Audit of the Funds Appropriated for Bicycle Projects
From Honolulu City Auditor, April 16, 2015
Audit Purpose: This audit focuses on the funds appropriated for bicycle projects for the City & County of Honolulu. The Department of Transportation Services is responsible for managing Honolulu’s bike program. Results for our audit identified opportunities for improving the administration and management of the bike program in order to achieve the bike program’s goals, objectives, and priorities.
The audit objective was to determine why bike funding lapsed at such a high rate and received low priority. The audit sub-objectives were to:
(1) evaluate the administration of the city’s bike program;
(2) evaluate and assess the adequacy of the controls used to manage the bike project funds; and
(3) determine why bike project funds were lapsing.
As of August 2014, the city met 20 of 35 benchmarks in the Oahu Bike Plan and 5 were partially implemented. Since January 2013, several bike projects were started or completed and several bike initiatives were underway. Despite the progress, our office found that the Department of Transportation Services (DTS) could improve its operations by establishing formal policies and procedures; standardizing terminology and definitions; and strengthening coordination of bike activities, plans, and projects among various city agencies.
We found that bike project funds totaling $3.64 million in grants and appropriations had lapsed or were subject to de-obligation because project managers lacked accurate, complete and reliable information and were not properly managing bike program resources. Management started implementation of the recommendations before the final audit report was released.
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The city and Department of Transportation Services needs to better manage bike project funds and federal grants so the funds are used in a timely manner to attain the bike program goals, objectives, and priorities. As of December 2014, we identified over $3.64 million in bike related funds, grants, and appropriations that had lapsed or were at risk of lapsing. Prior to January 2013, over $3.2 million in city and federal funds lapsed. After January 2013, over $353,800 in bike funds lapsed.15 If the city funds continue to lapse and federal funds are de-obligated, the loss will adversely affect DTS and the city’s ability to achieve the goals, objectives, and priorities itemized in the O`ahu Bike Plan and the city charter priority for a pedestrian and bicycle friendly city. The city’s external auditors reported the administration of federal funds was a material weakness in the city internal controls. The external auditor also recommended that the city review its grant agreements to identify all program requirements and implement procedures to ensure compliance with the federal requirements.... (p29)
A material weakness is the most serious level of deficiency for internal controls and indicates a material noncompliance with federal program requirements cannot be prevented and corrected on a timely basis. (p33)
During our review, we confirmed that DTS and the city lacks adequate controls to comply with the federal fund requirements. For example, DTS and the city lack procedures for ensuring bike related projects are started and completed within the timeframes stipulated by the federal agencies. Without proper controls, DTS and the city are unable to monitor, track, and expend federal funds before the funds expire and risk losing the use of federal funds and grants.... (p33)
DTS contends no formal de-obligation of the funds occurred and the funds do not expire, therefore the funds have not lapsed. DTS could not provide copies of any federal grants that show the federal funds do not expire. Federal and state personnel responsible for distributing the bike grants stated although the funds have not been de-obligated, they were concerned the de-obligation could occur at any time. City bike project funds returned to the city bike and highway funds may not be available for the same bike projects in future capital budgets. (p42-footnote)