Hawaii’s Financial Report Released – Finally
Every state must release a Comprehensive Annual Financial Report (CAFR), a series of government financial statements that detail the financial condition of a state, municipal or other governmental entity. These must comply with accounting requirements called “generally accepted accounting principles (GAAP), established by the Financial Accounting Standards Board (FASB).
The CAFR, which in Hawaii is compiled by a the state legislative auditor and audited by the accounting firm Deloitte & Touche LLP, includes three main sections, Introductory, Financial and Statistical.
But as Sheila Weinberg, president of the Institute for Truth in Accounting, points out, while this report is important, it is issued notoriously late in Hawaii.
Last year, the 2009 CAFR was 477 days late. In fact, Hawaii was the last state to release the report and received national attention for this delay.
This year, the report also was late, she said.
“Weinberg said that while the state does not have a set rule about when it is supposed to be released, she notes that the state requires individuals and corporations to have their state tax returns done within 111 days after the year end. Yet the state issues its financial report 478 days after its year end.”
In a press conference this week, Gov. Neil Abercrombie intimated that the report was delayed because of Gov. Linda Lingle’s administration’s incompetence.
However, the responsibility of getting the CAFR out on time falls to the legislative auditor, who works with other departments of the governor’s administation to get the information compiled.
Kalbert Young, director of the state Department of Budget & Finance, confirmed that the CAFR is the responsibility of the legislative auditor and the state Department of Accounting and General Services is the executive branch department that coordinates the production of schedules for the auditor and the external auditor.
Young said that the CAFR is really not important for the vast majority of taxpayers and that it’s delay has not meant any implication for taxpayers.
“It’s really a government operations issue and the delay really only impacts operational matters – such as, being necessary to issue bonds, respond to inquiries on audited financial numbers, etc. Credit agencies and investors (bond buyers) expect and rely on the CAFR for making investment decisions on whether to buy Hawaii bonds or judgements on the financial health of the State Government.”
He adds that “National organizations or think tanks will collect CAFRs from all the states to show relativity of metrics from one state to the next using the audited financial numbers. The CAFR is used in the budgeting process to the extent that we do use the audited numbers for development of the forward-looking financial plan, but to the extent that the CAFR has been delayed, it really is not that significant to have hampered the budget-planning process.”
However, Weinberg argues that “The financial statements include information that is critical for decision making for budget decisions and therefore the legislature and governor should have the information at the beginning of the budget process, and not long after it is done. This is equal to you setting up personal budget, making decision about what you should borrow and buy, while not knowing what your credit card balances are.”
Ewa Neighborhood Board Chair Should Return Money to Deceased Man’s Family
Frankie McCurley, an elected member of the Ewa Neighborhood Board, is expressing concerns over a lawsuit against Ewa Neighborhood Board Chairman Kurt Fevella by the daughter of a deceased Ewa Beach man.
The state court suit was filed earlier this year by Melanie Burroughs, daughter of Paul W. Burroughs, an Ewa Beach resident who died in 2009, two years after selling his home to Favella and his wife for $250,000.
Before he passed away, Burroughs told his daughter that he planned to leave “the majority of his estate” to her, the suit, filed by attorney John Edmunds, alleged.
Burroughs, who lives in the mainland where she has been battling cancer, claims that Fevella used undue influence to obtain control over her elderly father’s home and other assets.
While acting as Burroughs’ caregivers, Kurt and DonnaLee Favella “assisted him from time to time in his personal and financial affairs” and “used undue influence and fraud” to induce him to deed the title to his house to them, the suit charged.
Property records show that in 2007, Paul Burroughs took out two mortgages on his home before selling it later that year to the Favellas.
The first mortgage, for $100,000, was made in January 2007 and the second, an adjustable rate “reverse mortgage” worth up to $660,000, was borrowed in June 2007, according to state land records.
Reverse mortgages allow individuals over 62 years of age to draw cash from the equity in their homes over time. The effect on the market value of a home varies according to terms of the loan.
Favella did not respond to questions about how the loan proceeds were used or if he assisted Burroughs in borrowing the money.
Both loans have since been repaid.
Favella, who works part-time for the City as a refuse inspector, ran unsuccessfully for the state House of Representatives in 2008 and last year.
A vocal proponent of the Honolulu rapid transit project, Fevella is past chairman of the Ewa Neighborhood Board and was re-elected to the board earlier this year.
McCurley said Fevella should set the example and make full restitution with the family.
“This issue has shed a dark light on our community and needs to be corrected,” McCurley said.
This request comes the same day that Hawaii lawmakers learned that there is a loophole in a state law that is preventing law enforcement from learning about reports of financial fraud against the elderly.
State law requires that cases of suspected physical abuse of the elderly must be reported to law enforcement, but there is no such requirement in cases of suspected financial abuse.
Patricia McManaman, director of the state Department of Human Services, said banks and other financial institutions must report those suspicions to the state office of Adult Protective Services, which is not a law enforcement agency and is not equipped to conduct a criminal investigation.
Christopher Van Marter, head of the Honolulu Prosecutor’s White Collar Crimes unit, and Honolulu Police Lt. John McCarthy, who oversees HPD’s financial crimes investigations, recommended a change to the law.
The testimony came during an informational hearing on elder abuse and financial exploitation before the state Senate and House Human Services Committees.
Various witnesses told the legislators that the graying of Hawaii’s population has seen an increase in financial crimes against the elderly.
Attention Ultimate Fighting Fans
No its not Linda Lingle vs. Mazie Hirono in the battle for the U.S. seat.
Instead, this is about B.J. Penn or other ultimate fighters possibly coming to Hawaii for a championship event to be set in an outdoor arena in 2012.
MMA Weekly reports that according to UFC President Dana White, Hawaii may host a championship in 2012. White confirmed that his group is in negotiations to hold an event here that could include former Hawaii resident B.J. Penn.
The news report points out that “Hawaii has always been known as an area that not only loves fighting, but produces some of the best fighters in the world”. … and that “The UFC’s schedule hasn’t been set for next year yet, but Hawaii has always appeared on the radar for the organization once the state commission there instituted a set of rules similar to those held in other areas of the United States. Now with those rules and sanctioning in place, the UFC has an open door to land in Hawaii.”
The report also said White was not sure about B.J. Penn: He told MMA: “I don’t know. It’s like that Canada thing when everybody thought Georges (St-Pierre) had to be on the card. It’s great to have him, but it’s one of those markets we’ll kill it with or without him.”
This article comes just after Penn opened the 37,000 square foot UFC GYM in the old Pipeline Cafe in Kakaako and began selling memberships as of October 18. The gym was recently featured in the television drama Hawaii 5-0.
A press statement said the location, which will open for workouts in early 2012, “looks to bring the unique ‘Train Different’ approach of the UFC GYM brand to the Island, offering residents the opportunity to train like Penn and world-class UFC fighters.”
About the opening of the new location, UFC President Dana White said “BJ Penn has been a UFC champion at 155 and 170, a future Hall of Famer, and an icon in his home state of Hawaii. We’re excited to open the UFC GYM enrollment center in Honolulu. We know UFC GYM BJ PENN will become the ultimate fitness destination in Honolulu.”