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Friday, January 4, 2013
Audit: 38% of Reimbursements Show ‘Discrepancies’, ‘Honolulu Council Could be Exposed’
By News Release @ 3:41 PM :: 5543 Views :: Honolulu County, Ethics

Audit: 38% of Honolulu Council Meal Reimbursements Show ‘Discrepancies’, ‘Council Could be Exposed’  

From Honolulu City Auditor

The Council Administrative Manual (CAM) and Annual Contingency Allowance (ACA) policies were revised in May 2011….The revisions, however, did not include some important best practices for ensuring reimbursement claims were valid. As a result, the ethics commission recommendations were not fully implemented. In our opinion, a process for denying reimbursements and other best practices are needed to prevent violations from occurring…. (p10)

Absence of Best Practices Result in Larger Losses: The “2012 Report to the Nation on Occupational Fraud and Abuse” issued by the Association of Certified Fraud Examiners reports organizations that lacked the best practices had fraud losses that were approximately 45 percent larger than organizations with the recommended best practices….

Our sample of ACA expenses and reimbursements showed that most claims complied with the ACA policy requirements.  Exceptions, however, were found in meal reimbursements, missing forms, and a beverage reimbursement. Implementing best practices adopted by other entities could strengthen the current ACA policy and reduce the potential for misuse of ACA funds.

We reviewed a sample of 48 ACA charges and reimbursements valued at $17,154. The sample included reimbursement claims and expenses from each of the nine councilmembers and the nine council districts, and included different categories of ACA claims and different methods of reimbursement and charges. Travel expenses comprised the largest reimbursement claims. The sample results are shown below.

• 30 claims complied with ACA policy and had no exceptions,
• 14 claims had incomplete information (6 claims had incomplete justification for the meals, guest or organization names, and/or itemized receipts. 8 claims had incomplete justification or missing forms that explained how the expenditures advanced city purposes),
• 3 claims used obsolete forms, and
• 1 claim reimbursement included a prohibited expense (alcoholic beverage).

The discrepancies indicated meal expenses could be abused and the city council could be exposed to unneeded criticisms…. (p12)

“I see no compelling reason to significantly revise the current policy at this point in time.” -- Response to Audit from Council Chair Ernie Martin (p 24)

read … Full Text of Audit Report

CB: Audit: Honolulu's Post-Rod Tam Spending Policies Still Too Vague

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