Audit Report - Report Hi Dept Of Accounting And General Services State Single Audit Fy2021 Federal Awards 2022
Summary
State of Hawaii Single Audit of Federal Financial Assistance Programs for the Fiscal Year Ended June 30, 2021, listing Curt T. Otaguro as Comptroller and stating that the independent audit was contracted and administered by the Office of the State Auditor. The table of contents lists the Schedule of Expenditures of Federal Awards, notes, a Schedule of Findings and Questioned Costs in Sections I, II and III, a summary schedule of prior audit findings and a corrective action plan. The Report of Independent Auditors states that the auditors issued a report on the State's financial statements dated December 30, 2021, considers Finding No. 2021-001 a material weakness and Findings No. 2021-002 and 2021-003 significant deficiencies, and discloses no instances of noncompliance required to be reported under Government Auditing Standards.
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- Report Hi Dept Of Accounting And General Services State Single Audit Fy2021 Federal Awards 2022
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“Audit Report - Report Hi Dept Of Accounting And General Services State Single Audit Fy2021 Federal Awards 2022.”
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STATE OF HAWAII
SINGLE AUDIT OF FEDERAL FINANCIAL
ASSISTANCE PROGRAMS
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
CURT T. OTAGURO
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, 2021
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 ........................................................................... 9‒13
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS ....................................................... 14‒16
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Section I – Summary of Auditors’ Results ............................................................................................. 17‒18
Section II – Financial Statement Findings ............................................................................................. 19‒24
Section III – Federal Award Findings and Questioned Costs ................................................................. 25‒35
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, 2021, and the related notes
to the financial statements, which collectively comprise the State’s basic financial statements
and have issued our report thereon dated December 30, 2021.
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 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.
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.
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. However, as described in the accompanying
schedule of findings and questioned costs, we did identify certain deficiencies in internal
controls that we consider to be material weaknesses and significant deficiencies.
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. We consider the deficiency described
in the accompanying schedule of findings and questioned costs as Finding No. 2021‐001 to be
a material weakness.
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. We consider the deficiencies described in the accompanying
schedule of findings and questioned costs as Findings No. 2021‐002 and 2021‐003 to be
significant deficiencies.
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
The State’s response to the findings identified in our audit is described in the accompanying
corrective action plan. The State’s response was not subjected to the 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 entity’s internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity’s
internal control and compliance. Accordingly, this communication is not suitable for any
other purpose.
Honolulu, Hawaii
December 30, 2021
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
The Auditor
State of Hawaii
Report on Compliance for Each Major Federal Program
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 Public
Safety, Department of Taxation, and the Governor’s Office (collectively, the State) compliance
with the types of compliance requirements described 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, 2021. The State’s major federal
programs are identified in the summary of auditors’ results section of the accompanying
schedule of findings and questioned costs.
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. These entities expended
$4,026,757,944 in federal awards, which are not included in the accompanying schedule of
expenditures of federal awards for the year ended June 30, 2021. Our audit, described below,
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, 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 Title 2 U.S. Code of
Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance), or did not require an audit in accordance
with the Uniform Guidance.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms
and conditions of its federal awards applicable to its federal programs.
Auditors’ Responsibility
Our responsibility is to express an opinion on compliance for each of the State’s major federal
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted
in the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and
the audit requirements of the Uniform Guidance. Those standards and the Uniform Guidance
require that we plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have
a direct and material effect on a major federal program occurred. An audit includes examining,
on a test basis, evidence about the State’s compliance with those requirements and performing
such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for major
federal programs. However, our audit does not provide a legal determination of the State’s
compliance.
Basis for Qualified Opinion on Major Federal Program
As described in the accompanying schedule of findings and questioned costs, the State did
not comply with requirements regarding Assistance Listing (AL) No. 17.225 and AL No. COVID‐19
17.225, Unemployment Insurance, as described in Finding No. 2021‐005 for special tests and
provisions. Compliance with such requirements is necessary, in our opinion, for the State to
comply with the requirements applicable to those programs.
Qualified Opinion on Major Federal Program
In our opinion, except for the noncompliance described in the Basis for Qualified Opinion on
Major Federal Program section, 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 the
major federal programs identified above for the year ended June 30, 2021.
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, 2021.
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 Findings No. 2021‐004 and
2021‐006 through 2021‐010. Our opinion on each major federal program is not modified with
respect to these matters.
The State’s response to the noncompliance findings identified in our audit is described in the
accompanying corrective action plan. 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
Management of the State is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above. In
planning and performing our audit of compliance, we considered the State’s internal control
over compliance with the types of requirements that could have a direct and material effect
on each major federal program to determine the auditing procedures that are appropriate
in the circumstances for the purpose of expressing an opinion on compliance for each major
federal program and to test and report on internal control over compliance in accordance with
the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness
of internal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of the State’s internal control over compliance.
Our consideration of internal control over compliance was for the limited purpose described
in the preceding paragraph and was not designed to identify all deficiencies in internal control
over compliance that might be material weaknesses or significant deficiencies and therefore,
material weaknesses or significant deficiencies may exist that have not been identified.
However, as discussed below, we identified 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 Findings No.
2021‐004 and 2021‐005 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 Findings No. 2021‐006 through 2021‐010 to be
significant deficiencies.
