PERFORMANCE AUDIT of the HAWAIIAN HUMANE SOCIETY Findings
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• • • • PERFORMANCE AUDIT • OF THE HAWAIIAN HUMANE SOCIETY • • PERFORMED By ARTHUR ANDERSEN LLP • FOR THE HONOLULU CITY COUNCIL • • City and County of Honolulu STATE 0 F HAWAII • r • ARTHUR ANDERSEN • September 5, 1997 Arth~r Andersen LLP The Honorable John De Soto, Chairman and Suite 2900 Members of the City Council 737 Bishop Street City and County of Honolulu Honolulu HI 96813-3289 8085262255 • Honolulu, Hawaii 96813 • Dear Chair De Soto and Council Members: We are pleased to submit our Final Report on the Performance Audit of the Hawaiian Humane • Society. This report is the result of an examination and evaluation of the programs and operations of the Hawaiian Humane Society related to city contracts. We performed the audit for the City Council under contract with the Office of Council Services pursuant to the Honolulu City Council's Resolution 96-165, CD1, FD1, which authorized a performance audit 'of the Hawaiian • Humane Society. We appreciate the opportunity to perform this audit and sincerely hope that it will be constructively used to improve the services which the Hawaiian Humane Society performs. • truly yours, • • • • e. • • Performance Audit of the • Hawaiian Humane Society • • • Prepared by Arthur Andersen LLP for the • Honolulu City Council September 1997 • • • • PERFORMANCE AUDIT City and County of Honolulu HIGHLIGHTS State of Hawaii September 1997 • PERFORMANCE AUDIT OF THE HAWAIIAN HUMANE SOCIETY Findings . As a good business practice, the Council authorized a performance audit of the Society (Resolution 96-165, CDI, FD1). An audit of the Society had not been done since • 1980. Arthur Andersen LLP was engaged by the Office of Council Services to conduct the audit. The auditors found that: (I) The Society's animal control program has mixed • results against certain animal control performance "benchmarks. " (2) The Society' budgetary controls over the City's • programs could be improved. (3) The Society's system to track and address public complaints about Society personnel was inadequately documented. • (4) The Society did not comply with City contract provisions in such areas as program reporting and monitoring, response time for animal nuisance calls, and use of animal control officers. • (5) Animal care provided by the Society and by spay/neuter veterinarians appeared to be adequate, but certain improvements could be made. (6) The Society's internal operations relating to the • City's programs could be improved; program goals and objectives were not measurable, controls over purchases could be improved, and record keeping was incomplete. • (8) The Department of Finance oversight of the City's contracts could be improved. • • • PERFORMANCE A.UDIT OF THE HAWAIIAN HUMANE SOCIElY • Recommendations The auditors recommended that: and Response (1) The Society physically segregate City program funds from its other funds and keep separate accounting records. (2) The Society review the basis it uses to budget and account for the City's programs and review budget differences with the City. • (3) The Society document its procedure for handling both written and oral complaints from the public about Society personnel and document its responses. • (4) The Society comply with the reporting and monitoring requirements of its City contracts and develop reasonable animal complaint response times and qualifications for spay/neuter certificate purchasers. • (5) The Society improve its goal setting and internal operations with respect to the City programs. (6) The City strengthen oversight of its Society contracts, bolster contract provisions, ensure its • contracts are properly awarded, and establish a balanced budget for the animal control program. The Hawaiian Humane Society responded that certain recommendations were either being implemented or would • be addressed in consultation with the City, but that other findings and recommendations were not consistent with its legal relationship with the City. However, the auditors believe that contract compliance and sound business practices are essential elements for any contractor • prOViding sen'ices to the City with public monies. Regarding recommendations pertaining to it, the Department ofFinance was in general agreement, and noted that contract oversight has since been moved to the • Director's office. The department also said it would meet regularly with the Society to review contract performance. • • • TABLE OF CONTENTS Page Number • 1. Introduction I-I TI. Background TI-I ill. Findings and Recommendations ill-I FINDING NUMBER ONE: ITI-I • THE SOCIETY'S ANIMAL CONTROL PROGRAM HAS MIXED RESULTS AGAINSTCERTAINPERFO~CE "BENCHMARKS" • FINDING NUMBER TWO: ill-5 THE SOCIETY'S BUDGETARY CONTROLS OVER THE CITY'S