City misses deadline, but auditors press on
By Johnny Brannon
Advertiser Staff Writer
The city missed a deadline for submitting a major annual audit yesterday because accountants found errors in records provided by city officials.
But city budget and finance director Ivan Lui-Kwan said unaudited financial statements had been sent to federally sanctioned records centers so no disclosure agreements with bondholders would be violated.
LUI-KWAN
Accountants warned earlier last month that they would not be able to finish the city's Comprehensive Annual Financial Report on time because of problems they found with the city's numbers.
In a memo to the City Council about the delay, city auditors said the problems could "have serious consequences for the city's bond issuances." Council members also had asked whether any federal grants would be jeopardized.
Private bond raters say the delay will not lead immediately to any downgrade of the city's excellent bond ratings, but a lengthy holdup could cause problems. The U.S. Securities and Exchange Commission also said there would be no immediate penalty.
Lui-Kwan said no grants would be affected, but he did not know when the audit would be finished or how much the delays would cost. He said the task likely would take at least several weeks.
"The auditors, our staff and accountants have been working very diligently," he said. "I know they're hoping to finish up quickly, but they haven't given us a time."
A similar report was completed later than expected last year and cost an extra $37,000 because of problems found by auditors, according to city records.
Lui-Kwan, who has overseen the city's finances since November, said the delay this year is due largely to new requirements that the city inventory and assess all equipment and fixed assets, such as buildings and bridges.
"In a mammoth organization like the City and County of Honolulu, you've got information tucked away in different places, in all the departments and divisions," he said. "It takes time to gather that information and put it together in a manner for the auditors to analyze."
The city has supplied the information and is now responding to questions about the data as the audit progresses, Lui-Kwan said.
All cities that issue bonds must file audited annual reports with four Nationally Recognized Municipal Securities Information Repositories. Lui-Kwan said it was the first year he knew of that Honolulu was late making its submission.
Reach Johnny Brannon at jbrannon@honoluluadvertiser.com or 525-8070.