The State’s response to the internal control over compliance findings identified in our audit is
described in the accompanying corrective action plan. 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, 2021, 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
December 30, 2021, 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 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 15, 2022
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2021
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 $ 126,578 $ ‐
Wildlife Services – Plant and Animal Disease, Pest Control, and Animal Care 10.028 3,589 ‐
Inspection Grading and Standardization 10.162 4,275 ‐
Market Protection and Promotion 10.163 9,600 ‐
Specialty Crop Block Grant Program – Farm Bill 10.170 459,123 ‐
Trade Mitigation Program Eligible Recipient Agency Operational Fund 10.178 2,081,405 2,081,405
Rural Business Development Grant 10.351 53,252 ‐
Senior Farmers Market Nutrition Program 10.576 447,154 435,676
Cooperative Forestry Assistance 10.664 1,040,463 ‐
Wood Utilization Assistance 10.674 112,084 ‐
Urban and Community Forestry Program 10.675 72,645 19,901
Forest Legacy Program 10.676 3,895,287 ‐
Forest Stewardship Program 10.678 189,965 ‐
Forest Health Protection 10.680 698,395 ‐
Food Distribution Cluster
Commodity Supplemental Food Program 10.565 1,136,859 1,100,732
Emergency Food Assistance Program (Administrative Costs) 10.568 559,174 486,735
Emergency Food Assistance Program (Food Commodities) 10.569 4,037,606 4,037,606
Total Food Distribution Cluster 5,733,639 5,625,073
Total U.S. Department of Agriculture Direct Programs 14,927,454 8,162,055
Pass‐through from the State Department of Education
Child Nutrition Cluster
School Breakfast Program (1420‐C) 10.553 42,701 ‐
National School Lunch Program (1420‐C) 10.555 67,829 ‐
Total Child Nutrition Cluster 110,530 ‐
Pass‐through from the State Department of Human Services
State Administrative Matching Grants for the Supplemental Nutrition
Assistance Program (SNAP Cluster) (DHS‐18‐SNAP‐5074) 10.561 386,185 ‐
Total U.S. Department of Agriculture Pass‐through Programs 496,715 ‐
Total U.S. Department of Agriculture 15,424,169 8,162,055
U.S. DEPARTMENT OF COMMERCE
U.S. Department of Commerce Direct Programs
Interjurisdictional Fisheries Act of 1986 11.407 63,239 ‐
Fishery Products Inspection and Certification 11.413 4,210 ‐
Coastal Zone Management Administration Awards 11.419 2,330,384 1,446,278
Marine Sanctuary Program 11.429 154,148 ‐
Pacific Fisheries Data Program 11.437 350,656 ‐
Meteorologic and Hydrologic Modernization Development 11.467 566,806 532,722
Unallied Science Program 11.472 645,364 ‐
Coral Reef Conservation Program 11.482 626,298 ‐
State and Local Implementation Grant Program 11.549 329,713 ‐
Manufacturing Extension Partnership 11.611 1,096,441 ‐
Marine Debris Program 11.999 22,655 ‐
Economic Development Cluster
Economic Adjustment Assistance 11.307 11,805 ‐
Total Economic Development Cluster 11,805 ‐
Total U.S. Department of Commerce 6,201,719 1,979,000
(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, 2021
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 DEFENSE
U.S. Department of Defense Direct Programs
Collaborative Research and Development 12.114 1,654,698 ‐
National Guard Military Operations and Maintenance Projects 12.401 17,392,751 ‐
National Guard ChalleNGe Program 12.404 3,958,072 ‐
Economic Adjustment Assistance for State Governments 12.617 171,299 ‐
Total U.S. Department of Defense 23,176,820 ‐
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 99,425 ‐
Total U.S. Department of Housing and Urban Development 99,425 ‐
U.S. DEPARTMENT OF THE INTERIOR
U.S. Department of the Interior Direct Programs
Fish and Wildlife Management Assistance 15.608 55,358 ‐
Coastal Wetlands Planning, Protection and Restoration 15.614 3,257 ‐
Cooperative Endangered Species Conservation Fund 15.615 4,163,027 ‐
North American Wetlands Conservation Fund 15.623 7,042 ‐
Partners for Fish and Wildlife 15.631 3,739 ‐
State Wildlife Grants 15.634 1,123,152 ‐
Endangered Species Conservation – Recovery Implementation Funds 15.657 338,551 ‐
Candidate Species Conservation 15.660 2,199 ‐
Adaptive Science 15.670 17,225 ‐
Economic, Social and Political Development of the Territories 15.875 271,940 ‐
Historic Preservation Fund Grants‐In‐Aid 15.904 876,889 ‐
Outdoor Recreation – Acquisition, Development and Planning 15.916 1,090,678 ‐
Natural Resource Stewardship 15.944 34,211 ‐
Fish and Wildlife Cluster
Sport Fish Restoration 15.605 2,453,989 ‐
Wildlife Restoration and Basic Hunter Education 15.611 3,949,153 ‐
Total Fish and Wildlife Cluster 6,403,142 ‐
Total U.S. Department of the Interior 14,390,410 ‐
U.S. DEPARTMENT OF JUSTICE
U.S. Department of Justice Direct Programs
Crime Victim Compensation 16.576 74,450 ‐
Stop School Violence 16.839 150,432 ‐
Equitable Sharing Program 16.922 3,046 ‐
Total U.S. Department of Justice Direct Programs 227,928 ‐
Pass‐through from the State Department of the Attorney General
Coronavirus Emergency Supplemental Funding Program 16.034 829,066 ‐
(20‐VD‐01, 20‐VD‐02, 20‐VD‐03)
Crime Victim Assistance (18‐V2‐05, 19‐V2‐05 and 19‐V2‐10) 16.575 243,638 ‐
Residential Substance Abuse Treatment for State Prisoners (18‐12‐01, 19‐XT‐01) 16.593 92,329 ‐
Edward Byrne Memorial Justice Assistance Grant Program (18‐DJ‐05) 16.738 16,795 ‐
Paul Coverdell Forensic Sciences Improvement Grant Program (18‐CD‐05) 16.742 7,745 ‐
