Ka Wai Ola - Office of Hawaiian Affairs, Volume 35, Number 5, 1 May 2018 — Aloha mai kākou, [ARTICLE+ILLUSTRATION]

Aloha mai kākou,

/ 'ŌLELO A KA LUNA HO'OKELE V ^ MESSAGE FROM THE CEO — . , 1

F I S C A L STEWARDSH I P AT OHA

For seven years rirnning, independent certified accountants have looked into the Office of Hawaiian Affairs' books and found them elean. A elean audit isn't normally something we'd brag about - it just affinns internally that we're going about our work reliably and responsibly. But in light of recent events, we know we need to heighten our beneficiaries' confidence in our fiscal stewardship - after all, it's their trust we're managing. We also want to answer calls for transparency from our beneficiaries and the general public. Eaeh year, OHA is required to have an independent audit of the hnaneial statements of the agency and its subsidiary LLCs. Since 2012, three different independent and licensed audit teams have combed through our financials and not one has cited material concems. The takeaway is that OHA's administration has been consistently compliant in following set accounting procedures and processes. This year, N&K CPAs, Inc„ conducted the audit, whieh was completed at Ihe end of March. It was a tedious process that involved review of internal controls, hnaneial reports, notes to the hnaneial statements and the management's discussion and analysis that highlighted any changes from the past year. It's a lot of work for our Resource Management - Financial Assets division but it offers a critical set of checks and balances that we know is essential to managing the trust wisely. It's important to note that we're not just spending money - we're also generating it. The strong performance of the Native Hawaiian Tmst Fund increased OHA' s net assets by more than $26 million. Our commercial properties at Kaka'ako Makai and Nā Lama Kukui are also doing well, and nearing full occupancy. By holding the line on spending, we ended the fiscal year $2.15 million under budget and

were able to more than double our fiscal reserve ffom roughly $2.09 million to $4.24 million. This reserve gives OHA flexibility to be responsive when urgent needs and unanticipated opportunities arise, N&K CPAs, a highly-reputable finn, was also tasked with providing an independent auditor's report that looked into the substantial federal funding OHA receives. A significant amount of this federal funding goes to the Native Hawaiian Revolving Loan Fund, whieh offers qualified beneficiarie

low-interest loans to increase the number of Hawaiians starting and expanding businesses, improving their homes, continuing their education and eon- ^

solidating their debt. OHA's loan progi"am is funded and overseen 1 the federal Administration for Native Americans. Last year, our loans team submitted a business plan to ANA that enabled us to increase the amount of credit we ean extend to our beneficiaries. And in more good news, Ihe default rate on OHA loans has decreased ffom 33 percent to 12 percent, thanks in part to increased technical support ,

from our loans staff who want our borrowers to succeed. As leaders of a public agency, we shouldn't shy away from questions about OHA's fiscal stewardship or react defensively or in anger. Our annual audits may not be particularly exciting or buzzworthy, but they present objective and verifiable tmth something we could use more of in this day and age, ■ 'H 9ii iV»n nō mp» 9lr»Vi9 9 m<^ 1^9 'ni^'i'n

Kamana'opono M. Crabbe, Ph.D. Ka Pouhana/Chief Executive Officer