22-12, Review of Special Funds, Revolving Funds, Trust Funds, and Trust Accounts of the Department of Human Resources Development

Posted on Oct 26, 2022 in Summary

Photo: Office of the Auditor


One fund did not meet criteria

OUR REVIEW of the one special fund and two trust funds of the Department of Human Resources Development (DHRD) found the special fund did not meet criteria and should be reclassified to a revolving fund.

Section 23-12, Hawai‘i Revised Statutes (HRS), requires the Auditor to review all existing special, revolving, and trust funds every five years.  Reviews are scheduled so that each department’s funds are reviewed once every five years. Although not mandated by statute, we included trust accounts as part of our review. This is our sixth review of DHRD’s revolving funds, trust funds, and trust accounts. It is our second review of the special funds held by DHRD since Act 130, Session Laws of Hawaiʻi 2013, amended Section 23-12, HRS, to require review of special funds along with revolving funds and trust funds.

We used criteria developed by the Legislature and by our office based on public finance and accounting literature. For each fund, we present a five-year financial summary, the purpose of the fund, and conclusions about its use. We did not audit the financial data, which is provided for informational purposes. We do not present conclusions about the effectiveness of programs or their management, or whether the programs should be continued.

Reporting shortfall
WE NOTED that DHRD did not file statutorily required reports relating to funds totaling approximately $2.75 billion. Accurate and complete reporting will greatly improve the Legislature’s oversight and control of these funds.

Agency response
DHRD CONCURRED WITH THE FINDINGS and will take appropriate action to reclassify a special fund that functions more like a revolving fund. DHRD also stated that it will ensure compliance with all reporting requirements.


are used to account for revenues earmarked for particular purposes and from which expenditures are made for those purposes.

such as loan funds, are often established with an appropriation of seed money from the general fund and must demonstrate the capacity to be self-sustaining.

such as a pension fund, invoke the State’s fiduciary responsibility to care for and use the assets held to benefit those with a vested interest in the assets.

are typically separate holding or clearing accounts and are often used as accounting devices for crediting or charging state agencies or projects for payroll and other costs.

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