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Auditors issue clean opinion on HCDA FY2025 statements; new accounting standard triggers restatement
Summary
External auditors reported a clean opinion on HCDA's fiscal year ended June 30, 2025 financial statements, found no material internal-control weaknesses, and said adoption of a new compensated-absences accounting standard required a beginning net position adjustment of about $435,000 and several year-end audit adjustments.
External auditors told the Hawaiʻi Community Development Authority on Jan. 7 that HCDA's fiscal year 2025 financial statements were prepared in accordance with applicable standards and received a clean opinion.
Ralph Kanetoku and Guy Nishihiro, auditors under contract with the state office of the auditor (KKDLY LLC), said they issued an independent auditor's report and found no material weaknesses in HCDA's internal control over financial reporting and no reportable instances of noncompliance under government auditing standards. "We identified no instances of noncompliance and other matters that are required to be reported under government auditing standards," one auditor said.
The auditors described several significant audit adjustments made during the fiscal year-end close. They identified (1) recognition of unearned revenues related to a U.S. Navy advanced funding agreement, (2) recognition of a gain on remnant parcels in exchange for properties at 873 Kapiolani Boulevard and 610 Ward Avenue, and (3) lease accounting adjustments reflecting HCDA's roles as both lessor and lessee.
Auditors also highlighted adoption of a new government accounting standard on compensated absences (effective July 1, 2024) that required HCDA to present accrued sick leave on the face of the financial statements rather than as a footnote. As a result of that change in accounting principle, auditors said HCDA reinstated its beginning net position by about $435,000 in the 2025 government-wide financial statements.
During questions, Member Evans asked whether the new compensated-absences treatment applies across state agencies; the auditors confirmed it does. A member of the public, Keith Windicott, asked whether the FY2025 financial statements are available online; staff responded they are not posted online but are available on request.
Auditors confirmed they had full access to records and personnel during the audit and stated they were independent as of the financial-statement issuance date. They offered to answer further questions and said staff will provide updates if the board requests ongoing reporting on matters such as lease accounting and remnant parcel transactions.
