Taguchi finalizing list of initial audits

Maui County Auditor Lance Taguchi has been busy setting up the Office of the County Auditor since he was appointed to the position six months ago but said Thursday that he is finalizing a list of audits he plans on doing for the remaining six months of the current fiscal year.

“It’s not easy to start from scratch,” Taguchi said. “We’ve been communicating a lot with the state auditor (Jan Yamane) and counterparts in Neighbor Islands.”

He said that he expects to transmit the list of audits he plans on initiating between now and June 30 to the Maui County Council and the Mayor’s Office “in the next week or so.” The deadline for the county auditor to do so is Jan. 31, as stated in the Maui County Charter.

After months of searching for a qualified candidate to fill the county auditor position that was created in the 2012 general election, the Maui County Council chose Taguchi, then-county deputy clerk with more than 30 years of experience as a licensed accountant, for the job.

Because this was a new position, the appointed auditor’s job was not only to conduct audit functions but also to set up the auditor office, which included finding and equipping office space, hiring and managing staff and laying the groundwork for startup operations, county officials said.

So far, Taguchi said, “things are moving along,” and the auditor office is housed in the Wells Street Professional Center in Wailuku. He has hired an administrative officer and one other analyst/auditor. He said he hopes to round out his staff by adding another analyst in the next three months.

“For now, we’ll move forward with that, (though) we are still trying to determine if we will expand the office in fiscal (year) 2015 (that begins in July),” Taguchi said.

Most recently, the office just finished the procurement process to find a third-party to conduct the financial audit and audits of federally funded programs. County officials said that the financial audit of the county’s comprehensive annual financial report is conducted by a third-party, independent external auditor but overseen by the county auditor’s office.

“We’re continuing our work on developing audit programs and audit policies. If you look at all the different auditors’ offices in the state – Honolulu, Big Island, Kauai – it’s important to establish auditing standards and procedures because it provides credibility to the audit,” Taguchi said. “There may be times where (our) audit recommendations will be challenged. When that occurs, we need to stand by the standards we have adopted on the audit. It’s a process.”

Like all other auditor offices in the state, Maui County’s office will adhere to “Yellow Book” government auditing standards that are set by the American Institute of Certified Public Accountants. Because the office is still new and the staff so small, keeping up with national standards has some challenges, Taguchi said.

For example, some of the standards require review from an auditor that has not been a part of the audit process, Taguchi explained.

“With an office of three (people), that becomes problematic,” he said.

Council Member Don Couch, one of the three members of the council Temporary Investigative Group tasked with interviewing county auditor candidates last year, said that Taguchi seems to be “moving along as expected.”

“We knew it was going to take a long time to get the office going; he promised he’d have his list by the end of January, which is what we expected,” Couch said.

“I’m looking forward to seeing his list,” he added.

Taguchi declined to disclose the contents of his audit list before first transmitting them to the County Council and administration, so it is unknown whether his office plans on conducting an audit of the controversial demolition of the Old Wailuku Post Office.

The council Policy and Intergovernmental Affairs Committee agreed in October to defer action on its investigation into the “potential misuse of county funds” by Mayor Alan Arakawa’s administration until Taguchi unveils his list of intended audits.

Committee Chairman Riki Hokama had previously said that if the plan of audits does not include the Old Wailuku Post Office, the panel may re-evaluate its options then.

The controversy stems from the demolition of the Old Wailuku Post Office last year. Arakawa’s administration has conceded and apologized for using funds earmarked for the rehabilitation of the building for its demolition and for the planning of a new county campus – without amending the budget.

County spokesman Rod Antone said that the administration “thinks the issue is dead already” because the council voted in November to approve $1.5 million for the design of the new office building on the site of the old post office.

“All the council members have said they think the project was the right thing to do. They just had a question as to whether the procedure was proper,” Antone said. “I have faith that if Lance (Taguchi) takes a good look at it, it will show we might’ve made a technical error, but it wasn’t anything insidious.”

Antone said the administration welcomes “a neutral body such as Lance” to help quell the council’s concerns about any perceived wrongdoing in the demolition of the old post office.

Couch said that he, too, hopes “Lance looks into it and finds there’s no issue so we can move on.”

“If he finds an issue, I’d be very surprised,” Couch said.

* Eileen Chao can be reached at echao@mauinews.com.