City cleans out old contracts cluttering its books
By Peter Boylan
Advertiser Staff Writer
More than 100 old city contracts worth more than $10 million and going back a decade or more have been taken off the city's books following a review by accountants.
The move protects the city's bond rating and removes significant liability from the city's books, officials said.
The task force reviewed city financial records to identify contracts for projects that were completed under budget, were not pursued or otherwise remained "open" for accounting purposes, according to the city.
Auditors from the Honolulu firm of N&K CPAs Inc. were selected by the city to audit federally funded programs and internal controls, in conjunction with the annual audit for the fiscal year that ended June 30, 2007.
The firm issued an "unqualified" or clean report on the audit, and found no material weaknesses or significant deficiencies, according to the city.
"We are committed to careful and prudent management of taxpayer dollars, and this accounting review was part of our ongoing effort to clean up any financial problems we inherited," Mayor Mufi Hannemann said in a statement. "Fiscal responsibility is one of our top priorities, and our excellent bond ratings save taxpayers money by reducing our interest payments." The expunging of the contracts will:
"Closing out contracts in a timely manner is a key goal as we move forward, and is an integral part of prudent and accountable contract management," said Department of Budget and Fiscal Services director Mary Pat Waterhouse.
Members of the Honolulu City Council said old contracts remaining on the books as liabilities have been a problem dating back through several administrations.
If the projects remain on the books, that affects the city's ability to bond new capital improvement projects at a fiscally responsible rate.
"It has been a problem. We've had discussions periodically over the last couple of years to get those cleaned up. It's difficult because they normally span numerous departments and there is no one to oversee it," said city Councilman Todd K. Apo. "It's a good thing to do as long as you're not eliminating projects that you need to have."
Councilmman Charles K. Djou lauded the work of the city auditor and the administration.
"I would like to compliment the Hannemann administration for closing out old contracts and trying to save the taxpayers money," said Djou. "Obviously we want to know where taxpayers have exposure to liability."
Earlier this year, a group of independent financial auditors rated the City & County of Honolulu a "low-risk auditee," only the second time in 11 years the city has earned that high mark, according to the city.
Reach Peter Boylan at pboylan@honoluluadvertiser.com.
