Office of the Auditor | State of Hawai`i

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AUDITOR’S SUMMARY

Financial Statements, Fiscal Year Ended June 30, 2023

THE PRIMARY PURPOSE of the audit was to form an opinion on the fairness of the presentation of the financial statements for the Department of Education, as of and for the fiscal year ended June 30, 2023, and to comply with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), which established audit requirements for state and local governmental units that receive federal awards. The audit was conducted by Accuity LLP.

Financial Highlights

FOR THE FISCAL YEAR ended June 30, 2023, DOE reported total revenues of $4.36 billion and total expenses of $3.65 billion, resulting in an increase in net position of $705.5 million.

Total revenues of $4.36 billion consisted of (1) $3.02 billion in state-allotted appropriations, net of lapsed funds, (2) $748.3 million in non-imposed employee wages and fringe benefits, (3) $493.3 million in operating grants and contributions, (4) $92.5 million in charges for services, and (5) $2.3 million in other income.

Total expenses of $3.65 billion consisted of (1) $3.39 billion for school-related costs, (2) $85.4 million for state and school complex area administration, (3) $54.6 million for public libraries, and
(4) $119.3 million for capital outlay.

As of June 30, 2023, total assets exceeded total liabilities by $4.14 billion. Of this amount, $1.81 billion is unrestricted and may be used to meet ongoing expenses and obligations. Total assets of $4.83 billion were comprised of (1) cash of $2.31 billion, (2) receivables of $80.5 million, and (3) net capital assets of $2.44 billion. Total liabilities of $688.9 million were comprised of (1) vouchers and contracts payable of $200.2 million, (2) accrued wages and employee benefits of $180.4 million, (3) accrued compensated absences of $86.8 million, (4) workers’ compensation claims reserve of $143 million, (5) amount due to the State General Fund of $5 million, (6) notes payable of $31.9 million, (7) lease liability of $29.2 million, (8) subscription liability of $12.1 million, and (9) other liabilities of $300,000.

Auditors’ Opinion
DOE RECEIVED AN UNMODIFIED OPINION that its financial statements were presented fairly, in all material respects, in accordance with generally accepted accounting principles. DOE also received an unmodified opinion on its compliance with major federal programs, except for Economic, Social, and Political Development of the Territories and COVID-19 Education Stabilization Fund, which received a qualified opinion in accordance with the Uniform Guidance.

Findings
THERE WERE NO MATERIAL WEAKNESSES in internal controls over financial reporting that were required to be reported under Government Auditing Standards. However, the auditors identified a significant deficiency that is required to be reported under Government Auditing Standards. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. The significant deficiency is described on page 48 of the report.

There were two material weaknesses in internal control over compliance that were required to be reported in accordance with the Uniform Guidance. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected on a timely basis. The material weaknesses are described on pages 49 and 55-56 of the report.

There were four other instances of noncompliance that were required to be reported in accordance with the Uniform Guidance. The control deficiencies are described on pages 50-54 of the report.