State Auditor Suspends OHA Audit

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Ka Wai Ola

In December, Hawaiʻi State Auditor Les Kondo announced the suspension of his audit of OHA and its Limited Liability Corporations, threatening $3 million in state general funds for Native Hawaiians.

Last year, the Legislature passed a law that prohibits the release of OHA’s $3 million general fund appropriation for fiscal year 2021 until the state auditor completes an audit. Since then, OHA fully cooperated with the state auditor, timely providing him with all 937 documents he requested, including executive session Board meetings minutes that were redacted to protect attorney-client privileged information.

The state auditor said he was suspending the audit until OHA provides him with unredacted meeting minutes.

In response to the state auditor’s suspension of his audit, OHA Chair Colette Machado and OHA Vice Chair Brendon Kaleiʻāina Lee released the following statement:

In 2019, the Legislature approved OHA’s budget act with the condition that the agency’s second fiscal year of general funds cannot be released and used to benefit the Native Hawaiian people until the State Auditor submits an audit report to the Legislature.

Since then, OHA has timely provided the State Auditor with all documents requested, as we have always done for each of the regular audits we undergo every four years with the State Auditor. Specifically, OHA provided the State Auditor with minutes of all executive session meetings he requested. Certain portions of those meeting minutes were redacted because they are protected by the attorney-client privilege codified as Hawaiʻi Revised Statutes Chapter 626, Rule 503.

The authority the State Auditor attempts to exert under the guise of Hawaiʻi Revised Statutes 23-5 is unprecedented in scope even for audits conducted by the State Auditor.

The Honolulu Authority for Rapid Transportation (HART) also provided the State Auditor with redacted executive meeting minutes when it underwent an audit review. We note this did not prevent the State Auditor from completing its audit of HART (Report No. 19-03). We are disappointed that under the same circumstances, the State Auditor chose to complete its audit of HART but has chosen to not complete OHA’s audit.

We find it unfortunate that the State Auditor is using an unprecedented interpretation of his powers and has now unilaterally decided to not fulfill a legislative mandate and to instead play politics with critical general funds for Native Hawaiians.

To be clear, the State Auditor could present a situation where a court could decide if it agrees with his unprecedented interpretation of his power. But the State Auditor is not doing this. Instead, he has chosen to not do his job.

Nevertheless, we hope to work with the Legislature this session to ensure that programs and services to Native Hawaiians continue uninterrupted. In addition, we look forward to continuing to work with the State Auditor.

It’s important to recognize that OHA is constantly audited, by the state auditor (every four years as required by law), annually by an independent auditor, and most recently by a top ten national accounting firm, CliffordLarsonAllen LLP (CLA). OHA has a record of fully cooperating with these audits.

And, we are proud of our historical record of making meaningful improvements in how we serve our beneficiaries as a result of past reports of the State Auditor. We will approach implementing the recommendations made by CLA the same way we do with all audits.

The trustees also noted that OHA has a strong history of making improvements based on past state audits, partially or fully implemented 72 of 73 recommendations from the most recent three state audits.

As Ka Wai Ola went to press, OHA Administration was scheduled to present a Recommendation Implementation Plan on the CLA Report to the OHA Board on January 22.