Friday, June 05, 2020
Hawai'i Free Press

Current Articles | Archives

Thursday, March 28, 2019
Auditor Rips Rail Oversight: DAGS 'Busy Work Gives False Sense of Assurance'
By Hawaii State Auditor @ 6:35 PM :: 3459 Views :: Ethics, Rail

Review of the Department of Accounting and General Services’ Verification of the Honolulu Authority for Rapid Transportation’s Invoices

A Report to the Governor and the Legislature of the State of Hawai‘i

Hawaii State Auditor, Report No. 19-11, March, 2019

In this report, we examined the policies, procedures, and controls implemented by the Department of Accounting and General Services (DAGS) to assess whether invoices submitted by the Honolulu Authority for Rapid Transportation (HART) are eligible for payment using tax revenues. We found that DAGS fundamentally misunderstands its responsibilities under Act 1, performing unnecessary busy work that not only wastes time and money but also increases the risk of improper payment. Without administrative rules and documented procedures, there is a substantial risk DAGS’ staff auditors’ reviews are arbitrary and inconsistent.

Auditor’s Summary

IN REPORT NO. 19-11, Review of the Department of Accounting and General Services’ Verification of the Honolulu Authority for Rapid Transportation’s Invoices, we examined the policies, procedures, and controls implemented by the Department of Accounting and General Services (DAGS) to assess whether invoices submitted by the Honolulu Authority for Rapid Transportation (HART) are eligible for payment using state tax revenues. The Hawai‘i State Legislature limited the use of those state tax revenues to pay the rail project’s “capital costs” and further identified certain specific expenses that cannot be paid for through the Mass Transit Special Fund.

What We Found

Act 1 requires DAGS to verify that invoices submitted by HART contain only eligible capital costs and authorizes DAGS to promulgate administrative rules to determine how to do so. However, we found that DAGS has no intention of creating rules to guide its invoice verification responsibilities and establish the procedures HART must follow to obtain payment for its capital costs. We also found that DAGS does not provide training for its staff auditors, nor does it have formal policies and procedures in place to guide their work. According to the DAGS audit supervisor, the staff is not even given detailed instructions on how to construe the costs contained in HART’s invoices. DAGS did put Invoice Verification Programs in place to review HART’s invoices, but they reflect a poor understanding of construction practices and the way work is invoiced, leaving DAGS unable to reasonably assure that the costs can be paid out of the special fund.

We found DAGS is performing unnecessary, duplicative, and counter-productive audit procedures that mimic work already conducted by HART’s contract administrators. Rather than ensuring adequate review of each invoice HART submits, DAGS staff spend most of their time verifying the work reflected in the invoices was actually performed and the quantities of materials on the invoice were actually delivered.

Why did this occur?

We found that DAGS misunderstands its core responsibility under Act 1, which is to verify that the invoices submitted by HART are eligible for payment, not to verify that the invoices are free of mathematical errors and that HART complied with its own invoice review and approval process. However, without administrative rules and detailed instructions, DAGS’ implementation of its verification duties is opaque and subject to change without notice. Similarly, without defined terms, reviews can vary from auditor to auditor. For instance, Act 1 states that the Mass Transit Special Fund cannot be used to pay for “administrative or operating, marketing, or maintenance costs, including personnel costs,” yet DAGS has not provided formal guidance to its staff or HART on how it construes those vague terms, increasing the risk of improper payment.

Furthermore, DAGS staff auditors are spending so much time “re-performing” tasks HART has already completed that they cannot review all the costs HART submits for payment. Instead, DAGS auditors spot check just a small percentage of the costs included on each invoice, an approach that does not fulfill DAGS’ responsibility to verify that each cost submitted by HART can be paid for with state revenues.

Why do these problems matter?

In 2017, the Legislature provided HART with additional state funding to complete construction of its rail project – a project that has seen its estimated cost balloon from $5.122 billion to $9.188 billion. However, the Legislature explicitly restricted HART from using the state funds for certain types of expenses, such as administrative costs, including its personnel expenses. Without administrative rules and documented procedures detailing how to perform their verification responsibilities, there is a substantial risk DAGS’ staff auditors’ reviews are arbitrary and inconsistent. In addition, DAGS’ cursory invoice reviews substantially increase the risk of approving costs that do not qualify for payment with state revenues. DAGS’ review efforts provide nothing more than a false sense of assurance that revenues from the Mass Transit Special Fund are spent as the Legislature intended.

read … Summary or Full Report  

SA: HART work went off the rails, report says

CB: Latest Audit: Agency ‘Arbitrary,’ ‘Inconsistent’ In Reviewing Rail Costs


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


808 Silent Majority

808 State Update AM940


ACA Signups Hawaii



Alliance Defending Freedom

Aloha Life Advocates

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

American Mothers of Hawaii



Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Audit The Rail

Ballotpedia Hawaii

Better Hawaii 

Blaisdell Memorial Project

Broken Trust 

Build More Hawaiian Homes Working Group

CAFR Hawaii

Castaway Conservative

Children's Alliance Hawaii

Children's Rights Institute

Christian Homeschoolers of Hawaii

Citizens for Recall

Cliff Slater's Second Opinion

Coffee Break

CSIS Pacific Forum

DAR Hawaii

DVids Hawaii

E Hana Kakou Kelii Akina

E Māua Ola i Moku o Keawe

Farmers For Choice Hawaii


Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Get Off Your Butts!

God, Freedom, America

Grassroot Institute

Hawaii Aganst Assisted Suicide

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crime Victims' Rights

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defending Marriage

Hawaii Defense Foundation

Hawaii Families for Educational Choice

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Firearm Community

Hawaii Fishermen's Alliance

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii Meth Project

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Right to Life -- Big Island

Hawaii Right to Life -- Oahu

Hawaii Shield Law Coalition

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation

HI Coalition Against Legalized Gambling



Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Homeless Crisis

Honolulu Navy League

Honolulu Traffic

Horns of Jericho Blog

House Minority Blog

House Republican Caucus YouTube


Hump Day Report

I Vote Hawaii

If Hawaii News

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes


Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii


National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii


OHA Lies

Opt Out Today

Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons 

Pro-GMO Hawaii


Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SIFE Remington

SIFE W. Oahu 

Sink the Jones Act

Smart About Marijuana--Hawaii

St Marianne Cope

State Budget Solutions Hawaii

State Policy Network

Statehood for Guam

Tax Foundation of Hawaii

The Harriet Tubman Agenda

The Long War Journal

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Truth About Trade & Technology - Hawaii

UCC Truths

Union Members Know Your Rights

US Tax Foundation Hawaii Info

Valor in the Pacific

VAREP Honolulu

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii