STAND. COM. REP. NO. 1407

Honolulu, Hawaii

RE:    S.C.R. No. 98

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Madam:

     Your Committees on Ways and Means and Transportation, International and Intergovernmental Affairs, to which was referred S.C.R. No. 98 entitled:

"SENATE CONCURRENT RESOLUTION REQUESTING THE AUDITOR TO CONDUCT A MANAGEMENT AUDIT OF THE DEPARTMENT OF TRANSPORTATION FOR THE PURPOSE OF DETERMINING WHETHER APPROPRIATIONS ARE BEING APPROPRIATELY EXPENDED AND FEES OWED ARE COLLECTED AND ACCOUNTED FOR ACCURATELY,"

beg leave to report as follows:

     The purpose of this measure is to request the Auditor to conduct a management audit of the Department of Transportation.

     The management audit would determine whether:

     (1)  Legislative appropriations are efficiently administered by the Department for its intended purposes;

     (2)  State contracts are properly awarded by the Department and include adequate safeguards; and

     (3)  Fees and other charges assessed by the Department are collected and accounted for accurately.

     Your Committees find that serious concerns have arisen regarding the Department of Transportation's management of state funds.  Your Committees also find that financial audits of the Airports Division and Harbors Division of the Department of Transportation have revealed significant deficiencies in procurement processes and compliance with laws and regulations regarding accounting practices and internal controls.  Following the Department of Transportation's failure to adequately prepare for and address the concerns raised in this measure at a public hearing on April 8, 2009, the Chair of your Committee on Ways and Means sent a letter to the Director of Transportation requesting that the Department provide detailed information to address these issues.  Until these concerns are adequately addressed, your Committees believe that a management audit of the Department of Transportation is appropriate and necessary.

     As affirmed by the records of votes of the members of your Committees on Ways and Means and Transportation, International and Intergovernmental Affairs that are attached to this report, your Committees concur with the intent and purpose of S.C.R. No. 98 and recommend its adoption.

Respectfully submitted on behalf of the members of the Committees on Ways and Means and Transportation, International and Intergovernmental Affairs,

____________________________ J. KALANI ENGLISH, Chair

____________________________ DONNA MERCADO KIM, Chair