Posted on: Thursday, April 21, 2005

Audit blasts ag department

Associated Press

The state Department of Agriculture lacks formal written policies and procedures for many of its basic processes and management functions, according to a financial audit released yesterday by state Auditor Marion Higa.

The audit of the fiscal year ended June 30, 2004 faulted the administration of agricultural loans, certain accounts receivables and contract management.

Higa, whose office conducted the audit with the certified public accounting firm of Grant Thornton LLP, said testing of the agricultural loan process revealed a number of deficiencies, including loan file and loan system maintenance and reconciliation of internal and external loan reports.

The department also failed to comply with generally accepted accounting principles in the calculation of its allowance for agricultural loan losses, Higa said.

"In another material weakness, we found that the department's management of its accounts receivables is ineffective," she said.

The department's year-end financial reporting process was also determined to be ineffective, according to a summary of the audit.

The department lacked adequate management controls over cash receipts and disbursement as well as annual inventory counts, and had deficient procurement procedures that led to noncompliance with certain provisions of the Hawai'i Public Procurement Code, the summary said.

With certain reservations, the department concurred with the findings and recommendations of the audit, Higa said.

It provided additional information to explain current procedures and corrective actions planned or already taken to address identified deficiencies, she said.

"Most of the suggestions made by the auditor are easily remedied and have already been addressed," department spokeswoman Janelle Saneishi said. "Review and updating of the policies and procedures of the divisions within the department are already being conducted."