Audit accuses tourism agency of ‘poor stewardship’ of funds

The Hawaii Tourism Authority plans to ask the state Legislature to make changes to a law outlining the requirements for a single tourism marketing plan and will implement other internal improvements after a critical state audit.

The audit accused the HTA of poor stewardship of the public money that supports Hawaii’s $14.4 billion visitor industry, which accounts for 20 percent of Hawaii’s economy.

A state audit released on Wednesday criticized the HTA for lacking the formal written policies, procedures and training to ensure adequate transparency and accountability for how it spends public funds — all problems that a previous auditor identified about a decade ago. While Acting State Auditor Jan K. Yamane recognized that the HTA had taken steps to address previously identified planning and performance monitoring deficiencies, she said that more progress is needed.

"The State dedicates tens of millions of dollars every year to support this important industry; however, the authority’s continued deficiencies in planning, reporting and contract oversight show poor stewardship of public moneys," Yamane said in the report.

She said the HTA’s "self-described marketing plan" is nearly 600 pages, is spread across more than a dozen documents, and falls short of statutory requirements. Yamane also faulted the HTA for not ensuring that its marketing contractors submit final reports or routinely conducting evaluations. She also found contract files missing from key reports.

Yamane said that these weaknesses contributed to inconsistencies in the HTA’s monitoring of 2012 expenditures, including $59 million in marketing contracts and other agreements. It’s especially troubling that similar HTA problems were found in a 2002 audit, she said.

HTA President and CEO Mike McCartney did not dispute the audit’s findings.

"While we have made significant progress in these areas and other areas as well, we know there is always room for growth and improvement," McCartney said in a written statement. "The recommendations included in the report will be used as a tool in our ongoing planning and integrated into our work plan as we strive to be more efficient, effective and productive."

McCartney said HTA staff will use the auditor’s recommendations to develop a work plan, which they will present to the HTA board at its Dec. 19 meeting. HTA staff also will analyze tourism marketing plan requirements as outlined in HRS Sections 201-6 (a-b) and pursue changes during the legislative session, he said.

Rep. Romy M. Cachola, vice chairman of the House Committee on Tourism, said the HTA has done an excellent job marketing the islands to visitors, but added that it must address the issues raised by the state auditor.

"High standards of transparency and accountability are essential to maintaining the trust of taxpayers in using their money to promote Hawaii as a world-class tourist destination," Cachola said. "It is my hope that HTA follows the recommendations of the audit so that such deficiencies should not be an issue in any future audit."

Sen. Gilbert S.C. Keith-Agaran, vice chairman of the Senate Committee on Tourism, said a hearing is likely given the findings.

"We want to make sure HTA is accountable," Keith-Agaran said. "It will be an interesting session if the HTA comes in with legislation. I’m not sure how the statute would need to be changed as it’s pretty general."

Keith-Agaran called the dispute over whether HTA’s tourism marketing plan should be contained in one document a "culture clash."

"It reflects the difference between how government would operate as opposed to people who are used to being in business and may just want to get things done," he said. "But this is a very important industry that is funded by a state tax so obviously the people have a big interest in seeing if their efforts are successful and what (the HTA is) targetting isn’t self-serving."

Senate Majority Leader Brickwood Galuteria said he was particularly disappointed to learn that the HTA managers were not obtaining final contractor reports. Still, Galuteria said he was pleased that the HTA has pledged to move toward the auditor’s recommendations.

"We’ll hold HTA to their word that they will be taking this next step," Galuteria said. "We understand that it’s a fluid industry, but this thing is about institutional process and oversight. I’m sure that our tourism committee will want to hear more from them."