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The Department of Hawaiian Home lands Generally Had Capacity To Manage; However, it Needs To Improve Controls Over Its Administration of Recovery

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As part of the Office of Inspector General’s annual audit plan, we completed a capacity review of the Department of Hawaiian Home Lands’ (Department) American Recovery and Reinvestment Act of 2009 (Recovery Act) funding. Our objective was to determine whether the Department had sufficient capacity to manage and administer its Recovery Act funding. Specifically, we reviewed and assessed the Department’s capacity in the following areas: internal controls, financial operations, and procurement. The Department generally had sufficient capacity to manage its Recovery Act funding. However, the Department could improve its controls by (1) developing a more comprehensive set of written policies and procedures to describe its drawdown and disbursement process, (2) ensuring that its contractors had not been debarred or suspended before awarding federally funded contracts, (3) obtaining tax clearance certificates from its subcontractors, and (4) performing adequate reviews of weekly certified payrolls to ensure that its contractors and subcontractors paid their employees proper wages and fringe benefits in accordance with the Davis-Bacon Act and Hawaii Revised Statutes. In general, the Department attributed its weaknesses to staff oversight.

We recommend that the Deputy Assistant Secretary, Office of Native American Programs, require the Department to ensure that it (1) develops detailed written policies and procedures regarding its drawdown and disbursement process, (2) performs a search on the General Services Administration’s Excluded Parties List System and the State of Hawaii’s List of Debarred and Suspended Persons before it awards its federally funded contracts, (3) obtains tax clearance forms to show that all delinquent taxes against the contractor’s subcontractor have been paid, and (4) performs adequate reviews of the weekly certified payrolls in compliance with the Davis-Bacon Act and Hawaii Revised Statutes.