Total U.S. Department of Justice Pass‐through Programs 1,189,573 ‐
Total U.S. Department of Justice 1,417,501 ‐
(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, 2021
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 LABOR
U.S. Department of Labor Direct Programs
Labor Force Statistics 17.002 681,663 ‐
Compensation and Working Conditions 17.005 68,381 ‐
Unemployment Insurance 17.225 25,356,667 ‐
COVID‐19 – Unemployment Insurance COVID‐19 − 17.225 3,889,885,810 ‐
Total Unemployment Insurance 3,915,242,477 ‐
Senior Community Service Employment Program 17.235 1,635,829 ‐
Trade Adjustment Assistance 17.245 466,289 ‐
H‐1B Job Training Grants 17.268 265,763 ‐
Work Opportunity Tax Credit Program 17.271 13,022 ‐
Temporary Labor Certification for Foreign Workers 17.273 42,303 ‐
WIOA National Dislocated Workers Grants / WIA National Emergency Grants 17.277 163,674 ‐
WIA / WIOA Dislocated Worker National Reserve
Technical Assistance and Training 17.281 11,515 ‐
Apprenticeship USA Grants 17.285 613,244 ‐
Occupational Safety and Health – State Program 17.503 1,305,374 ‐
Consultation Agreements 17.504 541,048 ‐
Employment Service Cluster
Employment Service / Wagner‐Peyser Funded Activities 17.207 2,789,161 ‐
Disabled Veterans’ Outreach Program 17.801 389,024 ‐
Local Veterans’ Employment Representative Program 17.804 142,662 ‐
Total Employment Service Cluster 3,320,847 ‐
WIOA Cluster
WIOA Adult Program 17.258 2,170,704 1,818,195
WIOA Youth Activities 17.259 1,904,724 1,726,342
WIOA Dislocated Worker Formula Grants 17.278 1,821,088 1,118,055
Total WIOA Cluster 5,896,516 4,662,592
Total U.S. Department of Labor 3,930,267,945 4,662,592
U.S. DEPARTMENT OF TRANSPORTATION
U.S. Department of Transportation Direct Program
Highway Planning and Construction Cluster
Highway Planning and Construction 20.205 736,385 ‐
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 1,875,164 ‐
Total U.S. Department of Transportation 2,611,549 ‐
U.S. DEPARTMENT OF THE TREASURY
U.S. Department of Treasury Direct Program
COVID‐19 – Coronavirus Relief Fund COVID‐19 − 21.019 767,863,827 203,306,096
COVID‐19 – Emergency Rental Assistance Program COVID‐19 − 21.023 25,000,000 25,000,000
Total U.S. Department of the Treasury 792,863,827 228,306,096
U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
U.S. Equal Employment Opportunity Commission Direct Program
Employment Discrimination – State and Local Fair Employment
Practices Agency Contracts 30.002 137,972 ‐
Total U.S. Equal Employment Opportunity Commission 137,972 ‐
(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, 2021
Amount
Federal Grantor / Pass‐through Grantor and Program Title Federal Federal Provided to
(Pass‐through Identifying Number) AL Number Expenditures Subrecipients
U.S. GENERAL SERVICES ADMINISTRATION
U.S. General Services Administration Direct Program
Donation of Federal Surplus Personal Property 39.003 1,450,612 ‐
Total U.S. General Services Administration 1,450,612 ‐
U.S. NATIONAL ENDOWMENT FOR THE ARTS
U.S. National Endowment for the Arts Direct Program
Promotion of the Arts – Partnership Agreements 45.025 1,113,015 686,027
Total U.S. National Endowment for the Arts 1,113,015 686,027
U.S. SMALL BUSINESS ADMINISTRATION
U.S. Small Business Administration Direct Program
Federal and State Technology Partnership Program 59.058 136,570 ‐
State Trade Expansion 59.061 243,346 ‐
Total U.S. Small Business Administration 379,916 ‐
U.S. DEPARTMENT OF VETERANS AFFAIRS
U.S. Department of Veterans Affairs Direct Program
Veterans Cemetery Grants Program 64.203 796,018 ‐
Total U.S. Department of Veterans Affairs 796,018 ‐
U.S. ENVIRONMENTAL PROTECTION AGENCY
U.S. Environmental Protection Agency Direct Programs
Regional Wetland Program Development Grants 66.461 70,958 ‐
Performance Partnership Grants 66.605 381,924 ‐
Total U.S. Environmental Protection Agency Direct Programs 452,882 ‐
Pass‐through from U.S. Endowment for Forestry and Community
Healthy Watersheds Consortium Grant Program (E18‐38) 66.441 34,927 ‐
Pass‐through from the State Department of Health
Nonpoint Source Implementation Grant (DOH319) 66.460 182,951 ‐
Capitalization Grant for Drinking Water State Revolving Funds
(Drinking Water State Revolving Fund Cluster) (99986519) 66.468 51,410 ‐
Total U.S. Environmental Protection Agency Pass‐through Programs 269,288 ‐
Total U.S. Environmental Protection Agency 722,170 ‐
U.S. DEPARTMENT OF ENERGY
U.S. Department of Energy Direct Programs
State Energy Program 81.041 117,240 ‐
Weatherization Assistance for Low‐Income Persons 81.042 230,404 212,431
Renewable Energy Research and Development 81.087 725,173 ‐
State Energy Program Special Projects 81.119 22,542 22,542
Total U.S. Department of Energy 1,095,359 234,973
U.S. DEPARTMENT OF EDUCATION
U.S. Department of Education Direct Program
Education Stabilization Fund 84.425 1,650,000 1,650,000
Total U.S. Department of Education Direct Program 1,650,000 1,650,000
Pass‐through from the State Department of Education
Title I State Agency Program for Neglected and Delinquent
Children and Youth (S013A150011) 84.013A 56,515 ‐
Pass‐through from the University of Hawaii
Career and Technical Education – Basic Grants to States (V048A40011) 84.048A 121,238 ‐
Total U.S. Department of Education Pass‐through Programs 177,753 ‐
Total U.S. Department of Education 1,827,753 1,650,000
(continued)
See accompanying notes to the schedule of expenditures of federal awards.
