HUI NO KE OLA PONO INC

2025-001 – Internal Control over Financial, United States Department of Health and Human Services, Native Hawaiian Health Care System 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: As a result of the auditing procedures over the financial statements, 16 adjusting journal entries were required that resulted in a material change to the financial statements. Cause: Due to the continuing personnel turnover in operation and accounting departments, there was a lack of oversight to ensure accurate accounting procedures were performed during the fiscal year. Potential Effect: Lack of sufficient internal controls and monitoring processes increases the likelihood of misstatement and/or fraud. Questioned Costs: None. Recommendation: It is management’s responsibility to review financial statements for accuracy and ensure proper accounting is being performed. The accounting personnel and third party hired by the management to account for and prepare the financial statements should have adequate technical knowledge of Generally Accepted Accounting Standards and how to apply them to the internal procedures for preparing financial statements. Repeat Finding: Yes. See Summary Schedule of Prior Audit Findings, Finding 2024-001. Views of Responsible Officials of the Auditee: The Accounting Department has taken better control and accountability in handling accounting and financial internal control processes and month-end journal entries that have allowed more insights and understanding of financial data. The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

2025-002 - Inaccurate and Incomplete Schedule of Expenditures of Federal Awards (SEFA), United States Department of Health and Human Services, Native Hawaiian Health Care Systems 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements, as well as proper reporting of SEFA report. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: During our testing of Federal Expenditure for the Uniform Guidance on internal controls over major program compliance, it was noted that client did not report accurate and complete Schedule of Expenditures of Federal Awards. Cause: As part of key personnel change and lack of documentation to support whether it is a federal expenditure and what amount should or should not be included in SEFA schedule, the SEFA was not accurately calculated. Potential Effect: Lack of supporting documentation and missing entries can lead to inaccurate SEFA preparation. Questioned Costs: None. Recommendation: We recommend the Organization obtain all Federal grant documentation to support the determination to include or to exclude federal expenditures from the SEFA. Repeat Finding: Yes. See Summary Schedule of Prior Audit Findings, Finding 2024-002. Views of Responsible Officials of the Auditee: The Accounting Department has taken better control and accountability in handling accounting and major program internal control processes and month-end journal entries that have allowed more insights and understanding of financial data. The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

2025-003 – Cash Management, United States Department of Health and Human Services, Native Hawaiian Health Care Systems 93.932 Criteria: Under federal regulation (Uniform Guidance, 2 CFR §200.305), grantees are required to minimize the time between the drawdown of federal funds and the disbursement of those funds. To ensure proper cash management, recipients may draw funds up to three (3) business days in advance of incurring expenses. The timing of drawdowns must be as close as administratively feasible to immediate cash requirements. Funds held longer than three business days are generally considered excessive. Additionally, interest earned in excess of $500 annually on advanced funds must be remitted to the HRSA Payment Management System. Condition: During testing of federal expenditures for Uniform Guidance compliance on major programs, it was noted that the Organization withdrew over $1,300,000 in February 2025 to cover estimated expenses for the remainder of the fiscal year. The funds were fully expended on allowable program costs by fiscal year-end. Cause: Due to concerns regarding potential disruptions to access the Federal Payment Management System (e.g., government shutdown or policy changes), the Organization drew down a significant amount of funds in advance to ensure sufficient operating resources for the remainder of the fiscal year. Potential Effect: Drawing funds significantly in advance of allowable expenditures may result in excess cash on hand, which could negatively impact cash management practices and increase the risk of noncompliance with federal regulations, including potential misuse of federal funds. Questioned Costs: None. Recommendation: We recommend that the Organization strengthen its cash management practices by limiting federal fund drawdowns to amounts needed within three (3) business days of allowable expenditures, in accordance with federal requirements. Repeat Finding: No. Views of Responsible Officials of the Auditee: The Accounting Department has taken better control and accountability in handling drawdowns on federal funds based on timely allowable expenses incurred. The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

