Audit 349329

Questioned Costs Finding No. 2024 001: Federal Funding Accountability and Transparency Act Reporting (Material Weakness) $ – Federal Agency: U.S. Department of Commerce Assistance Listing Number and Title: 11.307 Economic Development Cluster Award Number: 07-79-07800 Condition During our audit, we noted an instance in which the Hawaii Tourism Authority (the “Authority”) did not complete the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of the Federal Funding Accountability and Transparency Act (“FFATA”) for a subgrant made during 2024. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 2 2 0 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $7,200,000 $7,200,000 $0 $0 $0 Criteria Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report subcontracts made under federally-awarded contracts by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Cause and View of Responsible Officials The lack of FFATA reporting may be attributed to general oversight by Authority management. Authority management noted that due to the lack of adequate staffing, the completion of non-routine reporting requirements such as those included in the FFATA were delayed. Effect Failure to file required reports reduces transparency on the use of program funds and represents an instance of noncompliance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200. Context A sample of one subgrant and one amendment to the subgrant greater than or equal to $30,000 totaling $7,200,000 were selected for audit from a population of $7,200,000 in subgrants greater than or equal to $30,000 from the Economic Development Cluster Program. Our test found two instances in which a FFATA report was not completed in a timely manner. Our sample was a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that Authority management understand all requirements for federal awards and ensure that required FFATA reports are completed in a timely and accurate manner.

Questioned Costs Finding No. 2024 002: Reporting (Material Weakness) $ – Federal Agency: U.S. Department of Commerce Assistance Listing Number and Title: 11.307 Economic Development Cluster Award Number: 07-79-07800 Condition During our audit, we noted the Authority reported an excess amount of $533,990 in federal expenditures in the semi-annual SF-425 federal financial report submitted for the period ended March 31, 2024. Furthermore, we noted that the excess expenditures as reported on the semi-annual SF-425 federal financial report pertained to items for which the associated goods or services were received by the Authority after the report period end date. Criteria Title 2 U.S. Code of Federal Regulations Part 200 requires that the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Cause and View of Responsible Officials The lack of accurate reporting may be attributed to general oversight by Authority management when determining the actual amount of federally funded expenditures incurred during the reporting period. Authority management believes that the expenditures as reported in the semi-annual SF-425 federal financial report submitted for the period ended March 31, 2024 are accurate, however management will implement additional procedures as requested by the external auditor. Effect Failure to file accurate information in reports represents an instance of noncompliance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200. Entities must also maintain accurate records of financial information, which are submitted to the Federal Agencies in accordance with Title 2 U.S. Code of Federal Regulations Part 200. Context A sample of one semi-annual SF-425 federal financial report was selected for audit from a population of two reports for the Economic Development Cluster Program. Our test found that the report did not accurately state the federal share of expenditures incurred during the reporting period. Repeat Finding This is not a repeat finding. Recommendation We recommend that Authority management be more diligent in following their policies and procedures for the preparation and review of federal financial reports to ensure the accuracy of information submitted.

Questioned Costs Finding No. 2024 001: Federal Funding Accountability and Transparency Act Reporting (Material Weakness) $ – Federal Agency: U.S. Department of Commerce Assistance Listing Number and Title: 11.307 Economic Development Cluster Award Number: 07-79-07800 Condition During our audit, we noted an instance in which the Hawaii Tourism Authority (the “Authority”) did not complete the reporting required by Section 2, Full Disclosure of Entities Receiving Federal Funding, of the Federal Funding Accountability and Transparency Act (“FFATA”) for a subgrant made during 2024. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 2 2 0 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $7,200,000 $7,200,000 $0 $0 $0 Criteria Section 2, Full Disclosure of Entities Receiving Federal Funding, of the FFATA requires an entity to report subcontracts made under federally-awarded contracts by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Cause and View of Responsible Officials The lack of FFATA reporting may be attributed to general oversight by Authority management. Authority management noted that due to the lack of adequate staffing, the completion of non-routine reporting requirements such as those included in the FFATA were delayed. Effect Failure to file required reports reduces transparency on the use of program funds and represents an instance of noncompliance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200. Context A sample of one subgrant and one amendment to the subgrant greater than or equal to $30,000 totaling $7,200,000 were selected for audit from a population of $7,200,000 in subgrants greater than or equal to $30,000 from the Economic Development Cluster Program. Our test found two instances in which a FFATA report was not completed in a timely manner. Our sample was a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that Authority management understand all requirements for federal awards and ensure that required FFATA reports are completed in a timely and accurate manner.

Questioned Costs Finding No. 2024 002: Reporting (Material Weakness) $ – Federal Agency: U.S. Department of Commerce Assistance Listing Number and Title: 11.307 Economic Development Cluster Award Number: 07-79-07800 Condition During our audit, we noted the Authority reported an excess amount of $533,990 in federal expenditures in the semi-annual SF-425 federal financial report submitted for the period ended March 31, 2024. Furthermore, we noted that the excess expenditures as reported on the semi-annual SF-425 federal financial report pertained to items for which the associated goods or services were received by the Authority after the report period end date. Criteria Title 2 U.S. Code of Federal Regulations Part 200 requires that the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Cause and View of Responsible Officials The lack of accurate reporting may be attributed to general oversight by Authority management when determining the actual amount of federally funded expenditures incurred during the reporting period. Authority management believes that the expenditures as reported in the semi-annual SF-425 federal financial report submitted for the period ended March 31, 2024 are accurate, however management will implement additional procedures as requested by the external auditor. Effect Failure to file accurate information in reports represents an instance of noncompliance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200. Entities must also maintain accurate records of financial information, which are submitted to the Federal Agencies in accordance with Title 2 U.S. Code of Federal Regulations Part 200. Context A sample of one semi-annual SF-425 federal financial report was selected for audit from a population of two reports for the Economic Development Cluster Program. Our test found that the report did not accurately state the federal share of expenditures incurred during the reporting period. Repeat Finding This is not a repeat finding. Recommendation We recommend that Authority management be more diligent in following their policies and procedures for the preparation and review of federal financial reports to ensure the accuracy of information submitted.