12
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2021
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 Program
Help America Vote Act Requirements Payments 90.401 233,165 ‐
HAVA Election Security 90.404 2,499,587 ‐
Total U.S. Election Assistance Commission 2,732,752 ‐
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
U.S. Department of Health and Human Services Direct Programs
Food and Drug Administration Research 93.103 115,519 ‐
Refugee and Entrant Assistance – State Administered Programs 93.566 71,258 60,968
Community Services Block Grant 93.569 3,318,374 3,120,974
COVID‐19 ‒ Community Services Block Grant COVID‐19 ‒ 93.569 1,603,048 1,580,071
Total Community Services Block Grant 4,921,422 4,701,045
Centers for Medicare and Medicaid Services (CMS)
Research, Demonstrations & Evaluations 93.779 399,030 ‐
The Health Insurance Enforcement and Consumer Protections Grant Program 93.881 36,167 ‐
Total U.S. Department of Health and Human Services
Direct Programs 5,543,396 4,762,013
Pass‐through from the State Department of Health
Injury Prevention and Control Research and State Community Based Programs 93.136 82,000 ‐
State Opioid Response Grants 93.788 42,585 ‐
Pass‐through from the State Department of Human Services
Temporary Assistance for Needy Families
(2001HITANF, DHS‐17‐ETPO‐4031 and DHS‐21‐ETPO‐0049) 93.558 1,752,632 134,999
Low‐Income Home Energy Assistance (G‐20011HILIEA and G‐2101HILIEA) 93.568 248,575 220,965
Total U.S. Department of Health and Human Services
Pass‐through Programs 2,125,792 355,964
Total U.S. Department of Health and Human Services 7,669,188 5,117,977
U.S. DEPARTMENT OF HOMELAND SECURITY
U.S. Department of Homeland Security Direct Programs
Non‐profit Security Grant Program 97.008 100,000 100,000
Boating Safety Financial Assistance 97.012 779,025 ‐
Community Assistance Program State Support Services Element 97.023 79,323 ‐
Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 35,195,424 30,555,093
National Dam Safety Program 97.041 20,976 ‐
Emergency Management Performance Grants 97.042 3,483,814 1,203,216
Cooperating Technical Partners 97.045 179,933 ‐
Pre‐Disaster Mitigation 97.047 2,105,422 2,059,886
COVID‐19 – Presidential Declared Disaster Assistance to
Individuals and Households – Other Needs COVID‐19 − 97.050 270,997,672 ‐
Port Security Grant Program 97.056 221,209 34,900
Homeland Security Grant Program 97.067 4,076,885 3,404,583
Earthquake Consortium 97.082 548 ‐
Financial Assistance for Targeted Violence and Terrorism Prevention 97.132 44,583 ‐
Preparing for Emerging Threats and Hazards 97.133 55,749 ‐
Total U.S. Department of Homeland Security 317,340,563 37,357,678
Total Expenditures of Federal Awards $ 5,121,718,683 $ 288,156,398
(concluded)
See accompanying notes to the schedule of expenditures of federal awards.
13
State of Hawaii
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2021
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 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
14
State of Hawaii
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2021
Hawaii Tourism Authority
Judiciary
University of Hawaii
Water Pollution Control Revolving Fund
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 Program, 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, 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 $3,915,242,477 reported as
expenditures for AL No. 17.225, Unemployment Insurance, and AL No. COVID‐19 – 17.225,
COVID‐19 – Unemployment Insurance, $3,889,885,810 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 state and federal 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.
15
State of Hawaii
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2021
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 Agriculture Direct Programs
Urban and Community Forestry Program 10.675 $ 72,645
Forest Stewardship Program 10.678 189,965
Total U.S. Department of Agriculture 262,610
U.S. Department of Commerce Direct Programs
Interjurisdictional Fisheries Act of 1986 11.407 63,239
Marine Sanctuary Program 11.429 154,148
Pacific Fisheries Data Program 11.437 350,656
Coral Reef Conservation Program 11.482 626,298
Total U.S. Department of Commerce 1,194,341
U.S. Department of Defense Direct Programs
Collaborative Research and Development 12.114 1,654,698
Total U.S. Department of Defense 1,654,698
U.S. Department of the Interior Direct Programs
Fish and Wildlife Management Assistance 15.608 55,358
Cooperative Endangered Species Conservation Fund 15.615 4,163,027
State Wildlife Grants 15.634 1,123,152
Economic, Social and Political Development of the Territories 15.875 271,940
Natural Resource Stewardship 15.944 34,211
Total U.S. Department of the Interior 5,647,688
U.S. Environmental Protection Agency Direct Programs
Regional Wetland Program Development Grants 66.461 70,958
Pass‐through from the State Department of Health
Nonpoint Source Implementation Grant 66.460 182,951
Total U.S. Environmental Protection Agency 253,909
U.S. Department of Health and Human Services Direct Programs
Food and Drug Administration Research 93.103 115,519
Total U.S. Department Health and Human
Services Direct Programs 115,519
Total Research and Development Cluster $ 9,128,765
16
SCHEDULE OF FINDINGS
AND QUESTIONED COSTS
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Section I – Summary of Auditors’ Results
Financial Statements
Type of auditors’ report issued Unmodified
Internal control over financial reporting
• Material weaknesses identified? X yes 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, 2021,
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, 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 $15,625,564
Auditee qualified as low‐risk auditee? yes X no
17
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Identification of Major Programs
Federal
AL Number Name of Federal Program or Cluster
12.401 National Guard Military Operations and Maintenance Projects
COVID‐19 – 21.019 COVID‐19 – Coronavirus Relief Fund
COVID‐19 – 21.023 COVID‐19 – Emergency Rental Assistance Program
COVID‐19 – 97.050 COVID‐19 – Presidential Declared Disaster Assistance to Individuals
and Households – Other Needs
Unemployment Insurance
17.225 Unemployment Insurance
COVID‐19 – 17.225 COVID‐19 – Unemployment Insurance
Community Services Block Grant
93.569 Community Services Block Grant
COVID‐19 ‒ 93.569 COVID‐19 – Community Services Block Grant
18
FINANCIAL STATEMENT FINDINGS
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Section II – Financial Statement Findings
Finding No. 2021‐001: Internal Control over Financial Reporting (Material Weakness)
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 2021 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, 2021, 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. 84, Fiduciary Activities.
A similar finding was reported as a significant deficiency in the prior year as Finding No. 2020‐001.
