One of the little observed results of the 2012 election on Maui was the decisive approval of a Charter Commission proposal calling for a County Auditor. While not the sexiest job around, a decisive majority of voters (54 percent to 29 percent) voted to bring Maui County into the 20th century and hire an independent auditor–a person whose sole job is to investigate county departments and make sure they’re working honestly and efficiently.
Of course, the election was more than a year ago, but the role of the County Auditor is still getting fleshed out. In July, the Maui County Council budgeted $900,000 for the office and voted unanimously to hire Lance Taguchi, a certified public accountant who most recently was working as Deputy County Clerk for Maui County. He’s also held worked as a legislative analyst with the County Council, an executive assistant at the Maui Mayor’s Office, field auditor with the State of Hawaii Department of Taxation and as an auditor with Deloitte, Haskins & Sells in Wailuku and with American Savings and Loan in Honolulu.
For a reporter like me, the notion of an official County Auditor looking at the things like the Maui County Police Department and Department of Liquor Control is just too delicious. But though he’s been in office for four months now, Taguchi is still far from delivering his first report.
On Nov. 18, I sat down with Taguchi in his new Wailuku digs–a still mostly empty office filled with temporary furniture (including two folding plastic tables on loan from the County Clerk’s office)–and we talked story about his new role in the county, what’s expected of him and why his office seems to be moving so slowly.
MAUITIME: What’s your staff situation so far?
LANCE TAGUCHI: Scott Kaneshina is my senior analyst. And I have an administration officer starting tomorrow. That will be it until the latter part of the year.
MT: How do you like the job so far?
LT: It’s challenging, but I kind of like it. I knew what I was getting into.
MT: Why did you want this job?
LT: I hesitated at first. I have a young family–a seven-year-old and a nine-year-old. But I’d be starting a new office and would hopefully make some improvements in the county. Also the money–like I said, I have a young family.
MT: What sort of improvements do you mean?
LT: First of all, this office is not responsible for implementing improvements in county government. We never implement recommendations–we only report them. But we can focus both the administration and the council on them. I don’t view this job as trying to come to an opinion as to who’s right, who’s wrong–we just bring out the facts. I think that’s pretty consistent with other auditor jobs.
MT: As I understand it, your office has to do a complete financial audit of the county–a Comprehensive Annual Financial Report (CAFR) audit. How is that coming?
LT: This office is not responsible for the audit–we contacted with a third party agency to perform the audit. We have a RFP [Request for Proposals] out for the June 30, 2014 audit. We should get proposals in December.
MT: Have you devised an Audit Plan to show what you’re going to look into?
LT: For the first year, my understanding–from the Corporation Counsel’s office–is that I’m not required to do one. That being said, I’ve stated that I intend to have an audit plan for audits to be implemented by early January 2014. For 2015 audits, that will be transmitted in May or June 2014. It’s not required, but I thought I’d transmit it.
MT: The county’s Cost of Government Commission has publicly advised you not to do an audit of the current mayoral administration’s decision to demolish the old Wailuku Post Office. They met on Nov. 15, and I guess they’ve sent you a letter saying as much. Have you made a decision on whether to audit that?
LT: I haven’t received that letter yet. And I haven’t decided whether it will be included in the list of audits for either 2014 or 2015.
MT: You’ve said that you’ll have an open door policy. Does that mean you’ll take suggestions for audits from the public?
LT: We’ve had a few people stop by the office. My first response is, “have you spoken to the department?” If you can’t get results there, you go higher. But when you come to my office, I don’t have the resources or authority to fix it. I can only investigate it and come to an independent analysis of what happened.
MT: What sorts of audits will your office be doing? Strictly financial or will you also be looking at performance?
LT: It’ll be a mix of both. The CAFR audit will always be done by a third party auditor. But we’ll do a mix of performance and compliance audits.
MT: What’s your criteria for conducting an audit?
LT: We’ll look to other offices that are well established–the state auditor, city auditor and to a certain extent the legislative auditor on the Big Island. They have helped a lot. For the first audits, a good start would be to look at third party auditor’s management letters. I have been in contact with Kobyashi, Kanetoku, Doi, Lum and Yasuda CPAs–an auditing firm in Honolulu–that’s audited the county.
I also used to be an analyst on the Budget and Finance Committee of the County Council. But keep in mind that my office is new. We’ll get there. Audits take time. Investigations take time. A lot of people don’t understand that government is designed to be slow because of taxpayer money. I want to be able to do a good job–credibility is the key. Once you lose your credibility, it’s difficult to get it back.
MT: Will you be adopting any sorts of auditing standards?
LT: I’m pretty sure I’ll adopt Yellow Book standards. They were adopted by all the other auditor offices in Hawaii. People ask me why–the reason is so the reader can see the audit has been to a high standard. It also has a peer review process.
There will be times when the auditee refutes the audit. It’s important to have credibility. We have to stand on our documentation and our standards.
MT: A few months ago you told the county Cost of Government Commission that you and your staff would be undergoing training. What sort of training?
LT: The Association of Local Government Auditors has classes, training, seminars. It’s a requirement of Yellow Book. We’ll definitely be getting that training. It’s to ensure that when we do the first audit, we do it in the proper way.
See, my senior analyst and myself–we don’t have a background of doing Yellow Book audits. The County Council could have selected someone with lots of experience with Yellow Book audits, but who had no experience with this county. In the end, they decided to select me.
MT: Let me ask you this: The County Council hired you, sets your budget, but you have the authority to audit any county department–including the Council. How do you maintain the independence required to do that?
LT: It’s no different from any other auditor’s office. You also have to understand that the Charter sets this office up. I have a six-year term, and can only be removed for cause. The Council has two-year terms. That provides some insulation.
Second, if the office is doing a good job, regardless of what it finds, it will be difficult for them to cut the funding for the office because the public in general will get upset. It was the public’s wish that we establish this office. That’s my belief.
MT: Over the last few months, the Cost of Government Commission has returned to this topic–even to the point of theorizing that maybe your office and theirs would merge.
LT: The Cost of Government Commission is concerned about it, in their way. But the strength of this office is its independence. Anything that takes away from this office’s independence, I’m going to fight. The public will protect this office as long as I’m independent and doing a good job.