Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Department of Taxation

From Hawaii State Auditor, Report No. 17-10

Two special funds and three trust accounts did not meet criteria

OUR REVIEW OF FOUR SPECIAL FUNDS, two trust funds, and seven trust accounts of the Department of Taxation (DoTAX) found two special funds and three trust accounts did not meet criteria and should be closed or reclassified.

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. DoTAX did not have any revolving funds during our review period. This is our fifth review of DoTAX’s revolving funds, trust funds, and trust accounts. It is our first review of DoTAX’s special funds.

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 that DoTAX 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

DOTAX GENERALLY AGREED WITH OUR FINDINGS and will take appropriate action to close one special fund and three trust accounts that did not meet criteria and inform the Department of Budget and Finance of our recommendation to reclassify one special fund to a trust account. DoTAX will also comply with reporting requirements.

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