The Office of the Auditor and the certified public accounting firm of KPMG LLP conducted a financial audit of the Department of Business, Economic Development and Tourism, State of Hawaii, for the fiscal year July 1, 2001 to June 30, 2002. The audit examined the financial records and transactions of the department; reviewed the related systems of accounting and internal controls; and tested transactions, systems, and procedures for compliance with laws and regulations.

We found deficiencies in the financial accounting and internal control practices of the department. We found that the department is deficient in the management of its loan programs. The department administers four revolving loan programs that were developed to stimulate Hawaii