Plans to scrap a previously sought top-down internal review of the Honolulu Authority for Rapid Transportation are expected for review today.

HART’s board of directors will consider a recommendation from its Internal Audit Committee to cancel a 2023 internal audit solicitation, the meeting’s agenda states.

According to its website, HART issued the latest internal audit solicitation in August, with a Sept. 30 due date.

“The selected (contractor) will provide internal audit services for the HART Board of Directors, primarily with direction and input from the Internal Audit Committee of the Board,” the posted job description reads. “The contractor will report administratively to the HART Executive Director/Chief Executive Officer through the HART Board Executive Officer.”

“The contractor will perform an overall assessment of HART’s processes to ensure policy and procedural operational efficiency, financial reporting reliability, and compliance with applicable laws and regulations,” the posting reads.

But on Feb. 2 HART’s Internal Audit Committee chair, Edwin Young, said the board of directors should cancel procuring outside internal audit services until a better option can be created.

A former Honolulu city auditor, Young told the committee that finding HART’s reviewer had been nothing short of problematic, “primarily because the bids came in higher than anticipated … and also because it is premised on internal audit standards, which are contrary to what government auditors follow in terms of the accepted government auditing standards.”

He asserted the agency’s solicitation for internal auditing services — approved in April by HART’s board — “contradicts the City Charter, Article 17-103 and 105, which designates the board as a policy-making board and the CEO as responsible for the day-to-day activities of the internal audit serv­ices.”

Young’s request to rescind the board’s prior decision — via Resolution 1, which in part states that the existing “scope of services” for a future internal auditor were “incompatible” and “redundant” — was also based on the city having about 42 full-time equivalent positions “performing the same functions that are listed in the scope of services.”

Those positions included the Honolulu Ethics Commission as well as the city’s Internal Control Division, he added.

“And we would establish it and perform the same functions with only one manager and one auditor” at HART, Young explained.

Typically, the role of internal auditors is to review large organizations, such as a private company or government agency, to identify operating inefficiencies, wasteful spending, noncompliance with laws and regulations, and even fraud and theft, among other issues.

The largest public works project in Hawaii history, HART has awarded over 82 contracts, totaling approximately $4.6 billion, since its inception in 2011, the agency’s website states. Now called Skyline, its construction — delayed for years due to cost overruns — is budgeted at nearly $10 billion.

Meantime, the request to cancel a planned internal audit rankled board member Natalie Iwasa, who claimed she’d been pushing for years for a full-scale review of HART’s inner workings.

“I just can’t believe it wasn’t established in the very beginning because we have a $10 billion project,” she told the panel Feb. 2, “and as the Association of Certified Fraud Examiners points out, organizations of all kinds have experienced approximately 5% loss of revenues annually, and one way to mitigate that risk is to have an internal audit function and a hotline.”

She said that “those two methods alone account for over 50% of frauds that are discovered.”

“So I am just really frustrated with this. … This board has discussed the internal audit function for four years now,” Iwasa said, adding that a prior peer review conducted by outside rail company directors yielded a detailed report. “The HART board adopted rules based on their report. The procurement was based on their report, and a lot of it is word for word.”

She added that although the board followed these recommendations, “at no point in the entire process did anyone say, ‘Hey, wait a minute, this goes against the charter.’ … So while I understand what we’re doing, I just wanted to express my frustration because this has just taken so long.”

Later, board member Roger Morton queried Young on whether city auditors have jurisdiction over HART. “And is it appropriate for us to look to them for providing that service, and are they willing?” Morton asked.

Young replied, “HART is a quasi-governmental entity, so they have no jurisdiction over it.”

“We can solicit their support, but they can’t tell us what to do,” Young said, noting his intent was to come up with a “different scope of services, a different model, and more in compliance with the City Charter.”

At the same meeting, the board of directors is also expected to discuss and create a formal permitted interaction group.

That group, or PIG, would study the feasibility of seeing HART and city Department of Transportation Services — which operates Skyline, TheBus and TheHandi-Van — merge into one transit agency.

HART, upon completed construction of Skyline’s 19-station, 18.9-mile fixed- guideway rail system to Kakaako, is slated to dissolve by 2031, city officials say.

The meeting is scheduled to begin at 8:30 a.m. at Alii Place, 1099 Alakea St., Suite 150.