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, included in the management representation letter, were necessary to properly report
the fiscal year 2021 financial statements.
Other misstatements identified were not corrected as they were deemed to be immaterial to the
financial statements.
19
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
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.
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.
20
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Finding No. 2021‐002: 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 June 30, 2021 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, 2021
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. 2020‐002.
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.
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.
21
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
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 $ 2.9 $ 6.6 $ 33.0
Hawaii Strategic Development Corporation ‐ ‐ 0.6
Hawaii Technology Development Corporation 4.9 19.7 3.1
Natural Energy Laboratory of Hawaii 7.1 6.4 8.3
Agribusiness Development Corporation 3.9 13.8 83.0
Nonmajor proprietary funds
Department of Accounting and General Services –
State Parking Revolving Fund $ 3.1 $ 3.6 $ 12.6
Department of Accounting and General Services –
State Motor Pool Fund 2.3 1.9 2.4
Department of Public Safety –
Correctional Industries Fund 6.8 5.2 3.6
Department of Labor and Industrial Relations –
Disability Compensation Fund 14.5 15.2 12.2
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. 34 and 61,
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
No. 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.
22
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Finding No. 2021‐003: 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, 2021, we performed an IT general controls review of selected State departments’ systems,
including the following systems operated by the Department of Taxation (DoTAX), Department of Labor
and Industrial Relations (DLIR), and Department of Accounting and General Services (DAGS):
DoTAX DLIR DAGS
GenTax UI BPS Statewide Inventory System
UI Tax FAMIS
QWRS HawaiiPay
UI Employer Website CWWS
Recon
Our review resulted in IT control deficiencies in the areas of logical security and change management
as follows:
Logical security
DoTAX
A partial review of functions (permissions) assigned to GenTax users was not performed as part
of the 2021 annual user access review.
DLIR
Terminated users are not consistently removed in a timely manner.
Change management
DLIR
Developers have access to the production environment.
There is no evidence to support that developers are properly segregated from the production
environment for the UI Employer Website with no monitoring control in place to detect
unauthorized changes.
Collectively, the number and related number of the IT control deficiencies resulted in an overall
significant deficiency. A similar finding was reported as a material weakness in the prior year as
Finding No. 2020‐003.
23
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
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 logical security and change management address the following risks:
Logical security
Unauthorized access to financial systems could result in the loss of data, unauthorized or nonexistent
transactions being made, or transactions being inaccurately recorded.
Change management
Unauthorized or untested changes promoted to the production environment could cause the 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 DoTAX and DLIR perform the following:
Logical security
DoTAX
Ensure access permissions are reviewed as part of the annual user access review.
DLIR
Implement periodic terminated user reviews.
Change management
DLIR
Remove developers’ access to the production environment.
Ensure that developer access to the UI Employer Website is properly restricted from the production
environment.
24
FEDERAL AWARD FINDINGS
AND QUESTIONED COSTS
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Section III – Federal Award Findings and Questioned Costs
Finding No. 2021‐004: SEFA (Material Weakness)
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 as a significant deficiency in the prior year as Finding No. 2020‐004.
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, 2021 and related notes to the SEFA that were not detected by
management’s internal controls, but were subsequently identified and corrected as part of our auditing
procedures.
For AL No. COVID‐19 – 97.050, COVID‐19 – Presidential Declared Disaster Assistance to Individuals
and Households – Other Needs, amounts were not initially separately identified as expenditures
under AL No. 17.225 Unemployment Insurance, in the draft SEFA. Amounts expended were
understated by approximately $271,000,000.
For AL No. COVID‐19 – 21.023, COVID‐19 – Emergency Rental Assistance Program, amounts
provided to subrecipients were not identified.
25
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
For AL No. 66.460, Nonpoint Source Implementation Grant, amounts expended under the R&D
cluster note to the SEFA did not match amounts reported on the SEFA. R&D cluster expenditures
were understated by approximately $109,000.
The draft SEFA did not identify the State Department of Health as the pass‐through entity for
amounts expended under AL No. 66.460, Nonpoint Source Implementation Grant.
For AL No. COVID‐19 – 93.569, COVID‐19 – Community Services Block Grant, the program was
not identified as a COVID‐19 related assistance.
For AL No. COVID‐19 – 21.019, COVID‐19 – Coronavirus Relief Fund, amounts were improperly
calculated which resulted in expenditures being overstated by approximately $87,000.000.
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, 2021, 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, including reporting expenditures funded
by pass‐through entities. We also recommend DAGS and other departmental personnel review and
keep abreast of reporting guidance issued by the OMB.
26
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Questioned
Cost
Finding No. 2021‐005: Special Tests and Provisions
(Material Weakness) $ –
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‐35644‐21‐55‐A‐15 2021
Award Year: UI‐35700‐21‐55‐A‐15 2021
UI‐35940‐20‐60‐A‐15 2021
Repeat Finding? Yes
Condition
During our audit, we examined the Benefit Accuracy Measurement (BAM) summary report and
identified minimum cases and timeliness requirements were not met regarding 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
27
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
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 was significantly impacted with an increase in
unemployment claims. Employees were also hindered from working for a substantial amount
of time due to government‐mandated shutdowns and other restrictions.
Recommendation
We recommend that the State department 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.
28
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Questioned
Cost
Finding No. 2021‐006: Special Tests and Provisions
(Significant Deficiency) $ –
State Agency: DLIR
Federal Agency: Department of Labor
AL Number and Title: 17.225 – Unemployment Insurance
Award Number and UI‐34492‐20‐60‐A‐15 2021
Award Year:
Repeat Finding? No
Condition
During our audit, we selected a non‐statistical sample of two quarterly performance reports to examine
and identified two instances where there was no available evidence to verify the reports were prepared.
Criteria
The Unemployment Insurance Program Letter No. 8‐20 requires performance reports to be submitted
by the twentieth day of the second month after the end of each quarter.
Effect
The failure to file required reports reduces transparency on the use of program funds hindering
monitoring by the awarding agency.
