KA MANA O NA HELUNon-Profit

Criteria - Segregation of duties is a key internal control to minimize the occurrence of errors, irregularities, and fraud to financial records whereby no person is performing tasks within more than one of three of the following functions, 1-authorization, 2-recordation and reconciliation, and 3-custody. Condition - We noted that during 2022, KMNH’s chief executive officer performed accounting functions, including posting of journal entries to the general ledger, recording cash receipts and disbursement transactions, and reconciliation of the monthly bank statement balances to cash balances in the general ledger. Cause- Due to unforeseen circumstances, the contracted third-party accountant who was providing certain accounting services to KMNH in previous years resigned. Due to its limited number of employees, there was no other employee with the knowledge and skills to take over those accounting functions other than the chief executive officer. Furthermore, management’s on-going efforts to replace the accountant have not been successful since the resignation. Effect - Without proper segregation of duties, there is a reasonable possibility that a material misstatement of KMNH’s financial statements will not be prevented, or detected and corrected, on a timely basis. Further, the lack of segregation of duties increases the opportunity for the misappropriation of assets or for intentional misstatements in the financial statements. Identification of a Repeat Finding - This finding was reported as a federal award finding in the immediate previous audit as Finding No. 2021-001. Recommendation - To ensure proper segregation of duties, we again recommend that KMNH continue its efforts to engage an accountant to provide relevant services and to develop appropriate policies and procedures to ensure proper segregation of duties. Views of Responsible Officials and Planned Corrective Action - KMNH agrees with the finding and recommendation and will continue its efforts to recruit a bookkeeper.

Criteria - Monthly bank reconciliations to general ledger bank balances is a key internal control when, on an ongoing basis, the cash balance on the balance sheet is substantiated. Bank reconciliations verify the integrity of data between the bank records and an entity’s internal financial records. The nature of the reconciliation control is detective, to uncover errors, missing items, and fraud, and most importantly to validate that the cash on the balance sheet is accurate. To be effective, bank reconciliations should be prepared as soon as possible after the bank balances are available. Unreconciled differences should be identified and disposed of on a timely basis. Condition - During our audit, we noted that KMNH did not prepare a certain bank reconciliation in a timely fashion. We selected one bank reconciliation for testing and noted that the December 2022 bank reconciliation was not prepared on a timely basis. Cause - Due to the limited number of employees and the unforeseen resignation of KMNH’s accountant in 2021, the chief executive officer was unable to prepare the bank reconciliation on a timely basis. Effect - The lack of a timely bank statement reconciliations to general ledger bank balances could result in a material misstatement of KMNH’s bank balances that may not be prevented, or detected and corrected on a timely basis. Identification of a Repeat Finding - This finding was reported as a federal award finding in the immediate previous audit as Finding No. 2021-002. Recommendation - We again recommend that management continue its efforts to engage a third-party accountant. Additionally, we recommend that all bank accounts be reconciled each month on a timely basis. The bank reconciliations should be reviewed for completeness and accuracy by an individual other than the preparer. Unreconciled differences should be identified and properly disposed of on a timely basis. Further, documentation should be maintained as to who prepared and reviewed those bank reconciliations, as well as when those bank reconciliations were completed. Views of Responsible Officials and Planned Corrective Action - KMNH agrees with the finding and recommendation and effective on March 1, 2024, all bank reconciliations are completed within 30 days of bank statement receipt.

Criteria - Pursuant to the Uniform Guidance, a non-Federal entity, including subrecipients of a State, must have and use documented procurement standards that conform to the procurement standards of §200.318 through §200.327 of the Uniform Guidance. Condition - We noted that KMNH did not adopt procurement standards compliant with sections §200.318 through §200.327 of the Uniform Guidance. Cause - Management had not updated its policies and procedures to incorporate the relevant Uniform Guidance procurement standards. Effect - The lack of the procurement standards consistent with the Uniform Guidance could result in a material misstatement of KMNH’s expenditures as reported in the statement of expenditures of federal awards. Identification of a Repeat Finding - This finding was reported as a federal award finding in the immediate previous audit as Finding No. 2021-003. Recommendation - We again recommend that KMNH incorporate §200.318 through §200.327 of the Uniform Guidance procurement standards to their policies and procedures manual to ensure compliance with Federal standards. Views of Responsible Officials and Planned Corrective Action - KMNH agrees with the finding and recommendation and effective on April 26, 2024 has implemented procurement standards per the Uniform Guidance.

