The most frequent question I am asked by beneficiaries is “Where is the forensic audit?” While the term “forensic” is just an informal nickname, we all know that we are talking about the independent audit for fraud, waste and abuse, which the Trustees authorized back on February 8, 2017.
Thanks to a May 22, 2018 Committee on Resource Management update, I can now tell you the shocking truth. After over a year of endless delays and obstacles, the independent audit has not even started! That’s right. As of the deadline for submitting this article, we do not have a signed contract with any auditing firm to perform the work!
As chair of the Audit Advisory Committee, I’ve done everything within my power to honor the wishes of beneficiaries that we conduct this audit. And I can assure you that Trustee Hulu Lindsey, Chair of OHA’s Committee on Resource Management, has tirelessly supported and advocated for it too.
Unfortunately, OHA’s execution of the procedural hoops to jump through has taken place at a snail’s pace.
Although trustees unanimously approved the independent audit, we have heard excuses over the past several months as to why it is not necessary.
Clean bill of health?
One excuse is the claim that OHA has had many annual audits, and these audits have, according to OHA’s CEO and some trustees, given OHA a clean bill of health. Don’t be fooled! The reality is that these audits are merely required “financial statements” audits. They simply show that our financial statements are in order, but are not designed to systematically look for fraud, waste and abuse.
Don’t believe the State’s scathing audit of OHA?
Another excuse is the claim that the recent State Auditor’s reports on OHA (which are available at https://files.hawaii.gov/auditor/Reports/2018/18-03.pdf and https://files.hawaii.gov/auditor/Reports/2018/18-03.pdf) are mistaken in their scathing criticism of OHA. But to that, I simply ask, “Who are you going to believe?” Please see my Ka Wai Ola May 2018 article, entitled “Why the State Audit is Good Medicine for OHA,” for a fair analysis. The reason the State has an independent auditor look into agencies is because there needs to be an external watchdog.
So why has the Independent Audit been delayed?
Perhaps it is best to consider what the independent audit is going to look into, and ask “who would be threatened by a thorough investigation?” Based on the original action item approved by the trustees, the independent audit will look for fraud, waste and abuse in the following areas:
- OHA’s limited liability companies
- All contracts over $100,000 and a sampling of smaller contracts
- Incidents that have raised red flags with other agencies, such as the State Procurement Office.
Presumably, if there is nothing to hide in these areas, there should be collaborative cooperation among trustees and administration, who are the top stakeholders with regards to the independent audit. Unfortunately, we won’t know what, if anything, is being hidden until the independent audit is performed. What we do know is that beneficiaries deserve to be given the truth.
The time has come for beneficiaries to speak up and hold your trustees accountable. You can call or write trustees, or you can come to our public Board meetings to demand that the independent audit be made a top priority.