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Tuesday, April 16, 2019
Auditor: AG's Child Support Fund Still Running Deficit
By Hawaii State Auditor @ 9:07 PM :: 5163 Views :: Hawaii State Government, Law Enforcement

Financial and Compliance Audit of the Department of the Attorney General

From Hawaii State Auditor, April, 2019 (excerpts)

The auditors from Egami & Ichikawa CPAs, Inc. identified two deficiencies in internal control over financial reporting or other matters that are required to be reported in accordance with Government Auditing Standards. There were no findings that were considered to be material weaknesses in internal control over compliance in accordance with the Uniform Guidance.

Findings

THERE WERE NO MATERIAL WEAKNESSES and two significant deficiencies in internal control over financial reporting that are required to be reported under Government Auditing Standards.

• Deficit in Child Support Enforcement Agency (CESA) agency fund balance of $655,000 needs to be resolved.

• Lack of adequate procedures to ensure that funds were properly encumbered. As a result, ATG paid $25,000 with fiscal year 2019 funds for fiscal year 2018 expenditures.

There were no findings that were considered to be material weaknesses in internal control over compliance in accordance with the Uniform Guidance.

The net excess of liabilities over assets of approximately $655,000 in the Statement of Fiduciary Net Position results from the Child Support Enforcement program and are due to uncollected recoupments due from custodial parents resulting from overpayments, and uncollected nonsufficient fund (NSF) payments due from non-custodial parents. The AG has requested funding from the Legislature to cover the deficit in the CSEA Agency Fund. (p50)

Prior Year Findings: (excerpt)

Since Federal regulations require disbursement of child support payments to custodial parents within two business days of receipt, CSEA disbursed amounts received without knowing whether the non-custodial parent had sufficient funds at the bank. Nonsufficient funds (NSF) checks rejected by the bank result in amounts due from non-custodial parents. Recovery of such funds were dependent on collecting from the non-custodial parent and not by reducing future child support payments to the custodial parent. Errors in the payment process gave rise to uncollected recoupments due from the custodial parent resulting from overpayment of child support payments. CSEA’s ability to collect such overpayment from the custodial parent by reducing future child support payments was limited. Over the years, the Agency trust fund monies have been used by CSEA to pay for all of the above items and as of June 30, 2017, obligations exceeded cash, resulting in a $1,273,000 deficit in the CSEA Agency Fund. The present deficit is being funded by the “float” created by outstanding uncashed checks ($2,864,000 over one year old) and from obligations due to parents not being immediately payable. Any recovery from parents for either NSF payments or overpayments of support is problematic. … (p67)

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