Audit report finds familiar problems

LIHUE — A set of annual audit reports found that Kauai County officials are still struggling to address longstanding financial and record-keeping deficiencies that were raised as red flags over the past several years.

”It’s deja vu,” Council Chair Mel Rapozo said about the results of the audit conducted by Honolulu-based accounting firm N&K CPAs, Inc. on transactions made during the 2014 fiscal year.

The trio of audit reports found five countywide issues, at least three of which appeared in previous audits of county finances, including inaccuracies in purchasing procedures and mishandled vacation and sick leave records.

Among the findings were repeated errors in the different manual processes used by departments to maintain and report vacation and sick leave records.

In 25 of the 60 records from six departments randomly selected and inspected by auditors, vacation or sick leave hours recorded in an employee’s leave log were not properly supported by their leave application forms.  

These discrepancies occurred in eight of the 10 records examined from the county’s Agency on Elderly Affairs, nine of the 10 analyzed from the Department of Planning, and eight of the 10 records reviewed from the Department of Public Works.

No errors, however, were found among vacation and sick leave records randomly selected and analyzed from the Office of the Mayor, Kauai Transportation Agency and Kauai Fire Department. 

”Payroll is a very complex situation when it comes to government, because we have 21 (vacation days) and 21 (sick days) — that’s a lot of days off for a lot of employees,” Council Vice Chair Ross Kagawa said. “If we don’t get a handle on a good system in each department, like the fire department, it’s going to be haywire. I understand that we know there’s a problem, but I tell you, it’s pretty scary to sit here and know that in eight of 10 cases there’s missing paperwork.” 

Another recurring issue, according to the reports, was oversight in the county’s purchase card (pCard) system, which was rolled out two years ago to several departments and agencies for handling transactions less than $1,500.

County policy requires employees with the cards to document quotes for purchases over $500 and pre-approve any card purchase through a designated coordinator. 

Errors were found in six of the 40 card transactions from the 2014 fiscal year examined randomly by auditors, including two instances where there was no evidence that purchases were approved prior to being made and two more where approval was done after the purchase was made.

Though these errors have been detected in audits every year since the pCard program was rolled out, county officials have been addressing them by training employees as the use of pCards expands, Assistant Chief Procurement Officer Ernest Barreira said. 

County Finance Director Steve Hunt said officials are also working to roll out an automated system that handles vacation, sick leave and comp time records by the 2016 fiscal year. 

Rapozo said more must be done to hold employees and officials accountable for oversights. 

”I guess what I would like to see in the fix-up plan is that we identify there was a failure by a supervisor who we counseled and it’s not going to happen again, but it has — it has been going on for way too long,” he said. “A simple paper that’s missing is not a computer problem — that’s a human error.”


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