The Hawaii State Auditor released a new report Friday criticizing how the Office of Hawaiian Affairs monitors and evaluates some of the grants that the organization distributes.

The report raises questions about whether OHA is meeting not only its statutory requirements but its fiduciary responsibilities to Native Hawaiians.

The semi-autonomous state agency manages a $600 million trust for the benefit of Native Hawaiians and has had a tumultuous year plagued by political infighting and allegations of misspending. The agency is even reportedly the subject of a corruption investigation by the FBI.

“Those deficiencies in OHA’s grants administration process indicate that OHA is not ensuring it meets statutory requirements, as well as its fiduciary responsibility to all beneficiaries,” the new audit says.

Cory Lum/Civil Beat

A state audit earlier this year criticized OHA for spending $14 million in discretionary funds without proper guidelines. The OHA Board of Trustees responded in part by defending the expenditures and noting that they went to organizations that benefited Native Hawaiians.

The audit released Friday afternoon is more narrowly focused. The audit found OHA “did not consistently meet the statutory requirements to monitor and evaluate ‘Ahahui Grants,” which are one-time awards to support single events.

The audit says OHA’s Transitional Assistance Program is the main division in charge of grant administration but has no comprehensive list of grants.

“Without a centralized and systematic process for compiling and verifying information on all OHA grants, TAP – and OHA – cannot ensure the accuracy and transparency of the agency’s reporting of grants to beneficiaries, the Legislature, and the general public,” auditors found.

“In fact, during the course of our audit work, we noted two grants – a $500,000 grant to the International Union for Conservation of Nature’s 2016 World Conservation Congress and a $250,000 Kūlia Initiative to the State Department of Labor and Industrial Relations – that were not included in OHA’s FY2015 annual report. Both TAP and fiscal personnel confirmed that the grants should have been included in the report and were omitted due to oversight,” the audit continued.

The audit also found that OHA met seven of 23 recommendations that came from the state’s 2013 audit. Another 15 recommendations were partially met and one was not. OHA disagreed with the recommendation to adopt an “information system to track grant status and project deliverables that flags the approval of new awards to grantees that miss a deliverable.”

The agency doesn’t plan to implement this and will continue to review grants manually, the audit says.

In a statement to the media, OHA said that it’s working to improve its grant administration and that the money goes to benefit Native Hawaiians.

“Formal Board and administrative initiatives already underway to review and update OHA policies and procedures, including those related to our grants program, will consider the findings and recommendations from today’s audit,” the statement said.

“In closing, OHA remains committed to improving the overall administration and reporting of funds that we disburse to the Native Hawaiian community and to providing increased transparency and accountability to our beneficiaries.”

The agency also noted that it’s already implemented a grant tracking system.

But the auditor took issue with some of OHA’s reply in its official comments.

“Distributing grant moneys throughout the community does not by itself better the conditions of OHA’s beneficiaries, as OHA seems to suggest in its response,” the auditor said. “Proper vetting, monitoring, and evaluation of all OHA grants is necessary to help ensure that funds distributed are being used consistent with the intended purpose, as well as with OHA’s overall mission.”