Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Department of Human Resources Development
Hawaii State Auditor’s Report No. 17-09, November, 2017
All funds met criteria
OUR REVIEW OF ONE SPECIAL FUND AND TWO TRUST FUNDS of the Department of Human Resources Development (DHRD) determined that the funds met criteria and should be continued.
Section 23-12, Hawai‘i Revised Statutes (HRS), requires the Auditor to review all existing special, revolving, and trust funds every five years. Reviews are scheduled so that each department’s funds are reviewed once every five years. Although not mandated by statute, we included trust accounts as part of our review. DHRD did not have any revolving funds or trust accounts during our review period. This is our fifth review of DHRD’s revolving funds, trust funds, and trust accounts. It is our first review of the special fund of DHRD.
We used criteria developed by the Legislature and by our office based on public finance and accounting literature. For each fund, we present a five year financial summary, the purpose of the fund, and conclusions about its use. We did not audit the financial data which is provided for informational purposes. We do not present conclusions about the effectiveness of programs or their management, or whether the programs should be continued.
Reporting shortfall
WE ALSO NOTED DHRD did not file statutorily required reports for non-general funds and for administratively created funds. Accurate and complete reporting will greatly improve the Legislature’s oversight and control of these funds and provide increased budgetary flexibility.
Agency response
DHRD GENERALLY AGREED WITH OUR FINDINGS, except our conclusion on the reporting requirements for the two trust funds. DHRD asserted that the two trust funds “are not controlled by the legislature, do not play a part in budgetary flexibility and have no ‘excess moneys’ that can be transferred to the general fund.”
We disagree with DHRD. The statutory requirements that DHRD report to the Legislature are unambiguous and do not exempt these trust funds. It continues to be our conclusion that DHRD must comply with reporting requirements of the statutes....
State Deferred Compensation Plan Trust Fund
End of Year Balance -- $1,820,726,000
This fund continues to serve the purpose for which it was created and meets the criteria for a trust fund. Created in 1983, this fund is used to hold employee contributions to and any investment earnings from the Deferred Compensation Plan. The Plan is overseen by a board of trustees, which contracts with Prudential Retirement to serve as the Plan’s third-party administrator. Prudential Bank & Trust serves as the Plan’s trustee, and State Street Bank provides sub-custodial services to Prudential Bank & Trust on behalf of the Plan....
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