STAND. COM. REP. NO. 1564

Honolulu, Hawaii

RE: S.R. No. 48

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Hawaiian Affairs, to which was referred S.R. No. 48 entitled:

"SENATE RESOLUTION REQUESTING THE OFFICE OF HAWAIIAN AFFAIRS TO CONDUCT AN INDEPENDENT FISCAL AUDIT OF ALL LIMITED LIABILITY CORPORATIONS CREATED OR CONTROLLED BY THE OFFICE,"

begs leave to report as follows:

The purpose and intent of this measure is to request the Office of Hawaiian Affairs to conduct an independent fiscal audit of all limited liability companies created or controlled by the Office.

Your Committee received testimony in support of this measure from the Center for Hawaiian Sovereignty Studies. Your Committee received testimony in opposition to this measure from one individual. Your Committee received comments on this measure from the Office of Hawaiian Affairs.

Your Committee finds that independent audits are necessary to assess government performance and to assist agencies reduce waste and inefficiency in their policy implementation, program management, and expenditures of public funds. The Office of Hawaiian Affairs' ongoing fiscal health is vital to its mission of improving the conditions and well-being of present and future Native Hawaiians and Hawaiians. The Office of the Auditor's 2018 Audit of the Office of Hawaiian Affairs raised concerns regarding spending irregularities and possible breaches of the Office's fiduciary duties, including in regards to the Office's limited liability companies (LLCs).

Your Committee notes that the Office of Hawaiian Affairs has completed and included with its testimony a copy of its June 30, 2017, financial statements and independent auditor's report. Your Committee recognizes the initiative taken by the Office of Hawaiian Affairs and recommends moving this measure along the legislative process for further consideration of any related issues.

As affirmed by the record of votes of the members of your Committee on Hawaiian Affairs that is attached to this report, your Committee concurs with the intent and purpose of S.R. No. 48 and recommends that it be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Hawaiian Affairs,

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MAILE S.L. SHIMABUKURO, Chair