Cause and View of Responsible Officials
Due to vacancies within the department, program personnel were reassigned which resulted in the
reports not being prepared.
Recommendation
We recommend that the State department implement adequate review of reports and ensure that
individuals responsible for preparing and reviewing reports have adequate knowledge of applicable
reporting requirements.
29
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Questioned
Cost
Finding No. 2021‐007: Allowable Costs (Significant Deficiency) $ –
State Agency: DLIR
Federal Agency: Department of Labor
AL Number and Title: 17.225 – Unemployment Insurance
Award Number and UI‐35644‐21‐55‐A‐15 2021
Award Year:
Repeat Finding? No
Condition
During our audit, we examined a non‐statistical sample of 25 payroll expenditures and identified an
underpayment for one employee selected for testing.
Criteria
In accordance with 2 CFR 200.430(a), compensation for personal services includes all remuneration,
paid currently or accrued, for services of employees rendered during the period of performance under
the Federal award, including but not necessarily limited to wages and salaries.
Effect
The underpayment of compensation affects the accuracy and transparency of program costs used by
management and reported to the federal awarding agency.
Cause and View of Responsible Officials
An input error for a retrospective pay adjustment was made when processing payroll resulting in the
improper payment to an employee that does not work on the Unemployment Insurance program of the
$2,505 retrospective adjustment of an employee that works on the program. The compensation for the
employees in question were corrected by the department subsequent to identification of the error as
part of our audit testing in fiscal year 2022.
Recommendation
We recommend that management ensure proper procedures and controls are in place to meet all
requirements for compensation of employees in accordance with grant awards and procedures issued
by the U.S. Department of Labor.
30
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Questioned
Cost
Finding No. 2021‐008: Subrecipient Monitoring
(Significant Deficiency) $ –
State Agency: Governor’s Office
Federal Agency: Department of the Treasury
AL Number and Title: COVID‐19 – 21.023 – COVID‐19 – Emergency Rental Assistance
Award Number and Consolidated Appropriations Act 2021
Award Year:
Repeat Finding? No
Condition
During our audit, we examined a non‐statistical sample of two subawards but found no evidence
of evaluation of the subrecipients’ risk of noncompliance at the time of the subaward.
Criteria
2 CFR Section 200.331(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.
Effect
Without evaluating the subrecipient’s risk of noncompliance and determining the appropriate
subrecipient monitoring procedures necessary, the State may not be providing the appropriate level
of monitoring over its subrecipients.
Cause and View of Responsible Officials
Due to vacancies within the department, program personnel were unable to perform the subrecipient’s
risk of noncompliance in a timely matter. However, subawards were only provided to State
departments that regularly receive federal funding and are familiar with federal requirements.
31
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
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.
32
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Questioned
Cost
Finding No. 2021‐009: Subrecipient Monitoring
(Significant Deficiency) $ –
State Agency: DLIR
Federal Agency: Department of Health and Human Services
AL Number and Title: 93.569 – Community Services Block Grant
Award Number and 75‐20‐1536 2020
Award Year: 75‐21‐1536 2021
Repeat Finding? No
Condition
During our audit, we tested a non‐statistical sample of three subawards and determined that in all
instances the State department did not provide certain required federal award information in the
subaward agreements.
Criteria
2 CFR Section 200.332(a) requires subawards to clearly identify information, such as the Federal Award
Identification Number (FAIN), identification of whether the award is R&D, period of performance, and
indirect cost.
Effect
By not including the required information in the subaward, subrecipients may have trouble complying
with federal grant requirements.
Cause and View of Responsible Officials
Program management was unaware of the requirement to communicate the FAIN to subrecipients.
However, subawards were only provided to subrecipients that regularly receive federal funding and
are familiar with federal requirements.
Recommendation
We recommend that program management ensure that program personnel are familiar with all grant
requirements, including the reporting of all necessary federal award information to subrecipients.
33
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
Questioned
Cost
Finding No. 2021‐010: Subrecipient Monitoring
(Significant Deficiency) $ –
State Agency: Governor’s Office
Federal Agency: Department of the Treasury
AL Number and Title: COVID‐19 – 21.019 – COVID‐19 – Coronavirus Relief Fund
Award Number and Coronavirus Aid, Relief, and 2020
Award Year: Economic Security Act
Repeat Finding? Yes
Condition
During our audit, we examined a non‐statistical sample of two subawards but found no evidence
of evaluation of the subrecipients’ risk of noncompliance at the time of the subaward.
Criteria
2 CFR Section 200.331(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.
Effect
Without evaluating the subrecipient’s risk of noncompliance and determining the appropriate
subrecipient monitoring procedures necessary, the State may not be providing the appropriate level
of monitoring over its subrecipients.
Cause and View of Responsible Officials
Due to lack of formal procedures at the inception of the program in the fourth quarter of fiscal year
2020, program management was unaware of the requirement to formally assess each subrecipient’s
risk of noncompliance. However, in fiscal years 2020 and 2021, subawards were only provided to other
state agencies and county governments within the State that regularly receive federal funding and are
familiar with federal requirements.
34
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2021
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.
35
SUMMARY SCHEDULE OF
PRIOR AUDIT FINDINGS
State of Hawaii
Summary Schedule of Prior Audit Findings
Year Ended June 30, 2021
Finding Status Current Year
No. Description Department Classification Resolved Unresolved Finding No.
2020‐001 Internal Control Over DAGS Significant X 2021‐001
Financial Reporting Deficiency
2020‐002 Accounting for Component DAGS Significant X 2021‐002
Units and Proprietary Funds Deficiency
2020‐003 IT General Control Deficiencies DLIR; Material X 2021‐003
DoTAX Weakness
2020‐004 Schedule of Expenditures DAGS Significant X 2021‐004
of Federal Awards Deficiency
2020‐005 Special Tests and Provisions DLIR Material X 2021‐005
Weakness
2020‐006 Eligibility DLIR Significant X
Deficiency
2020‐007 Subrecipient Monitoring Governor's Significant X 2021‐010
Office Deficiency
2019‐009 Suspension and Debarment DLNR Significant X
Deficiency
2019‐010 Earmarking DLNR Material X
Weakness
2019‐011 Special Tests and Provisions DLNR Significant X
Deficiency
2019‐014 Subrecipient Monitoring DOD 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, 2021
Corrective Actions Taken for Unresolved Findings
Finding No. 2020‐001: Internal Control Over Financial Reporting
In fiscal year 2021, 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. 2021‐001) is reported, Finding No. 2020‐001 will not be carried forward.
