STATE AUDITOR’S RESPONSE TO WORKING GROUP REPORT

News Release from Office of the Auditor, Apr 9, 2021

The State Auditor Working Group, formed by Speaker of the House Scott Saiki to “determine whether the Office of the State Auditor is in compliance with Art. VII, section 10 of the Hawai‘i State Constitution,” issued its report on April 1, 2021. 

Although described to be akin to an audit, the Working Group’s review does not remotely resemble one.  The report was completed without ever talking to the Auditor or any other current staff.  It is primarily a collection of opinions based on manipulated data, inaccurate assumptions, and unattributed snippets of critical comments from former employees. 

The Working Group’s “findings” and conclusion are flatly wrong.  Their review was never intended to be objective or fair and was simply part of a larger campaign to undermine our work and to exert influence over the Office of the Auditor.  The State Constitution, which established the position, intended the Auditor to be non-partisan and independent, shielding the Auditor from such political interference. 

The Office of the Auditor helps to preserve the public trust in government through unbiased, objective, fact-based analysis that is intended to provide transparency, ensure accountability, and improve government.

PDF: Read Full Response

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The OHA Controversy and the Working Group’s Recommendation We Employ “Alternative Procedures”  (from pg 5-6 of report)

…The Working Group dedicates six pages of the report to what it calls the “Office of Hawaiian Affairs Controversy.” Like the rest of the report, that section is replete with mischaracterizations and false statements. For instance, the Working Group claims that their “research showed that the State Auditor requested and approved the proviso in Act 37 that required a financial and management audit of OHA be completed by the Office of the State Auditor and the report be issued to the Legislature before general funds could be released to OHA.” That statement is flatly wrong. Our testimony on H.B. No. 172 (2019 Regular Session), the bill that became Act 37, noted state law already required us to audit OHA every four years. We were unaware of the Legislature’s plan to condition the release of certain general funds on the completion of the audit until the conference draft was issued.

The Working Group also questions our suspension of the audit after OHA refused to provide access to certain unredacted minutes. As noted above, our audits are performed in accordance with Government Auditing Standards issued by the Comptroller General of the United States. In contrast to the Working Group’s process, those standards require audit findings to be supported by sufficient, appropriate evidence, which in our professional judgment we do not have without the complete minutes. It is absurd for the Working Group to question that decision – i.e., our professional judgment – based on the limited information they gathered from legislative bills and public court records; it is equally irresponsible for the Working Group to speculate that we should employ “alternative procedures” to achieve the audit objectives without any understanding of the audit evidence we have obtained and why we do not have confidence in the conflicting, incomplete, and likely inaccurate testimony of current and former trustees. If the alternative procedures the Working Group is suggesting are the same type of alternative procedures they used to complete their report, the result would be a meaningless audit report, full of inaccuracies, and based on opinions and unsupported accusations. We do not issue those types of reports.

We do agree with the Working Group that the lawsuit is unwarranted and a waste of public funds as well as Native Hawaiian Trust Fund moneys. However, we did not initiate the lawsuit and, therefore, do not have the discretion to dismiss the complaint. OHA sued the Office of the Auditor and me, in my official capacity, asking the court to declare that we “violated” Act 37 by not issuing an audit report before the 2020 legislative session. Like the Working Group, OHA apparently believes the reason we suspended the audit – i.e., OHA’s refusal to cooperate – is not relevant and we should have issued an incomplete, unsupported report. However, OHA is not asking the court to direct us to complete the audit, and we are not holding the $3 million in general funds that was appropriated to OHA under Act 37. Frankly, there is no purpose for the declaration that OHA seeks or for OHA to continue its lawsuit, except for reasons that are unrelated to OHA and its beneficiaries. Nevertheless, OHA seems intent on pressing forward with the litigation….

PDF: Read Full Response

As Explained: Hanabusa Attack on Auditor is all about hiding corruption in the Office of Hawaiian Affairs

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SA: Scathing ‘audit’ of Hawaii state auditor Les Kondo is met with scathing rebuttal

Star-Adv April 13, 2021…The panel’s report said the office under Kondo’s leadership isn’t in compliance because it failed to deliver 10 of 25 performance audits from 2016 to 2019.

Kondo said that of the 10 audits that weren’t done, nine didn’t need to be done because either not enough lawmakers requested the work as required by state law or the request was reversed. Kondo faulted the panel for not verifying the accuracy of the list that he said was gathered by Saiki’s office.

The 10th undone audit focused on the state Office of Hawaiian Affairs. Kondo’s office began this work in 2019 but suspended it because OHA’s board of trustees refused to share unredacted minutes of closed-door executive session discussions having to do with companies the agency formed to hold and manage investments….

Kondo also claims that Saiki inappropriately pushed for his office to complete the OHA audit.

The panel said Kondo’s office should have finished the audit without executive session minutes. Suspending the OHA audit held up a $3 million allocation to the agency. OHA sued the auditor’s office, and a judge ruled that OHA could withhold the minutes, though the decision didn’t resolve the dispute….

read … Scathing ‘audit’ of Hawaii state auditor Les Kondo is met with scathing rebuttal