Criteria - A non-Federal entity that expends $750,000 or more in Federal awards during the year must have a single audit conducted in accordance with 2 CFR §200.514. Pursuant to 2 CFR §200.512, the audit must be completed and Form SF-SAC: Data Collection Form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after year end of the audit period. Condition - We noted that KMNH has not submitted the single audit reports required by the Uniform Guidance, including the Data Collection Form to the Federal Audit Clearinghouse for the year ended December 31, 2022, within the stipulated nine months after the end of the audit period. Cause - KMNH has not adhered to established Uniform Guidance terms and conditions regarding the submission dates of the single audit reports and Data Collection Form for the year ended December 31, 2022. Effect - KMNH is not in compliance with the Uniform Guidance terms and conditions regarding the submission dates of the single audit report and Data Collection Form for the year ended December 31, 2022. Identification of a Repeat Finding - This finding was reported as a federal award finding in the immediate previous audit as Finding No. 2021-004. Recommendation - We again recommend that KMNH incorporate internal controls to ensure compliance with the Uniform Guidance with respect to the submission deadline of single audit reports and the Data Collection Form. Views of Responsible Officials and Planned Corrective Action - KMNH agrees with the finding and recommendation and have updated internal controls to monitor audit submissions to the Federal Audit Clearinghouse.

Finding No. 2021-003: Procurement U.S. Department of Housing and Urban Development Passed Through the State of Hawaii Department of Human Services Emergency Solutions Grant Program Coronavirus Federal Assistance Listing Number 14.231 Criteria - Pursuant to Title 2, Subtitle A, Chapter II, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), a non-Federal entity, including subrecipients of a State, must have and use documented procurement standards that conform to the procurement standards of §200.318 through §200.327 of the Uniform Guidance. Condition - We noted that KMNH did not adopt procurement standards compliant with sections §200.318 through §200.327 of the Uniform Guidance. Cause-Management had not updated its policies and procedures to incorporate the relevant Uniform Guidance procurement standards. Effect-The lack of the procurement standards consistent with the Uniform Guidance could result in a material misstatement of KMNH's expenditures as reported in the statement of expenditures of federal awards. Recommendation - We recommend that KMNH incorporate §200.318 through §200.327 of the Uniform Guidance procurement standards to their policies and procedures manual to ensure compliance with Federal standards.

Finding No. 2021-004: Procurement U.S. Department of Housing and Urban Development Passed Through the State of Hawaii Department of Human Services Emergency Solutions Grant Program Coronavirus Federal Assistance Listing Number 14.231 Criteria - A non-Federal entity that expends $750,000 or more in Federal awards during the year must have a single audi conducted in accordance with 2 CFR §200.514. Pursuant to 2 CFR §200.512, the audit must be completed and Form SF-SAC: Data Collection Form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after year end of the audit period. Condition - We noted that KMNH has not submitted the single audit reports required by the Uniform Guidance, including the Data Collection Form to the Federal Audit Clearinghouse for the year ended December 31, 2021, within the stipulated nine months after the end of the audit period. Cause - KMNH has not adhered to established Uniform Guidance terms and conditions regarding the submission dates of the single audit reports and Data Collection Form for the year ended December 31, 2021. Effect - KMNH is not in compliance with the Uniform Guidance terms and conditions regarding the submission dates of the single audit report and Data Collection Form for the year ended December 31, 2021. Recommendation - We recommend that KMNH incorporate internal controls to ensure compliance with the Uniform Guidance with respect to the submission deadline of single audit reports and the Data Collection Form.