The state Bureau of Conveyances has not adequately updated its administrative rules, fee schedules or subscription contracts with title insurance companies nor has it created written guidelines for handling cash, a state fiscal management officer told a House and Senate investigative committee yesterday.

Juliet Kanzanjian, a fiscal management officer for the state Department of Land and Natural Resources, said the state could be losing tens of thousands of dollars because of the way the bureau is being managed.

Kanzanjian's testimony follows similar comments from Leroy Taira, a retired auditor who worked for Kanzanjian at the department. Taira told the committee earlier this month that the bureau has yet to increase its fees for providing improved access to bureau documents by title companies.

Asked by state Sen. Jill Tokuda, D-24th (Kailua, Kane'ohe), the co-chair of the committee, whether the bureau's actions were proper, Kanzanjian said: "It shouldn't be."

The committee also heard more details yesterday about a computer software program created without a contract by Title Guaranty of Hawai'i that allowed it and other title companies to gain quicker access to hundreds of land-use documents recorded at the bureau each day. Title Guaranty offered to develop the software to automatically copy the documents for access by title companies each day because the bureau was three months behind on indexing the documents, causing delays in releasing daily filings.

Lorenzo Dy-Liacco, an information technology specialist at the department, said the software was installed on a state computer at the bureau that was maintained by Title Guaranty. Under questioning, he said the bureau did not perform any diagnostic tests on the software to determine if it did exactly what Title Guaranty said it would do. If the computer experienced problems or stopped running, Title Guaranty was called in to troubleshoot.

"I think there was tremendous pressure to get that up to speed," Dy-Liacco said of title company access to daily filings.

The computer with the Title Guaranty software was seized by the state attorney general's office earlier this year as part of its investigation into the bureau. However, the attorney general's office has provided an alternative method of delivering the daily filings to title companies so the service has not been interrupted during the probe.

After the hearing, Tokuda said she was troubled.

"The bottom line is we have donated software written by a private company without a contract that has access to our system," Tokuda said.

State and title company officials have explained that the software helped the title insurance industry get immediate access to documents and avoid delays in real estate transactions.

State Rep. Cynthia Thielen, R-50th (Kailua, Kane'ohe Bay), questioned whether the bureau should have been charging any higher fees for access when it is slow in performing its job of indexing documents. The bureau is still an estimated 2 1/2 months behind in indexing. Title Guaranty and other title companies use their own indexing systems, so they can bypass the bureau.

The committee plans to meet next week for an overview of what it has learned so far. The committee is looking into mismanagement at the bureau, whether any title companies had undue influence on the bureau, and whether the state is losing money because of poor management practices.

State Rep. Karl Rhoads, D-28th (Kaka'ako, Iwilei), said he understands that management problems at the bureau may have existed for several years, so it may not be fair to blame the Lingle administration. But he said bureau management apparently has not improved under the Lingle administration.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.