PROGRAMS COULD BE • IMPROVED FINDING NUMBER THREE: ill-I 0 THE SOCIETY'S SYSTEM TO TRACK AND ADDRESS PUBLIC COMPLAINTS ABOUT SOCIETY PERSONNEL WAS INADEQUATELY • DOCUMENTED FINDING NUMBER FOUR: ill-13 THE SOCIETY DID NOT COMPLY WITH • CERTAIN CITY CONTRACT PROVISIONS FINDING NUMBER FIVE: TII-20 ANIMAL CARE PROVIDED BY THE SOCIETY AND BY SPAYINEUTER VETERINARIANS APPEARS TO BE ADEQUATE, BUT CERTAIN IMPROVEMENTS COULD BE MADE • • • • TABLE OF CONTENTS (continued) • Page Number FINDING NUMBER SIX: ID-24 THE SOCIETY'S INTERNAL OPERATIONS RELATING TO THE CITY'S PROGRAMS COULD • BE IMPROVED FINDING NUMBER SEVEN: ID-33 THE DEPARTMENT OF FINANCE'S OVERSIGHT OF THE CITY'S CONTRACTS COULD BE • IMPROVED IV. Conclusion: The Society's and City's Management IV-I Control Environment Covering City Programs Could be Improved • V. Responses from Affected Agencies V-I Hawaiian Humane Society • Department of Finance • • • 11 • • • LIST OF TABLES Page Number • TABLE 1: Outcomes for Intake of All Animals, llI-l Including Cats and Dogs, FY 1995 and 1996 TABLE 2: Reported Animal Control Budget Versus llI-6 • Internal Budget, FY 1995 and 1996 TABLE 3: Animal Control Program Finances, FY 1995 and 1996 llI-7 TABLE 4: Crematorium Expenditures, FY 1995 and 1996 llI-8 • TABLE 5: Compliance with SpaylNeuter Contract Requirements, ill-15 FY 1995 and 1996 TABLE 6: Status of Dispatch Logs, FY 1995 and 1996 Ill-27 • TABLE 7: Status ofField Service Reports, FY 1995 and 1996 ill-28 TABLE 8: Status of Case Reports, FY 1995 and 1996 ill-29 TABLE 9: SpaylNeuter Certificate Payments Versus ill-35 • Expenditures, FY 1995 and 1996 • • • 1ll • • I. INTRODUCTION • As a good business practice, the Council authorized a performance audit of the Society (Resolution 96-165, CDl, FDl). The Council's last audit of the Society was conducted in 1980. Arthur Andersen LLP was engaged by the Office of Council Services on behalf of • the City Council to conduct the audit. A. OBJECTIVES OF THE PERFORMANCE AUDIT • Resolution 96-165 set forth the objectives of the audit as follows: Determine if City funds had been used efficiently and effectively to support each of the direct services contracted by the City with the Society, including administrative overhead. • Evaluate the Society's compliance with its contractual obligations to the City. Determine whether the Society has complied with all applicable statutes, ordinances, policies, and rules relating to the investigation of animal nuisances, • cruelty, abuse, and neglect, and the seizure of animals from their owners. Determine whether the Society has provided adequate animal care in the City's contracted animal shelter. Determine the cause( s) of any deficiencies found, whether in management, financial, personnel or other systems or procedures, and make • recommendations for improvement as appropriate. B. SCOPE AND METHODOLOGY • To meet the objectives of the performance audit, the auditors performed a review of selected financial and operational records and transactions and the related systems of controls of the Society as they relate to the Society's contracts with the City. The examination was made for the two fiscal years 1995 (from July 1, 1994 to June 30, 1995) • and 1996 (from July 1, 1995 to June 30, 1996). The audit was conducted in accordance with standards established by the American Institute of Certified Public Accountants and the relevant provisions of Government Auditing Standards (1994 Revision) issued by the Comptroller General of the United States. • I-I • • The audit procedures included, among other things, the following major areas of emphasis: • Review of selected financial and operational information related to the City contracts contained in the Society's reports. The review was made using certain information obtained from the Humane Society of the United States (HSUS). Based upon the auditors' discussions with an HSUS employee, the auditors understand that the HSUS compiles the results of surveys of • certain animal shelters across the U.S. These surveys are conducted by the HSUS and other agencies, such as the American Humane Association. This information was not compiled for the express purpose of evaluating the Society's operations and, as with all publicly available information, has certain inherent limitations. However, the auditors believe that the use of these • survey findings was a reasonable "benchmark" to evaluate the Society's animal control program performance and meet the objectives of the performance audit. Review of selected elements of the accounting and management control system • covering the City contracts. Testing selected transactions for compliance with specific provisions of the City contracts, the Society's internal policies and procedures, and laws and regulations. However, no legal determination was made as to the Society's