Finding No. 2020‐002: Accounting for Component Units and Proprietary Funds
No corrective action was taken in fiscal year 2021. As a current year finding (Finding No. 2021‐002)
is reported, Finding No. 2020‐002 will not be carried forward.
Finding No. 2020‐003: IT General Control Deficiencies
Corrective actions were taken in fiscal year 2020 to mitigate a number of the previously reported
deficiencies; however, corrective action is still ongoing. As a current year finding (Finding No. 2020‐003)
is reported, Finding No. 2020‐003 will not be carried forward.
Finding No. 2020‐004: 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, 2021. As a current year finding (Finding No. 2021‐004) is reported, Finding
No. 2020‐004 will not be carried forward.
Finding No. 2020‐005: Special Tests and Provisions
DLIR continues to improve its internal controls to comply with requirements. As a current year finding
(Finding No. 2021‐005) is reported, Finding No. 2020‐005 will not be carried forward.
Finding No. 2020‐007: Subrecipient Monitoring
No corrective actions were taken in fiscal year 2021. As a current year finding (Finding No. 2021‐010) is
reported, Finding No. 2020‐007 will not be carried forward.
Finding No. 2019‐010: Earmarking
DLNR continues to improve its internal controls to comply with earmarking requirements.
Finding No. 2019‐011: Special Tests and Provisions
DLNR has been working with the Federal Agency to clarify the memorandum of understanding/
agreement 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 2022.
CORRECTIVE ACTION PLAN
SECTION II – FINANCIAL STATEMENT FINDINGS
2021-001 – Internal Control over Financial Reporting (Material Weakness)
Condition
The State’s internal control over financial reporting could be improved. During our audit
of the fiscal year 2021 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 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. In fiscal year 2021, DAGS requested formal reporting
information packages to obtain the financial information from State departments but did
not receive timely responses from some departments.
A similar finding was reported as a significant deficiency in the prior year as Finding No.
2020-01.
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.
1
DAGS has completed a draft of a new chart of accounts for the whole state which will
assist in the reporting and compliance of the ACFR and SEFA reports. The procurement
of a new accounting system has been recently awarded and expected to run by June 30,
2023. With this new system, it would address or mitigate financial reporting deficiencies.
Person Responsible
Lenora D. Fisher, Administrator, DAGS Accounting Division
Anticipated Date of Completion
June 30, 2023
2021-002 – Accounting for Component Units and Proprietary Funds (Significant
Deficiency)
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, 2021 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 June 30, 2021 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. 2020-002.
2
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
Lenora D. Fisher, Administrator, DAGS Accounting Division
Anticipated Date of Completion
June 30, 2023
2021-003 – IT General Control Deficiencies (Significant Deficiency)
Condition
Logical Security
Terminated users are not consistently removed in a timely manner
Corrective Action Plan
Concur. Continue to develop process to have HR notify IT department of any terminated
employees. DLIR-UI Branch Managers and Supervisors have been notified to send Form
343 – User Profile Update – to Administration Office upon immediately termination of an
employee.
Person Responsible: Bennett Yap, DLIR IT Chief
Anticipated Date of Completion: June 2022
No user access review performed on the UI employer website
Corrective Action Plan
Concur. DLIR-UI will perform review of UI employer website annually. Next review is
scheduled for February 2022.
Person Responsible: Wendy Maher, DLIR-UI Specialist Supervisor
Anticipated Date of Completion: June 2022
Change Management
Developers have access to the production environment
Corrective Action Plan
Concur. DLIR is continuing to work with ETS to remove developers access to the
production environment.
3
Person Responsible: Bennett Yap, DLIR IT Chief
Anticipated Date of Completion: June 2022
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
Corrective Action Plan
Concur. DLIR continues to work with the vendor to understand controls and/or have
access to a SOC-1 report.
Person Responsible: Bennett Yap, DLIR IT Chief
Anticipated Date of Completion: June 2022.
2021-004 – Schedule of Expenditures of Federal Awards (Material Weakness)
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 as a significant deficiency in the prior year as Finding No.
2020-004.
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 whole state which will
assist in the reporting and compliance of the ACFR and SEFA reports. The procurement
of a new accounting system has been recently awarded and expected to run by June 30,
2023. With this new system, it would address or mitigate financial reporting deficiencies
Person Responsible
Lenora D. Fisher, Administrator, DAGS Accounting Division
4
Anticipated Date of Completion
June 30, 2023
2021-005 – Special Tests and Provisions (Material Weakness)
State Department of Labor and Industrial Relations
AL No. 12.225 – Unemployment Insurance
COVID-19 – 17.225 – COVID-19 – Unemployment Insurance
Direct award from the U.S. Department of Labor: UI-35644-21-55-A-15, UI-35940-20-60-
A-15, UI-35700-21-55-A-15
Condition
1) Did not meet minimum cases for PAID (PCA) of 480 and Denied (DCA) of 450
2) Did not meet timeliness for PCA 95% within 90 days and 98% within 120 day
Corrective Action Plan
Concur
1) The required minimum cases for PCA-480 and DCA-450 were reinstated July
2021.
2) BAM staff who were previously assigned to other duties to address the huge
workload increase due to the Pandemic were rededicated to performing only BAM
related work beginning September 2020. The unit has brought on two experienced
adjudicators to fill vacancies and learn BAM methodology. They continue to
progress to the level where they 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 monitors case completion and timeliness to ensure the unit works toward
achieving the BAM requirements.
