Internal audit of UH managed Maunakea lands finds no irregularities

From UH News Dec 13, 2018

An audit of finances related to the University of Hawaiʻi’s management of Maunakea will be presented to the UH Board of Regents Committee on Independent Audit on Wednesday, December 19, 2019 at 10:30 a.m., at the UH Mānoa Information Technology Building first floor conference room.

The audit concluded that the “University entities involved with Maunakea have developed processes and procedures to appropriately account for their respective transactions in connection with their management of Maunakea.”

The audit was conducted at the direction of the Board of Regents by its February 2018 resolution requiring the UH Office of Internal Audit to evaluate university funds, lease payments and external funds received in support of stewardship, management, education and other activities related to Maunakea. The audit also included the review of transfers of funds between entities including both the university and the Research Corporation of the University of Hawaiʻi (RCUH) and payments made to university-related support programs by the Maunakea observatories or other third parties.

The complete audit, including findings, conclusions and response (PDF).

The audit analyzed and/or reviewed the following:

• The Comprehensive Management Plan and sub-plan
• The Maunakea Observatories Support Services Management (MKSS) plan
• Revenue and expense ledgers of the Office of Maunakea Management (OMKM) and MKSS
• Transfers between OMKM, MKSS and related entities (UH Institute for Astronomy, UH Hilo and RCUH)
• Contracts and agreements between UH and the 13 Maunakea observatories
• The four State of Hawaiʻi Auditor reports
• OMKM’s 2017 Annual Report to the Board of Land and Natural Resources regarding the Status of the Implementation of the Comprehensive Management Plan
• Contracts and agreements between OMKM and tour operators
• Establishment and funding of accounts held by RCUH
• Capital asset listings for reasonableness and appropriate accounting for depreciation (OMKM and MKSS)
• Minutes from meetings of the Maunakea Management Board and MKSS Oversight Committee
• MKSS invoices to the observatories and OMKM, noting the services performed, billing amount, date of services, etc.
• MKSS shared expense allocation methodology by cost center
• UH Foundation accounts related to Maunakea
• Other relevant documents as deemed appropriate

The UH Office of Internal Audit also toured the university’s facilities on Maunakea, including the Visitor Information Station; lodging, dining and administrative facilities at Halepōhaku, the mid level facility, and observatories.

Audit recommendations and management responses

The audit made several recommendations. Here are summaries of each recommendation and managementʻs response:

1. MKSS should consider consulting and collaborating with RCUH to determine whether accounting system enhancements are available to allow for a more efficient recordation of transactions

• Management’s Response: We concur and have implemented recommendation.

2. Internal Audit noted that payroll registers for historical fiscal years (in excess of one year) are not maintained by RCUH. Accordingly, MKSS should monitor the status of RCUH’s proposed system enhancement to archive historical payroll registers.

• Management’s Response: We concur and are implementing this recommendation.

3. MKSS should consider improving its documentation in regards to transfers between cost centers to ensure the flow of financial information is complete and accurate.

• Management’s Response: We concur. MKSS has implemented additional budget codes within its internal accounting system to more clearly document and track transfers between related cost centers.

4. In connection with the process of obtaining a new land authorization, OMKM and the observatories should discuss allocating a portion of Ranger Program costs to all observatories given the increase of these costs since 2000.

• Management’s Response: We agree that the Maunakea Observatories should share in the costs of the Ranger program in the future.

5. Determine if the commercial tour operator per passenger charge ($6) is sufficient to recover the costs incurred by OMKM and MKSS.

• Management’s Response: OMKM is working with the UH Mānoa School of Travel Industry Management on a study to answer this question.

6. The UH Institute for Astronomy should consult with the Financial Management Office to determine the applicability of Government Accounting Standard Board Statement No. 83, Certain Asset Retirement Obligations related to the future decommissioning of the four observatories owned by the university.

• Management’s Response: Management recognizes the auditor’s advisement regarding accounting standards.

The complete audit, including findings, conclusions and response (PDF).

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SA: Mauna Kea finances clean in UH internal audit