Auditor faults
defense agencyThe state department could not
account for $12.2 million in
costs for the fiscal year
The Hawaii Department of Defense must do a better job of accounting for capital assets such as equipment, buildings and other facilities, according to a report issued Tuesday by state auditor Marion Higa.
Of the department's $17.2 million in capital assets, the agency was unable to provide adequate financial reporting on costs related to $12.2 million of those assets for the fiscal year that ended last June, according to the audit.
Such costs included $4.5 million to $4.8 million in accumulated depreciation of the total assets.
Better accounting is needed "to support the propriety of these assets," Higa's report said.
The Department of Defense, in its response to the audit contained in the report, generally agreed with the auditor's findings, with some exceptions.
The response, submitted by state Adjutant General Robert Lee, noted that some of the facilities in question are U.S. government property and already accounted for at the federal level.
"We fail to see the value of adhering to the auditor's recommendation," the response said. "The federal government already accounts for these assets and spending funds to certify the value of fully depreciated assets has questionable economical and financial value."
The audit also found:
>> Poor management of contracts resulted in noncompliance with certain provisions of the Hawaii Public Procurement Code.The Defense Department said that since March 2003, when its contract specialist left, the agency has been developing a "standard operating procedure" manual for the contracting process, something that never was completed before the end of the fiscal year.
>> Inaccuracies in the department's payroll system resulted in overcharging the federal government $11,751.
>> The department did not file certain federal financial status forms on a timely basis.
Regarding contracts, the audit's report said inaccurate contract records and poor management resulted in there being "no assurance that fair competition was sought by the department and that state funds were spent in an effective and cost-beneficial manner."On the other two matters, the department said it agreed with the auditor's findings and it has taken steps to correct the situation.
