Launching what he calls “basically an audit of the Auditor’s Office,” Hawaii House Speaker Scott Saiki has convened a panel to evaluate the State Auditor’s office amid concerns about missed deadlines and “unnecessary litigation.”

The working group will consist of former U.S. Rep. Colleen Hanabusa and former state Office of Budget and Finance Director Wes Machida and will be chaired by former Honolulu City Auditor Edwin Young. Saiki has asked them to submit their report on or before April 1.

“As you know, limited resources make it problematic for the State Auditor to address all outstanding issues and matters,” Saiki wrote in a memo sent to all House members, which was obtained by Civil Beat. “Therefore, the findings of the working group will assist the State Auditor in prioritizing its work and the scope of its work.”

Speaker of the House Scott Saiki speaks about preparations in the budget for Coronavirus.
Hawaii House Speaker Scott Saiki, pictured here in February, has launched a probe of the State Auditor. Cory Lum/Civil Beat/2020

In an interview, Saiki said he had initiated the inquiry because State Auditor Les Kondo has missed deadlines for reports requested by lawmakers and has gotten into what Saiki called “unnecessary litigation.”

Saiki specifically pointed to an audit of the Office of Hawaiian Affairs, which the Legislature asked Kondo to conduct before lawmakers would release $3 million in general funds to OHA.

But the audit got mired in litigation between the auditor and OHA over whether the auditor could have access to portions of OHA executive session minutes that OHA had redacted from previously provided material. After examining the minutes, Hawaii Circuit Court Judge Jeffrey Crabtree agreed that the redacted portions were covered by attorney-client privilege and could thus be redacted.

But Kondo has refused to do the audit without the privileged information, and, as a result, OHA’s funding has been held up.

State Auditor Les Kondo speaks about the first HART Audit.
State Auditor Les Kondo speaks about the first HART Audit in January 2019. Cory Lum/Civil Beat/2019

Kondo said he was aware of the working group but had not spoken to Saiki about the reason for it. Kondo said the OHA litigation was not his office’s fault and that government auditing standards require the office to obtain the full minutes.

“In my opinion, we did not have sufficient and appropriate evidence,” he said.

Additionally, Kondo said his office has worked hard to successfully pivot during a time when many agencies have been inaccessible for the kinds of work government auditors do because of the pandemic.

Unlike tax or financial auditors, government performance auditors often engage in field work that requires being on-site at an agency’s office or physical location. An ongoing audit of the state prisons simply isn’t feasible now, he said.

At the same time, Kondo said, the office sought to take the initiative to provide help with the COVID-19 crisis by reporting on possible overlooked sources of revenue for the cash-strapped state government and by doing a report on the state’s travel quarantine program.

Saiki also pointed to a requested audit of the Honolulu rail project, saying it came in late despite $1 million in additional funding from the Legislature.

Kondo defended the rail report, which the office released in multiple parts, as “timely and solid.”

A former executive director of the State Ethics Commission, Kondo took over as State Auditor in 2016, replacing Jan Yamane, who had served in an acting role for years following the retirement of long-time State Auditor Marion Higa.

Although an independent agency, the auditor’s office often takes its assignments from the Legislature, which has the power to direct the office to conduct investigations. Saiki said he had not seen Kondo’s predecessors miss deadlines and get engaged in litigation the way Kondo has.

Although appointed to an eight-year term, the auditor may be removed “for cause” by a two-thirds vote of the joint session of the Legislature.

Asked if missed deadlines and undelivered reports could be considered cause to remove Kondo, Saiki said: “Yes. My position is that of all state offices, the auditor’s office should be beyond reproach.”

“They need to follow the law, the Constitution and directives from the Legislature,” he added.

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