HDOT audit finds discrepancies

LIHUE — The Hawaii Department of Transportation’s Highways Division in fiscal year 2018 did not review capital improvement projects in a timely manner, incorrectly classified federal expenditures and violated cash management requirements by drawing funds from a federal agency prior to paying a subcontractor, according to a report issued by the Hawaii State Auditor’s Office.

An independent audit conducted on behalf of the state auditor assessed the Highways Division’s presentation of financial statements through June 30, 2018 and identified “a number of errors in supporting documentation” made by HDOT administrators.

Auditors reviewed 25 HDOT projects in progress where little or no activity had occurred in the prior two fiscal years and found that all but five were categorized inappropriately. Twenty of the selected projects “were deemed to either have been placed in service or were canceled,” the report said.

Some of the errors had been caught and recorded as proposed audit adjustments by HDOT management, but Highways Division administrators did not catch over $12 million in misappropriated or improperly transferred funds, according to the audit.

The auditor’s report also noted a trend that “could be indicative of a larger internal control issue.” Auditors found several discrepancies in adjustments made by HDOT management totaling roughly $20 million, which could potentially allow for “material misstatements of the financial statements.”

The cause of the issue, according to the audit, was that office personnel and contract accountants previously responsible for preparing year-end financial statements were assigned to other tasks, like account reconciliations or financial analyses, and due to expedited reporting deadlines the tasks were not able to be completed in a timely manner.

These issues were exacerbated by an “aged” accounting system and “an overall lack of personnel resources caused by retirements and the difficulty of filling vacancies,” the report found.

The audit also found that roughly half of the $5.9 million total “highway safety cluster expenditures” had been improperly reported or incorrectly classified in the Highway Division’s annual report on the expenditure of federally-awarded funds. Auditors attributed the error to “decentralized” grant management that relied on incomplete information from the Motor Vehicle Safety Office.

Finally, the audit revealed that over $3.6 million in reimbursible expenditures were not paid by the Highways Division until after the funds were received from the federal awarding agency. That number represents over a third of the total amount of the division’s reimbursement requests inspected by auditors.

The discrepancy left the division out of compliance with cash management requirements but was found to be a simple misinterpretation of guidelines provided by the federal awarding agency.

  1. SeemsRight March 27, 2019 4:47 pm Reply

    The had 5/25 correct seems like a correct answer to me. You see 5 county or state employees and usually only 1/5 is working so the 20% efficiency and accuracy is a correct assessment.

    Yet the state wants to raise taxes (mileage tax) to repair roads and highways. Well this audit clearly says that they aint doing much with the money but paying overpriced and rebuying materials that they already bought. Is there going to be a criminal case involved in this audit? Usually fines and financial penalties come about when these fraudulent discrepancies occurs.

    So the suspicious new mileage tax creates a revenue that the Feds wouldn’t have as much vested in auditing. The state can control the money or in control the money that Ian siphoned. The fix is in and the scheme is set.

    The funny part is that Hawaii wants to go green and bam plastics and now they want to go after electric cars because they reduce fossil fuel consumption. That’s a hypocritical message but there’s actually more to it and doesn’t pass the smell test.

    Feds should be all over this and who is conspiring and colluding to create this bill. Was it one of the many unions or contractors that profits from state DOT fraud? I guarantee that if investigated, this will become another huge public corruption case.

  2. SCG March 28, 2019 5:08 am Reply

    Is the auditors report a public document? If so could you include a ink in your article? For anyone who is really interested in Facts ,this is the only way to get the real story. My takeaway from the article is that DOT accounting office is under staffed and/or under qualified and I would bet their requirements for compliance are overly complicated. Governments do this to minimize fraud and one reason government projects cost so much , (red tape). In response to SEEMS RIGHT, I did not read FRAUD anywhere and unless you read something I didn’t or the actual audit, I think you may have added a lot of conjecture and personal ideology into your response that isn’t really helpful. having said that you may be correct in your take , do you have experience working at DOT or some other qualification that would give you more insight? That’s a real question.
    I do hope that people all over will start to engage in more factual based dialogue. Aloha!

  3. Uncleaina March 28, 2019 11:41 am Reply

    See? This is why our roads suck – or state workers are stealing our tax dollars! Millions of dollars missing? “Antiquated accounting system”? Why? Wonder why they are raising the GET even though there *should* be plenty of funds? This story explains it – but apparently no one cares.

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