Person Responsible
Sheryl Ozaki, UI Quality Control Supervisor
Anticipated Date of Completion
1) Completed
2) July 2023
5
2021-006 – Special Tests and Provisions (Significant Deficiency)
State Department of Labor and Industrial Relations
AL No. 12.225 – Unemployment Insurance
COVID-19 – 17.225 – COVID-19 – Unemployment Insurance
Direct award from the U.S. Department of Labor: UI-35644-21-55-A-15, UI-35940-20-60-
A-15, UI-35700-21-55-A-15
Condition
Non-compliance of RESEA ETA-9129 quarterly report submittal.
Corrective Action Plan
Concur. DLIR will assign 2 people (lead/alternate) to be responsible for the timely filings
of the ETA quarterly reports and will mandate that the reports be reviewed by a supervisor
prior to submission.
DLIR is also working with ETS to provide PDF versions of the HI RESEA quarterly
production reports in a secured document folder on our share drive to guarantee data
securement.
Person Responsible: Arthur Barba, DLIR-UI Acting Administrator
Anticipated Date of Completion: June 30, 2022
2021-007 – Activities Allowed or Unallowed (Significant Deficiency)
State Department of Labor and Industrial Relations
AL No. 12.225 – Unemployment Insurance
COVID-19 – 17.225 – COVID-19 – Unemployment Insurance
Direct award from the U.S. Department of Labor: UI-35644-21-55-A-15, UI-35940-20-60-
A-15, UI-35700-21-55-A-15
Condition
An UI employee’s payroll retroactive pay in the amount of $2,505 was mistakenly paid to
an employee who does not work on the UI program. It was not corrected during fiscal
year 2021 but upon discovery subsequent to fiscal year end.
Corrective Action Plan
Non-concur: The amount of retroactive pay $2,505 was paid out from UI funds, recorded
in UI fund ledger in April 2021. Therefore, it does not affect the accuracy and
transparency of program cost used by management and reported to the federal awarding
agency.
6
The correction of the UI employee’s retroactive pay was made on pay day 12/03/2021;
the other employee’s on 12/03/2021 and 12/20/2021. All corrections were recorded on
UI funds. Consequently, it is a wash on the UI payroll expenses in December 2021; it
only affects the mentioned employees’ pay.
Person Responsible: Vyhien Peyton, Administrative Services Officer
Anticipated Date of Completion: December 20, 2021
2021-008 – Subrecipient Monitoring (Significant Deficiency)
Governor’s Office
AL No. COVID-19 – 17.225 – COVID-19 – Emergency Rental Assistance
Direct award from the United States Treasury (Award no. Consolidated Appropriations
Act 2021
Condition
A risk assessment was not performed by the Office of Federal Awards Management at
the time a sub-award was made to a subrecipient.
Corrective Action Plan
Concur.
A risk assessment has been completed for all Emergency Rental Assistance (“ERA”)
subrecipients.
Please note that all ERA subrecipients were required and did attend a weekly ERA
subrecipient meeting. A weekly subrecipient meeting is the highest level of subrecipient
oversight that can be provided.
Person Responsible
Mark Anderson, Administrator, Office of Federal Awards Management, Department of
Budget and Finance
Anticipated Date of Completion
Corrective action was taken in May 2021.
7
2021-009 – Subrecipient Monitoring (Significant Deficiency)
AL No. 93.569 – Community Services Block Grant
Direct Award from: U.S. Department of Health and Human Services (Award no. 75-20-
1536 and 75-21-1536)
Condition
During the audit, three sample subaward agreements were examined but found that the
subaward agreements (nor any subsequent documents provided to the subrecipients) did
not include communication of the Federal Award Identification Number (FAIN). In
accordance with Title 2 Code of Federal Regulations (CFR) Part 200.331(a) requires a
pass-through entity to provide subrecipients award information. Although it was noted
noncompliance among the total samples, the subrecipients are recurring Community
Action Agencies (CAAs) who are familiar with the CSBG program and how to properly
use federal funds. Each CAA is also required to furnish an audit report to the State
annually, which the State reviews. Program management was unaware of the
requirement to communicate the FAIN to subrecipients.
Corrective Action Plan
Concur. By June 30, 2022, OCS Program and Evaluation Administrator will send the
notices of award with allocation letters to each subrecipient going forward. Each notice of
award states the Award Number, Unique Federal Award Identification Number (FAIN),
Statutory Authority, the Assistance Listing (AL) Number, and other information related to
the federal award. By attaching the notice of award with each allocation letter, the State
will ensure that the subrecipients are aware of the award information.
Person Responsible
Courtney Ho, Program and Evaluation Administrator
Jovanie Domingo Dela Cruz, Executive Director
Anticipated Date of Completion
June 30, 2022
8
2021-010 – Subrecipient Monitoring (Significant Deficiency)
Governor’s Office
AL No. COVID-19 – 21.019 – COVID-19 – Coronavirus Relief Fund
Direct award from the United States Treasury (Award no. Coronavirus Aid, Relief and
Economic Security (CARES) Act 2020
Condition
2 CFR Section 200.331(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. Auditor examined a non-statistical sample of six
subawards but found no evidence of evaluation of the subrecipients’ risk of
noncompliance at the time of the subaward.
Corrective Action Plan
Concur
The Office of Federal Award Management (OFAM) will ensure that program personnel
are familiar with federal assistance requirements, including compliance with 2 CFR Part
200 which requires pass-through entities to communicate all necessary federal award
information to subrecipients and perform risk assessments of subrecipients. OFAM will
develop and/or enhance 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:
1) The subrecipient’s prior experience with the same or similar subawards;
2) The results of previous audits including whether the subrecipient requires 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;
3) Whether the subrecipient has new personnel or new or substantially changed
systems;
4) The extent and results of federal awarding agency monitoring (e.g., if the
subrecipient also receives Federal awards directly from a federal awarding
agency).
Person Responsible
Mark Anderson, Administrator, Office of Federal Awards Management, State Department
of Budget and Finance
Anticipated Date of Completion
June 30, 2022
9
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