Financial Audit of the Department of Agriculture A Report to the Governor and the Legislature of the State of Hawai`i Report No. 05-02 April 2005_part7 pot

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Response of the Affected Agency

Comments on
Agency Response

We transmitted a draft of this report to the Department of Agriculture on
April 4, 2005. A copy of the transmittal letter to the department is
included as Attachment 1. The response of the department is included as
Attachment 2.
The department states that it was given an opportunity to adjust its
allowance for loan losses, and thereby believes that a qualifying opinion
should be removed. Based on the department’s adjusted allowance for
loan losses, the related qualification to the opinion in the draft report was
removed. However, a material weakness still exists as the department’s
methodology used to determine its allowance for loan losses for FY200304 does not comply with generally accepted accounting principles.
Otherwise, the department generally concurred with our findings and
recommendations, and provides additional information to explain its
current procedures and corrective actions planned, or already taken, to
address the internal control deficiencies identified in our report.

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