• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
Download
 
Procurement Audit of theDepartment of Education: Part 1
A Report to theGovernor and theLegislature of the State of Hawai‘i
THE AUDITOR
STATE OF HAWAI‘I
Report No. 09-03February 2009
 
Ofce of the Auditor 
The missions of the Ofce of the Auditor are assigned by the Hawai‘i State Constitution(Article VII, Section 10). The primary mission is to conduct post audits of the transactions,accounts, programs, and performance of public agencies. A supplemental mission is toconduct such other investigations and prepare such additional reports as may be directed
by the Legislature.
Under its assigned missions, the ofce conducts the following types of examinations:1. Financial audits attest to the fairness of the nancial statements of agencies. Theyexamine the adequacy of the nancial records and accounting and internal controls,and they determine the legality and propriety of expenditures.2. Management audits, which are also referred to as performance audits, examine theeffectiveness of programs or the efciency of agencies or both. These audits arealso called program audits, when they focus on whether programs are attaining theobjectives and results expected of them, and operations audits, when they examinehow well agencies are organized and managed and how efciently they acquire andutilize resources.3. Sunset evaluations evaluate new professional and occupational licensing programs todetermine whether the programs should be terminated, continued, or modied. Theseevaluations are conducted in accordance with criteria established by statute.4. Sunrise analyses are similar to sunset evaluations, but they apply to proposed rather than existing regulatory programs. Before a new professional and occupationallicensing program can be enacted, the statutes require that the measure be analyzedby the Ofce of the Auditor as to its probable effects.5. Health insurance analyses examine bills that propose to mandate certain healthinsurance benets. Such bills cannot be enacted unless they are referred to the Ofceof the Auditor for an assessment of the social and nancial impact of the proposed
measure.
6. Analyses of proposed special funds and existing trust and revolving funds determine if proposals to establish these funds are existing funds meet legislative criteria.7. Procurement compliance audits and other procurement-related monitoring assist theLegislature in overseeing government procurement practices.8. Fiscal accountability reports analyze expenditures by the state Department of Education in various areas.9. Special studies respond to requests from both houses of the Legislature. The studiesusually address specic problems for which the Legislature is seeking solutions.Hawai‘i’s laws provide the Auditor with broad powers to examine all books, records,les, papers, and documents and all nancial affairs of every agency. The Auditor alsohas the authority to summon persons to produce records and to question persons under oath. However, the Ofce of the Auditor exercises no control function, and its authority islimited to reviewing, evaluating, and reporting on its ndings and recommendations to the
Legislature and the Governor.
THE AUDITOR
STATE OF HAWAI‘I
Kekuanao‘a Building465 S. King Street, Room 500Honolulu, Hawai‘i 96813
 
The Auditor State of Hawai‘i
OVERVIEW
Procurement Audit of the Department of Education: Part 1
Report No. 09-03, February 2009
Summary
The Ofce of the Auditor and the certied public accounting rm of GrantThornton LLP conducted a procurement audit of the Department of Education,State of Hawai‘i, for the scal year July 1, 2006 to June 30, 2007. The auditexamined the procurement processes, policies, and transactions of the departmentand included inquiry, analytical procedures, and inspection of relevant recordsand documents to assess the department’s compliance with state procurementlaws and regulations. The rm also performed procedures to evaluate the designand operating effectiveness of the department’s controls over compliance withstate procurement laws for transactions procuring goods and services in excessof $25,000, the department’s small purchase threshold.Our audit revealed a lack of proper leadership and controls over the department’s procurement process and a resulting indifference toward procurement complianceamong department personnel. Although the department inherited a awed procurement system from other state agencies pursuant to the State’s ReinventingEducation Act of 2004, the department had pushed for the act’s passage on the belief that the existing procurement process was dysfunctional and obsolete. Inshort, the department undertook the responsibility of its own accord.Upon assuming that responsibility, procurement authority for the department washastily delegated to the branch and school levels in an attempt to meet the demandsof the 250+ schools statewide. However, many of the delegated procurementofcers lacked sufcient knowledge and experience to effectively carry out thoseduties. This shortfall was compounded by the department’s failure to establish anadequate system to standardize and monitor its procurement activities. More thanthree years later, there is still no formal internal control system over procurementin place. Further, the department lacks corrective or disciplinary proceduresfor procurement violations, and the Board of Education has not maintained asufciently involved role in oversight of procurement.The result is much confusion among employees and dissent within the departmentover proper procurement policies and procedures. We discovered numerousoccurrences of non-compliance with procurement laws and regulations for eachof the various procurement methods utilized by the department. Many of theinfringements appeared to be inadvertent. For example, we found 20 purchasesmade in scal year 2007 using purchasing cards (or P-cards) that exceeded the$2,500 limit without proper approval. Those 20 purchases were also for prohibiteditems, including computers and travel coupons.Other ndings, particularly those that occurred in the Ofce of School Facilitiesand Support Services, appeared to have been done in an attempt to circumvent
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...