The former auditor of the City and County of Honolulu on Thursday told a special House committee that State Auditor Les Kondo does not follow federal standards on auditing and acts in a way that Young finds professionally inappropriate.
Edwin Young also said that Kondo’s behavior in office — authoritarian, intimidating and adhering to outdated practices — could call into question the validity of his office’s work, possible decertification of the office and even result in the state seeing its bond rating degraded.
Kondo’s behavior, said Young, along with news reports about him, led Young to believe that Kondo is the “poster child for bad auditing.” He told the committee that the Legislature may have to “take action” or else the situation may worsen.
Young said that Yellow Book standards apply to all federal, state and county auditing practices, and are not merely guidelines. He criticized Kondo’s habit of recording interviews with agency staff being audited, saying the practice may result in biased testimony and would have to be corroborated.
As well, if concerns about fraud or potential fraud were raised in the course of an audit — something that witnesses before the House committee have suggested may have occurred — it was the responsibility of Kondo to report that to the appropriate agencies and to include the information in the audits.
Asked for his response, Kondo emailed a lengthy statement. It said in part, “Clearly, Edwin Young wasn’t called to educate the committee on the Yellow Book; it was just a jumping off point for him to talk about the 2021 State Auditor Working Group Report; to legitimize that report and to de-legitimize us. Edwin Young was the chair of the State Auditor Working Group. He was clearly not an impartial, unbiased witness.
Kondo added: “We addressed the report, showing how there was no validity to the statements and conclusions he made in that report. People should read the Office of the Auditor’s response on our website.”
And he said that his office has been peer reviewed twice since he has been auditor. “Those peer reviews were conducted by other working state auditors and confirmed that we are a solid audit office.”
Young, who was subpoenaed by Rep. Della Au Belatti’s committee investigating compliance with audits of the Agribusiness Development Corporation and a land fund of the Department of Land and Natural Resources, followed testimony of another witness Thursday morning.
Randal Lee, a former judge who was briefly hired by Kondo in 2018 to work on an audit of the Honolulu rail project, said he found possible fault with 76 out of 164 change orders. Worried abut cost overruns and project delays, he shared the concern about the change orders with Kondo but said he did not know what the state auditor did about those concerns.
Lee also said he and another contractor were terminated by Kondo after only a few months on the job because — as Lee said he heard from Kondo himself — House Speaker Scott Saiki denied a request to use surplus funds to pay for the work. Lee said he was paid about $33,000 for what was a $200,000 contract.
Lee said he had no reason to believe that Kondo misled or lied to him about the contract funding, and that he held no ill-will toward him.
Asked about Lee, Kondo said in part, “Mr. Lee, who admitted to only perusing our final report on HART, can rest assured that we did look at the matters that he identified to us and which he described to the investigative committee. Those who read the HART audit, Report No. 19-03, will find we reported that the City prematurely entered into contracts.”
Kondo also called Young’s remarks on bond ratings and the State Auditor’s Office “reckless and false.”
Belatti’s committee is expected to continue its work in November and December and to submit its findings and recommendations to the Legislature in January.
In the meantime, Kondo has this to say about the committee and its work:
“Instead of trying to improve government by following up on real issues with real recommendations, the Committee is trying to bury our office under a torrent of innuendo and half-truths, while the audits of the Special Land and Development Fund and the Agribusiness Development Corporation go unnoticed. Auditing is hard — speaking truth to power often is — but we do so. If Chair Belatti and the other members of the Committee are truly concerned with me or my office, I am open to a fair, open inquiry, one that allows for a two-way discussion of these issues.”
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