of their work search efforts. These enhancements will help claimants better
understand UI program requirements including:
• What claimants should report and why,
• The reporting expectations at various decision points throughout the certification process while they still have
time to meet the requirements,
• Convey the consequences of intentionally providing false information or making mistakes during reporting,
and
• Imposing a denial of benefits for weeks in which the claimant does not meet the work search eligibility
requirement.
4
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Person Responsible
Sheryl Maligro, UI Program Supervisor
Anticipated Date of Completion
The enhancements to the Work Search Process are anticipated to be completed in June 2024.
Finding No. 2023‐010 – Special Tests and Provisions (Material Weakness)
State Department of Labor and Industrial Relations
AL Number: 17.225 Program Title: Unemployment Insurance
Condition
Both and/or either the minimum number of cases and timeliness percentages for paid and denied claims including
monetary, separation and nonseparation, were not met.
Current Status of Corrective Action Plan
Concur.
The BAM unit was short staffed an investigator from March 2022. The vacancy was filled on January 17, 2023.
The number of paid and denied claims were increased and the BAM supervisor was assigned denied cases.
The unit anticipates to meet the minimum number of 480 paid and 450 denied cases effective FY 23‐24 which
began in July 2023.
The unit has made great strides and is currently meeting the denied timeliness requirements.
The unit has brought on an experienced adjudicator to fill a vacancy and learn BAM methodology. He is in
the probationary period and is expected to continue to progress to the level where he will be able to function
independently on simple‐to‐difficult and complex cases. The unit has worked cohesively to assist colleagues
with investigative tasks. The TPS individual contributes to this effort by assisting with the assembly of new
case files for the BAM investigators. This collective effort allows the unit to make progress to our goals.
The BAM supervisor continues to help and monitor case completion and timeliness to ensure the unit works
toward achieving the BAM requirements.
Person Responsible
Sheryl Maligro, UI Program Supervisor
Anticipated Date of Completion
June 2025
5
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Finding No. 2023‐011 – Earmarking (Significant Deficiency)
State Department of Labor and Industrial Relations
AL Numbers and Program Title: 17.258 – WIOA Adult Program
17.259 – WIOA Youth Activities
17.278 – WIOA Dislocated Worker Formula Grant
(WIOA Cluster)
Condition
The auditing firm noted the following instances of noncompliance:
• A total of 15.61% of funds were allocated for employment and training activities for adults and dislocated
workers.
• A total of 74.60% of funds were allocated for services to out‐of‐school youth.
Current Status of Corrective Action Plan
Concur.
Administrative Services Office (ASO) has communicated with Workforce Development Division (WDD) that no
more than 15% of funds shall be allocated to provide employment training activities for adults and dislocated
workers. If there are recaptured funds to spend from the local areas for the program year, ASO and WDD will
make sure that recaptured funds will not exceed the maximum requirements of 15%.
WDD shall monitor the progress of subrecipients to meet the minimum 75% expenditure for out‐of‐school
youth. If necessary, a monthly or bi‐monthly meeting with subrecipients shall be scheduled to monitor the
progress and take proactive recommendations and action to meet the requirements.
Person Responsible
Maricar Pilotin‐Freitas, Workforce Development Division Administrator
Anticipated Date of Completion
March 2024
6
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Finding No. 2023‐012 – Reporting (Material Weakness)
State Department of Labor and Industrial Relations
AL Numbers and Program Title: 17.258 – WIOA Adult Program
17.259 – WIOA Youth Activities
17.278 – WIOA Dislocated Worker Formula Grant
(WIOA Cluster)
Condition
Reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA was not
completed.
Current Status of Corrective Action Plan
Concur.
Due to changes in program personnel, there was miscommunication between the parties responsible for filing
the FFATA reports.
Previous ASO left abruptly in 2023 with limited to no cross‐training. Other positions vacated in 2023 as well.
The ASO and Accountant VI vacancies were filled on December 1, 2023 and February 1, 2024, respectively.
The ASO will come up with a checklist of pertinent reports that are due for WIOA programs including FFTA
reporting and have the responsible staffs (Accountant and Supervisor) report to ASO Officer and WDD
Administrator monthly for verification.
Person Responsible
Lynn Araki‐Regan, Administrative Services Officer
Anticipated Date of Completion
March 15, 2024
Finding No. 2023‐013 – Subrecipient Monitoring (Material Weakness)
State Department of Labor and Industrial Relations
AL Numbers and Program Title: 17.258 – WIOA Adult Program
17.259 – WIOA Youth Activities
17.278 – WIOA Dislocated Worker Formula Grant
(WIOA Cluster)
Condition
No evidence of evaluation of the subrecipients’ risk of noncompliance at the time of the subawards, and no
evidence of on‐site monitoring procedures of the subrecipients.
7
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Current Status of Corrective Action Plan
Concur.
The ASO will come up with a checklist of pertinent reports that are due for WIOA programs including but not
limited to Risk Assessment Report to include the following information:
o Subrecipient’s prior experience with the same or similar subawards.
o Results of previous Single Audit of the same or similar program that has been audited as major program.
o New and Departing Personnel Record.
o Systems Changes/Update.
o Completion of Subrecipient Monitoring Report.
A formal analysis of each subrecipient’s risk of noncompliance with each of the respective subaward
requirements shall be performed at the time of the subaward.
In‐person, onsite monitoring of the activities of the subrecipient shall take place annually to ensure that the
subaward is used for authorized purposes, in accordance with federal statute and regulations.
Person Responsible
Ferdinand Casabay, Accountant VI
Anticipated Date of Completion
May 31, 2024
Finding No. 2023‐014 – Reporting (Significant Deficiency)
State Department of Defense
AL Number: 97.067 Program Title: Homeland Security Grant Program
Condition
The auditing firm selected three subawards that were executed between July 1, 2022 – June 30, 2023, noting that
FFATA reports for the selected subawards were not filed timely.
Current Status of Corrective Action Plan
Concur.
It is our commitment to address this issue promptly and implement necessary measures to prevent its recurrence.
We understand the importance of accurate and timely data entry in the FFATA portal for federal awards and
subawards.
8
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
In response to this issue, we have developed a corrective action plan to address the root causes and prevent
similar occurrences in the future:
Review of Process: We will conduct a thorough review of our current process for entering funding amounts
into the FFATA portal to identify any inefficiencies or gaps in the process.
Training and Awareness: We will provide additional training to other personnel in the grant section to ensure
that there is continuity in the tasks. This will include reinforcing the importance of adhering to established
deadlines and protocols.
Implement Reminders: We will implement automated reminders and notifications to alert grant staff
members via shared Microsoft Outlook Calendar of impending deadlines for entering new federal award
into the FFATA portal. These reminders will serve as a proactive measure to prevent delays and ensure
timely completion of tasks.
Lastly, reminder indicators such as receiving the official grant award and executing a memorandum of agreement
with subrecipients will be an indicator for action to process FFATA reporting.
The FFATA information and process already exists in our Homeland Security Procedural Manual (Page 49) that we
maintain annually. We will continue to maintain and make any necessary revisions if there are any changes.
Person Responsible
Glen Badua, Grants Manager
Anticipated Date of Completion
February 20, 2024
9
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