To the University of Hawai‘i Board of Regents and University of Hawai‘i at Mānoa Vice Chancellor for Administration, Finance and Operations

From Glenn Shizumura, Director, Office of Internal Audit April 24, 2012 (Released by UH February, 2013)

This report supplements a June 2011 report prepared by the Office of Internal Audit (Internal Audit) assessing the Office of Facilities and Grounds (OFG) implementation of recommendations contained in an Accuity LLP (Accuity) agreed-upon procedures report dated October 12, 2009. Internal Audit’s June 2011 report concluded that 50% of Accuity’s recommendations were implemented. However, pursuant to correspondence dated October 18, 2011 and a presentation at the October 26, 2011 Board of Regents’ Committee on University Audits (Audit Committee) meeting, OFG personnel stated that all recommendations were implemented. Accordingly, this report evaluates this statement regarding OFG’s management and controls with respect to inventory. This report also addresses OFG’s management and monitoring of financial operations, in addition to certain human resource matters, such as employee monitoring and work performance evaluation.

This report is organized to provide historical information on OFG reports issued in previous years and the status of recommendations noted in those reports, discussion of the timing of Internal Audit’s current year work, and related findings, observations and conclusions. The significant findings and observations by audit area are summarized below:

1. Inventory

a. Improperly valued – lacked documentation supporting the valuation for inventory items selected for testing.

b. Control deficiency regarding inventory existence – unable to provide work orders and invoices supporting the change in inventory quantities between the date of OFG’s physical inventory counts (September 30, 2011) and Internal Audit’s inventory counts (December 9, 2011).

c. Potential obsolescence – lacked analysis and evidence supporting inventory usage, turnover and optimum quantities.

2. Financial Reporting

a. Lack of periodic analysis of OFG’s department wide financial information to verify accuracy and completeness – evidenced by the five (5) plus months of preparation time to provide Statements of Revenues and Expenses for the years ended June 30, 2011 and 2010 and the reasonableness of OFG’s responses resulting from Internal Audit’s inquiries.

b. Monthly expenditure reports not reconciled to annual report – evidenced by OFG’s inability to reconcile monthly expenditure reports to the Statements of Revenues and Expenses. OFG was also unable to provide documentation supporting their assertion of monthly expenditure report review by OFG’s Budget Committee.

3. Human Resources

a. Unapproved organization structure - operating structure does not conform to the University of Hawai'i at Manoa Chancellor approved organization chart dated July 1, 2011.

b. Lack of written expectations- the OFG Assistant Vice Chancellor's annual overall OFG expectations are not written. Accordingly, these .annual expectations cannot be. communicated to all employees and evaluating employees against these expectations are not possible.

c. Annual performance evaluations not prepared - extremely poor performance in the preparation and communication of annual evaluations for Civil Service employees. The most recent annual evaluation for certain employees date back to 1998.

d. Lack of objective monitoring of employee work productivity - monitoring of employee work productivity is primarily subjective. Internal Audit was informed that employees cannot be required to prepare timesheets.

Internal Audit will review and report on OFG's project management and procurement processes in a separate report planned for fiscal 2013.

Read … FULL TEXT OF AUDIT REPORT

SA: UH faulted over inventory control--An official challenges an April 2012 audit critical of the Manoa facilities office