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OHA board hears accounting review after $6M public‑land trust drawdown error; $5.42M repaid, $576,609 remains
Summary
Trustees were briefed on an erroneous July 2023 journal voucher and subsequent drawdowns that overstated a state account; administration says $5,420,000 was repaid and about $576,609 remains payable. Trustees pressed for stronger internal controls, legal interpretations and mandatory board visibility for nonroutine trust drawdowns.
The Office of Hawaiian Affairs board received a public briefing Dec. 18 on an accounting error tied to the public land trust that led to a multimillion‑dollar overstatement and subsequent drawdowns.
Administration officials said a July 2023 journal voucher of $16,125,000 was processed and not reversed as directed by the Department of Accounting and General Services; that unreversed entry produced an overstated state account balance that later supported drawdowns in June–July 2024. Once the error was identified, the administration reported that $5,420,000 has been repaid to the state and that approximately $576,609 remains owed.
Trustees and staff recounted the timeline: staff and consultants reviewed transaction detail, located the unreversed journal voucher and classified the overstated receipts as liabilities due back to the state. Administration said the misinterpretation of the relevant legislative act contributed to the drawdowns and agreed that an updated statutory/legal interpretation should have been sought earlier. A representative for the accounting consultant described efforts to reconcile account detail and flagged problems with the state’s account‑summary reporting that lacks transaction‑level detail.
Trustees pressed on several points: why the board was not notified earlier, whether legal counsel reviewed the interpretation that led to the drawdowns, and whether existing delegation of authority and approval thresholds allowed the transactions to proceed without board notification. Administration and counsel said the previous delegation of authority permitted such drawdowns without board notice at certain thresholds; the board’s updated delegation raises the chair‑notification threshold for non‑PO payments to $2,500, so similar transactions would now trigger higher oversight. Trustees recommended new standard operating procedures, mandatory legal sign‑offs for statutory interpretations, and clearer escalation protocols for large nonroutine trust transactions.
Administration said it is transferring supporting files to OHA for spot checks and that a post‑distribution audit and corrective journal entries are in process. Trustees also discussed whether interest or other financial impacts remain to be determined and asked staff to return with a full remediation plan and documentation of communication with DAGS and the prior CFO. No disciplinary actions or determinations of legal liability were announced during the briefing; staff said work to correct the accounting is underway.
