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State auditor’s report
finds court controls flawed,
tampering easy

Audit: DOE pay scales sometimes higher than UH's

By Mary Adamski
Star-Bulletin

Some $55 million in fines, restitution, bail and other cash were collected by state courts but the state auditor found insufficient internal controls and faulty accounting procedures that could open the door to fraud or theft.

"The Judiciary should appropriately segregate cash receipt duties so that no one individual has custody of cash, access to supporting documents or records, and the function of depositing cash," said auditor Marion Higa in the audit submitted to the Legislature and Gov. Ben Cayetano yesterday.

The audit for the fiscal year that ended June 30 revealed:

There were errors in recording about $500,000 of the $30 million in restitution due from offenders to compensate victims.

More than $23 million in fines was collected, but another $6 million in outstanding fines was written off from the records and deemed uncollectible.

A review of 96 cash receipts from three court systems found 95 instances when cash collected was not deposited until two to 18 days later.

The state auditor's office and the accounting firm of Grant Thornton LLP said they found the decentralized judiciary system to be inefficient and the dearth of electronic controls poses a threat to security of information.

"Unauthorized access to critical data files compromises the integrity of information being processed and increases the opportunity for input tampering, which involves the entry of false or fraudulent data into the computer," said the report. "Cashiers have the ability to change account information on the online data master files including the victim's name and address. Restitution payments for a deceased victim or an out-of-state victim can be changed and issued to another individual by simply changing the account information."

Higa's report recommended implementation of control procedures, segregation of cash handling duties and restricted access to documents and files.

Michael Broderick, administrative director of the courts, responded by pointing out that "the auditor focused primarily on the "possibility' of problems."

He said that although the auditor said failure to implement internal controls could put court resources at risk, "the auditor did not find any actual discrepancies." Broderick's response was published with the auditor's report.

He said the Judiciary is addressing concerns about cash collection with blind count procedures, a lockbox system for mailed receipts and new bail refund procedures.

Broderick said the courts have taken measures to improve the collection of fines including converting to an automated ledger, and it will soon open a new electronic system by which the public can pay traffic fines over the Internet.

He acknowledged that "more can be done to collect restitution. However, the Judiciary's current compliance rate of 93 percent is high."

He said auditor's finding of $500,000 restitution not properly recorded pertained to two old cases, one from 14 years ago, the other was 15 years old.

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Audit: DOE pay scales
sometimes higher than UH’s

By Mary Adamski
Star-Bulletin

The pay is higher for Department of Education employees in supervisory or specialist positions than it is for University of Hawaii professionals or state civil service workers in similar jobs, according to a state auditor's report.

"Formal minimum salary ranges for the department are approximately 34 percent higher than the minimum salary ranges for the university and the civil service system," said auditor Marion Higa.

The study released yesterday focused on the department's educational officers who include the 500 principals and vice principals as well as 300 specialists in various fields such as fiscal, public relations, data processing and other professionals.

In making the comparisons with similar state echelons, "the educational officer jobs do not entail a greater level of complexity," Higa found.

The auditor was directed last year to study salary structures as "legislators and those involved in civil service reform have become concerned about whether various state personnel systems are 'in alignment.' The concern centers on whether pay schedules (compensation plans) are equitable and whether the three personnel systems should be more independent of each other or more integrated," the report said. Fox Lawson & Associates LLC was contracted to help with the study.

State School Superintendent Paul LeMahieu told Higa that the disparity in pay among state departments "is not the essential issue. Your implicit acceptance that all salaries should be identical reinforces that view and reifies the very practice that ensures mediocrity in government service.

"The larger issue then is to secure your advice as to how these differentials can result in the employment of the highest quality people," LeMahieu wrote in a response published with the audit.

Higa wrote that the Department of Education's classification and compensation of educational officers is inequitable. It lacks a formal job evaluation methodology to ensure that an employee's duties and responsibilities are accurately reflected.

For example, the department has 17 separate classifications for principals and eight for vice principals. "We found no actual class specifications for these. Also several classification series lack entry and journey levels, some supervisory positions do not actually supervise."

The report said minimum qualifications for many Department of Education positions are inconsistent with the job level. An example given is the entry-level fiscal specialist position. The minimum qualification is a bachelor's degree in accounting or a closely related subject plus two years of professional work in the financial field. But a person with five years experience as a school principal or vice principal is considered to have equivalent credentials for the fiscal job.

The state auditor recommended that the Legislature require that the Board of Education adopt a classification and compensation structure for educational officers that more accurately reflects the level of work being performed.

The school superintendent said: "The audit does not address the basic question as to whether everyone should be at identical levels of pay. Clearly that is not the case in the private sector where pay differentials are essential to recruiting, hiring and retaining quality professionals. Its silence on this question doesn't offer any suggestions as to what is desirable in a system that now requires new levels of flexibility and responsiveness."

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