2024-001 – Internal Control over Financial, United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: As a result of the auditing procedures over the financial statements, significant adjusting journal entries were required that resulted in a material change to the financial statements. In addition, we had the following comments relating to internal controls: Internal control over disbursements - it was noted two out of 25 disbursements tested did not have the proper approval documented on the invoice or the purchase request form. We did note that the check for the disbursement was properly signed by an authorized check signor based on their review of the invoice when signing the check. Review of cancelled checks – it was noted that copies of cancelled checks are not attached to monthly bank statements and a check signor is reviewing images of cancelled checks online. Cause: Due to the personnel turnover in operation and accounting departments, there was a lack of oversight to ensure accurate accounting preparation for the fiscal year. Potential Effect: Lack of sufficient internal controls and monitoring processes increases the likelihood of misstatement and/or fraud. Questioned Costs: None. Recommendation: It is management’s responsibility to review financial statements for accuracy and ensure proper accounting is being performed. The accounting personnel and third party hired by the management to account for and prepare the financial statements should have adequate technical knowledge of Generally Accepted Accounting Standards and how to apply them to the internal procedures for preparing financial statements. In addition to the comments above, recommendation related to improve internal control are as follows: Internal control over disbursements – While we were able to conclude that an authorized check signor approved the disbursement while signing the check we recommend the Organization follow their internal control procedures. These procedures require documented approval on all disbursements, which is noted on the invoice or the purchase request form. Review of cancelled checks - We recommend an authorized check signor review images of cancelled checks monthly either online or attached to bank statements to ensure payee names, amounts and approval signatures are reasonable. Repeat Finding: Yes. See Summary Schedule of Prior Audit Findings, Finding 2023-001. Views of Responsible Officials of the Auditee: The Accounting Department has taken better control and accountability in handling accounting and financial internal control processes and month-end journal entries that have allowed more insights and understanding of financial data. The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

2024-002 - Inaccurate Schedule of Expenditures of Federal Awards (SEFA), United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements, as well as proper report of SEFA report. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: During our testing of Federal Expenditure for the Uniform Guidance on major program compliance, it was noted that client did not report accurate Federal expenditures of Federal Awards. Cause: As part of key personnel change and lack of documentation to support whether it is a federal expenditure and what amount should or should not be included in SEFA schedule, the SEFA was not accurately calculated. Potential Effect: Lack of supporting documentation and missing entries can leads to inaccurate SEFA preparation. Questioned Costs: None. Recommendation: We recommend the Organization obtain all Federal grant documentation to support the determination to include or to exclude federal expenditures from the SEFA. Repeat Finding: Yes. See Summary Schedule of Prior Audit Findings, Finding 2023-002. Views of Responsible Officials of the Auditee: The Accounting Department has taken better control and accountability in handling accounting and major program internal control processes and month-end journal entries that have allowed more insights and understanding of financial data. The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

Internal Control over Financial Reporting, United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: As a result of the auditing procedures over the financial statements, significant adjusting journal entries were required that resulted in a material change to the financial statements. Specifically, 13 adjustments were needed to fairly state the financial statements in all material respects. In addition, we had the following comments relating to internal controls— Internal control over payroll and disbursements We noted instances where employees’ pay rate approval forms and timesheets are not available to substantiate and document approved pay rates with employees. We noted instances where check and credit card disbursements did not have authorization approval forms to document approval or did not have receipts or invoices to substantiate the expenditure. Internal control over account balances We noted instances where subsidiary schedules and reconciliations did not agree to balances in the general ledger. Cause: Due to the personnel turnover in operation and accounting departments, there was a lack of oversight to ensure accurate accounting preparation for the fiscal year. Potential Effect: Lack of sufficient internal controls and monitoring processes increases the likelihood of misstatement and/or fraud. Questioned Costs: None. Recommendation: It is management’s responsibility to review financial statements for accuracy and ensure proper accounting is being performed. The accounting personnel and third party hired by the management to account for and prepare the financial statements should have adequate technical knowledge of Generally Accepted Accounting Standards and how to apply them to the internal procedures for preparing financial statements. Specific recommendations relating to the comments above are as follows: Internal control over payroll and disbursements We recommend the Organization make extra efforts to ensure required documentation and approvals are obtained on employee’s pay rate forms and timesheets. We recommend the Organization obtain proper approvals on disbursements based on the Organization’s internal control procedure. Internal control over account balances We recommend the Organization maintain an accurate accounts payable schedule to ensure all year end records were properly maintained. Repeat Finding: Yes. See Summary Schedule of Prior Audit Finding, Finding 2022-001 Views of Responsible Officials of the Auditee: Starting early 2023, the Accounting Department has taken better control and accountability in handling accounting and financial internal control processes and month-end journal entries that have allowed more insights and understanding of financial data. The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

Inaccurate Schedule of Expenditures of Federal Awards (SEFA), United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements, as well as proper report of SEFA report. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: During our testing of Federal Expenditure for the Uniform Guidance on major program compliance, it was noted that client did not report all required Federal expenditures of Federal Awards Cause: As part of key personnel change and lack of documentation to support whether a federal expenditure should or should not be included in SEFA schedule, client was missing a few federal expenditures that should have been included in this fiscal year’s SEFA. Potential Effect: Lack of supporting documentation and missing entries leads to inaccurate SEFA for the fiscal year. Questioned Costs: None Recommendation: We recommend the Organization obtain all Federal grant documentation to support the determination to include or to exclude federal expenditures from the SEFA. Repeat Finding: Yes. See Summary Schedule of Prior Audit Finding, Finding 2022-002 Views of Responsible Officials of the Auditee: Starting early 2023, the Accounting Department has taken better control and accountability in handling accounting and major program internal control processes and month-end journal entries that have allowed more insights and understanding of financial data. The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

