Ka Wai Ola - Office of Hawaiian Affairs, Volume 18, Number 3, 1 Malaki 2001 — Auditor's Report: Review, assess, implement and move forward. [ARTICLE+ILLUSTRATION]

Auditor's Report: Review, assess, implement and move forward.

Aloha mai kākou, e nā 'ōiwi o Hawai'i. This fourth KWO article in a series of 48 highlights OHA's Board response to the State Auditor's Draft Report. OHA's response was completed with participation and input from OHA staff, the Administrator and Trustees. On Feb. 9, with Trustees Apoliona, Cataluna, Dela Cruz, Machado, Stender and Waihe'e voting yes; and Trustees Akana, Hee and Ota voting no; Trustees approved the 30 page "OHA Response to the State Auditor," hand-delivered to State Auditor Higa within the specified deadline. Included in the transmittal were individual documents from Trustees Akana and Hee, and Administrator Ogata. At this writing, the Auditor is finalizing the "confidential" report for public release. The Board-approved response to the Auditor, however, is public because the Board approved the response in open session. Seven areas of improvement are recommended by the audīt: 1) OHA's role in improving conditions for all Hawaiians. The OHA response notes, in part: "In January 2001. the OHA Board of Trustees declared strategic planning as an urgent priority for the year ... Programs will be developed

to meet those needs and budget will be developed within the OHA Spending Policy limits. OHA will assume its clearing house role in the Native Hawaiian Comprehensive Master Plan."

2) Fiduciary duties and management of OHA's investments. The OHA response notes, in part: "All issues related to investment and fiscal management and finan- 1 eial controls mentioned in this audit indicate a necessity for an internal auditor to ensure eomplianee to existing policies and the further development of appropriate policies to assist Trustees ...", and eommits to establishing an

internal auditor position in the first quarter of fiscal year 2002, (whieh starts July 1, 2001); referring policies for amendment or creation to Board committees for action, and finalizing of the Investment Custodian contract before the end of March 2001. 3) Timely inclusion of items on the Board agenda, an issue raised in the 1997 State Auditor's Report and not implemented. The OHA response notes, "By March 2001, the Committee on Policy and

Planning will promulgate policies ... to adopt time limits within whieh the Board of Trustees Chair must plaee a committee's recommendation to the board on the full board's meetine aeenda."

4) Management of grants program. The OHA response notes, "To ensure that services are provided to the Hawaiian community, OHA has established an internal monitoring process for grants. With this monitoring process enacted, OHA shall obtain all information via quarterly reports, interviews, and/or site visits ensuring that services are provided to native Hawaiians and

Hawaiians before disbursement of funds." 5) Native Hawaiian Revolving Loan Fund. The OHA response notes, in part, "continuing review of credit reports with eaeh loan application, comprehensive write ups, including analysis of financial statements, projections and market/business plans," disbursing loan funds only after execution of closing documents and use of checklists, adhering to the NHRLF operations manual in

securing collateral, assuring that collateral is not the only reason a loan is not approved, improving collection processes, and producing "accurate monthly delinquency reports." 6) Policies and procedures for effecting organizational change. The OHA response notes that the Board will discuss state administrative directives 90-01 and 95-06, the audit recommendations, and adopt guidelines on reorganization in 2001. 7) Employee grievance process. OHA's response, says, "OHA employs the complaint process contained in the OHA Policy Against Sexual and Other Forms of Harassment, adopted by the Board in 1998. However, the response states that OHA will look at developing an employee grievance procedure. OHA's response to the Auditor cites corrective action predating the draft audit report, as well as additional areas requiring immediate attention. OHA review ^ of need for new policies, guidelines and implementation will be scrutinized by periodic review by the Board of Trustees. OHA must now move forward. ■

OHA's response to the Auditor cites corrective iction predating the draft audit report, as well as additional areas requiring immediate attention.

Haunani Apoliona

I Trustee, At-large