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The Honolulu Advertiser

Posted at 12:00 p.m., Monday, September 9, 2002

Audit shows errors in homelands accounts

By Mike Leidemann
Advertiser Staff Writer

The Department of Hawaiian Home Lands has accounting deficiencies of "the worst possible type" that could cost the state and taxpayers millions of dollars, according to the state auditor's office.

A report released today says the department does not have an adequate way to determine its allowance for doubtful accounts and can't provide the necessary details to support the figures in its own financial statements.

The auditor's office also found that the department incorrectly recorded $1.8 million in the wrong accounting period and has failed to ensure that all departmental accounting polices and procedures are in place.

"This could cost the state and Hawai'i's taxpayers millions of dollars; also, this could cost qualified eligible beneficiaries the opportunity to receive assistance because loan moneys are tied up in delinquent loans that are unlikely to be repaid," state auditor Marion Higa wrote in the summary of the audit, which covers the fiscal year July 1, 2000, to June 30, 2001.

The Department of Hawaiian Home Lands was formed 80 years ago to place eligible Hawaiians on 203,500 acres of land.

Among the other problems found in the audit:

• The department does not enforce written collection policies for its outstanding loans.

• Documentation for follow-up on delinquent loans is not maintained consistently.

• The department has failed to to maintain details of its guarantees of up to $50 million in loans originally made by other agencies.

Higa recommended an overhaul of the department's accounting procedures, including new "internal control policies and procedures" that would ensure that all expenditures and liabilities are properly recorded.

Department of Hawaiian Home Lands officials disagreed with the majority of the findings and recommendations of the audit, Higa noted.