Internal Control over Financial Reporting, United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: As a result of the auditing procedures over the financial statements, significant adjusting journal entries were required that resulted in a material change to the financial statements. Specifically, 11 adjustments were needed to fairly state the financial statements in all material respects. In addition, we had the following comments relating to internal controls— Internal control over payroll and disbursements We noted instances where employees’ pay rate approval forms are not available to substantiate and document approved pay rates with employees. We noted instances where check and credit card disbursements did not have authorization approval forms to document approval or did not have receipts or invoices to substantiate the expenditure. Internal control over account balances We noted instances where subsidiary schedules and reconciliations did not agree to balances in the general ledger. Medical billings We are able to agree total medical billing revenue from the billing systems to the General Ledger; however, management was unable to provide us participant listing for the Intergy billing system. Cause: Key personnel of the Organization, including the Executive Director and Chief Finance Director, and several key accounting and operation employees are no longer employed in the Organization during fiscal year 2022. Although the Organization hired an interim Executive Director and outsourced accounting function to a third party professional, fiscal year 2022’s financials was not properly stated. Due to the personnel change in operation and accounting departments, there was a lack of oversight to ensure accurate accounting preparation for the fiscal year. Potential Effect: Lack of sufficient internal controls and monitoring processes increases the likelihood of misstatement and/or fraud. Questioned Costs: None. 2022-001 – Internal Control over Financial Reporting, United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 (Continued) Recommendation: It is management’s responsibility to review financial statements for accuracy and ensure proper accounting is being performed. The accounting personnel and third party hired by the management to account for and prepare the financial statements should have adequate technical knowledge of Generally Accepted Accounting Standards and how to apply them to the internal procedures for preparing financial statements. Here are our recommendations relate to the comments above— Internal control over payroll and disbursements We recommend the Organization takes an extra effort to ensure required documentation and approvals were obtained on employee’s pay rate forms and timesheets. We recommend the Organization obtain proper approvals on disbursements based on the Organization’s internal control procedure. Internal control over account balances We recommend the Organization maintain accurate accounts payable, accounts receivable and bank reconciliation schedules to ensure all year end records were properly maintained. Medical billings For internal control purpose, we recommend the Organization have sufficient review procedure on billing to ensure sufficient documentation and proper determining on insurance scale payment determination. Repeat Finding: Yes. See Summary Schedule of Prior Audit Finding, Finding 2021-001 Views of Responsible Officials of the Auditee: The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

Inaccurate Schedule of Expenditures of Federal Awards (SEFA), United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements, as well as proper report of SEFA report. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: During our testing of Federal Expenditure for the Uniform Guidance on major program compliance, it was noted that client did not report all required Federal expenditures of Federal Awards Cause: As part of key personnel change and lack of documentation to support whether a federal expenditure should or should not be included in SEFA schedule, client was missing a few federal expenditures that should have been included in this fiscal year’s SEFA.E 2022-002 - Inaccurate Schedule of Expenditures of Federal Awards (SEFA), United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 (Continued) Potential Effect: Lack of supporting documentation and missing entries leads to inaccurate SEFA for the fiscal year. Questioned Costs: None Recommendation: We recommend the Organization obtain all Federal grant documentation to support the determination to include or to exclude federal expenditures from the SEFA. Repeat Finding: Yes. See Summary Schedule of Prior Audit Finding, Finding 2021-002 Views of Responsible Officials of the Auditee: The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

Lack of Internal Control over Reporting, Health Resources and Services Administration, United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 Criteria: 2 CFR § 200.512 Report submission (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. In addition, HRSA, the major fund grantor, required timely submission of the grants’ annual and quarterly Federal Financial Report (FFR) and Native Hawaiian Data System reports. Government Auditing Standards require adequate internal controls over accounting functions. These internal controls should reduce to a relatively low level of risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants would be material in relation to a federal program being audited may occur and not be detected in a timely manner by employees in the normal course of performing their assigned functions. Conditions: We noted a lack of internal control over Reporting and noncompliance with the timely on-line submission of the annual audit report to the Federal Audit Clearinghouse. Also, during the fiscal year the HRSA grant’s required quarterly financial reports (QFRs) and UDS reports were not available. Cause: Management had turnover and financial data was not prepared accurately and timely to properly report the audited financial statements to the Federal Audit Clearinghouse. Potential Effect: A lack of internal controls over required compliance requirements could affect the Organization receiving future federal funding. Questioned Costs: None 2022-003, Lack of Internal Control over Reporting, Health Resources and Services Administration, United States Department of Health and Human Services, Native Hawaiian Health Care 93.932 (Continued) Recommendations: We recommend management complete all required reporting timely. Repeat Finding: Yes. See Summary Schedule of Prior Audit Finding, Finding 2021-003 Views of Responsible Officials of the Auditee: The Organization concurs with the finding and recommendation. See Management Responses and Corrective Action Plans.

