Office of the Auditor | State of Hawai`i

Photo: Hawai‘i National Guard

AUDITOR’S SUMMARY

One trust fund did not meet criteria
OUR REVIEW OF SIX TRUST FUNDS and four trust accounts of the Department of Defense (DOD) found one trust fund did not met criteria and should be closed.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 second review of DOD’s special
funds, revolving funds, trust funds, and trust accounts.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 ALSO NOTED that DOD did not file statutorily required reports for non-general funds and for administratively created funds. Accurate and complete reporting will greatly improve the Legislature’s oversight and control of these funds and provide increased budgetary flexibility.

Agency response
DOD AGREED with our review of its funds and will take appropriate action to close the trust fund that did not meet criteria. DOD will also comply with reporting requirements.

FUND TYPES

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

REVOLVING FUNDS
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.

TRUST FUNDS
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.

TRUST ACCOUNTS
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.