2021-001 ? Internal Control over Financial Reporting, Native Hawaiian Health Care 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: As a result of the auditing procedures over the financial statements, significant adjusting journal entries were required that resulted in a material change to the financial statements. Specifically, 14 adjustments were needed to fairly state the financial statements in all material respects. In addition, we had the following comments relating to internal controls? Internal control over payroll During our testing of payroll it was noted some of employees? pay rate forms had not been updated or approved for the periods tested. The Organization relies on ProService wage reports with no liaison in-between. It was also noted the temporary Executive Director did not fill out timesheet, which is a requirement by the management for the major Federal grant?s cost allocation purpose. Medical billings During our testing of medical billings, it was noted one patient?s insurance scale was not determined accurately based on documentation at hand. Cause of Condition: Key personnel of the Organization, including the Executive Director and Chief Finance Director, and several key accounting and operation employees are no longer employed in the Organization during fiscal year 2021. Although the Organization hired an interim Executive Director and outsourced accounting function to a third party professional, fiscal year 2021?s financials was not properly stated. Potential Effect: This leads to several last month and the year?s entries not presented, or was recorded in error. Questioned Costs: None. Context: Due to the personnel change in operation and accounting departments, there was a lack of oversight to ensure accurate accounting and Inaccurate Schedule of Expenditures of Federal Awards (SEFA) preparation in the last few months of the fiscal year. Recommendation: It is management?s responsibility to review financial statements for accuracy and ensure proper accounting is being performed. The accounting personnel and third party hired by the management to account for and prepare the financial statements should have adequate technical knowledge of Generally Accepted Accounting Standards and how to apply them to the internal procedures for preparing financial statements. Here are our recommendations relate to the comments above-- Internal control over payroll For internal control purpose, we recommend the Organization takes an extra effort to ensure required documentation and approvals were obtained on employee?s pay rate forms and Timesheets. Medical billings For internal control purpose, we recommend the Organization have sufficient review procedure on billing to ensure sufficient documentation and proper determining on insurance scale payment determination. See Management?s Response and Corrective Action Plans on Page 26.

2021-002 - Incomplete and Inaccurate Schedule of Expenditures of Federal Awards (SEFA), Native Hawaiian Health Care 93.932 Criteria: Auditees are responsible for accurate recording and reporting on financial statements. Auditees are also responsible for major program compliance to Uniform Guidance Part 200 requirements, as well as proper report of SEFA report. To ensure accuracy and compliance of financials and major program compliance, management is responsible to design sufficient internal control over financials recording and reporting. Condition: During our testing of Federal Expenditure for the Uniform Guidance on major program compliance, it was note that client did not report all required Federal expenditures of Federal Awards that was the responsibility of the Organization. Cause of Condition: As part of key personnel change and lack of documentation to support whether a Federal expenditure should or should not be included in SEFA schedule, client was missing a few federal expenditures that should have been included in this fiscal year?s SEFA. Potential Effect: Lack of supporting documentation and missing entries leads to incomplete and inaccurate SEFA for the fiscal year. Questioned Costs: None Recommendation: We recommend the Organization obtain all Federal grant documentation to support the determination to include or to exclude Federal expenditures from the SEFA. See Management?s Response and Corrective Action Plans on Page 26.

2021-003 - Lack of Internal Control over Reporting, Health Resources and Services Administration, Native Hawaiian Health Care 93.932 Criteria: 2 CFR ? 200.512 Report submission (a) General. (1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. Government Auditing Standards require adequate internal controls over accounting functions. These internal controls should reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants that would be material in relation to a federal program being audited may occur and not be detected in a timely manner by employees in the normal course of performing their assigned functions. Conditions: We noted a lack of internal control over Reporting and noncompliance with the timely on-line submission of the annual audit report to the Federal Audit Clearinghouse. Context and Cause of Conditions: Management had turnover and financial data was not prepared accurately and timely to properly report the audited financial statements to the Federal Audit Clearinghouse. Potential Effect: A lack of internal controls over required compliance requirements could affect the Organization receiving future federal funding. Questioned Costs: None Recommendations: We recommend management complete all required reporting timely.