Legislative Joint Auditing

All right this meeting of the legislative joint auditing committee is here by called to order. First item on the agenda's adoption of the minutes from the june fourteenth twenty twenty four meeting those should have been emailed to you prior to this meeting you should have had the opportunity to review those dersey a motion to adopt the minutes from the june to fourteenth twenty twenty four meeting. See motion senator ourselves in second and senator johnson second senator johnson all of the papers say i'm all those opposed as have it minutes have been adopted next item on the agenda is the adoption of reports of the executive and standing committees i'll begin with the executive committee and recognize my coacher center walls to present the reports and while as you're recognized. The exact committee met thursday july the level that twenty twenty four staff reported to the committee the article special and investigating reports scheduled to be presented to the standing committee and the four legislative joint audit committee this month the new business representative last room withdrew a request for a special report on the arkansas board with no additional business to discuss the many was adjourned the next meeting of the committee scheduled for thursday september twelfth twenty twenty four or to call the chair and move for adoption of this report senator wallace's move for the adoption of the report and see a second representative is there any discussion seeing none all those in favor say I all those oppose as have it the report has been adopted next week the standing committee on counties and municipalities this time i'll recognize representative ride to present the report representative right thank you mister chairman the committee adopted the minutes of the meeting near june thirteenth twenty twenty four committee continue request from the city of madison to repay less than ten percent of general revenues for amounts old to the street fine as require barcel code and take a twenty seven seventy two seven the committee approves a request for madison to repay an initial payment of thirty five hundred and fifty nine dollars and three hundred and fifty dollars monthly staff informed the committee that the prosecution attorney investigate in the city of greatest status as a possible straight trail is determined no action was required the committee was updated on the status of private reports and directed straight to send letters reminded energies the link would be submitting reports to obtain those reports as soon as possible the committee reviews seven different reports in a hundred and thirteen current reports. A patience from seven energies or president to address repeat findings for previously deferred reports for were filed and committee approved motion to refer one of these to the proschedule attorney and the city and the and the attorney general of the one hundred and thirteen current reports reviewed forward referred to project in the terry's an attorney general the committee ball hundred night current reports and deferred five to allow officials to attend questions and a future made in our provide further information mister chair a move for adoptions representative right has moved adoption of the report to see a second c second representative dalbies there any discussion sing non all those in favor say I all as opposed reports been adopted next we have the standing committee on educational institutions and recognize senator solomon at this time to present the report thank you mister chair the committee reviewed seventy eight auto reports consisting of school districts educational cooperatives charter schools for the year ended june thirtieth twenty twenty three representatives in the arkansas nation of elementary in the secondary education were present and answered questions from the committee related to the findings in the marvel school districts auto report including a repeat finding the auto report for the jacksonville north last year school district in jesse school district contained findings which were referred to the prosecuting attorney and the attorney general the auto report from the marvelous school district jacksonville north laskie school district and hope academy of northwest arkansas charter school were deferred to the september meeting so that school officials could be present to and to answer committee questions related to the findings in the respective reports. The committee made emotion that the odd standing committee on educational institutions review the school districts that have been placed under state control determine if the effectiveness of their physical standing as a result of the state takeover the committee filed seventy five reports that were brought before it and deferred three report auto reports to the september meeting mister chairman I moved the adoption of this report senator solvent has moved adoption of the report do I see a second second representative ladyman. Any discussion seeing none all those in favor of say i've all those opposed as habit report has been adopted next we have the standing committee on state agencies representative firm and you're recognized present the report thank you sir chairman manner ports run the committee's agenda yesterday one deferred report and one with one report with findings were presented the department of corrections findings that were deferred from the june meeting related to a missing deposit in consistencies and their audits of firearms ammunition among the various divisions and corrective action was not implemented regarding internal audits of their inmate councils the department of military did not properly record accounts payable and a count receivable various agency staff members for present to report on how the agencies intend to address the art of findings and to answer committee questions during the meeting the committee filed nine reports I moved up this report representative deferment has moved adoption of the report to see a second second representative right any discussion seeing none all those in favor say I all those opposed as have at the report has been adopted next we'll move to item d on the agenda which is a review of reports first we have a special report specifically a review of selected financial records and transactions related to the city of augusta for the period of january one twenty twenty three december thirty one twenty twenty two this report was early released march thirteenth twenty twenty four and was deferred from the june fourteenth twenty twenty four. El jack meeting we're going to receive an update I believe today from the prosecuting attorney and miss emily wide is recognized to present that update that's why you're recognized. Thank you mister chair members back in june this case was deferred for us to visit with the uh prosecuting attorney and figure out the status of a criminal case if there was a criminal investigation to refresh a recollection this report was a regionally referred to the first judicial district prosecuting attorney that prosecuting attorney were cust and as a result of that the prosecutor coordinator appointed a special prosecutor I was able to visit with that special prosecutor this week and confirmed that there is an active and open criminal investigation that he is working with the arkansas state police. Yeah. Thank you miss wide miss wide has given an update as to the status of this matter I know she's left there the mike but did anyone have any questions of miss why seeing nine is there any discussion this matter seeing none will move to the next item on the agenda okay well actually what we probably need to do is just take a motion to file that report is there a motion to file the report all right motion senator johnson second senator stone all those in favor say I all those oppose are reports been filed. Next on the agenda we have an investigative report related to the city of boxide and a review of selected transactions from january one twenty twenty three november thirtieth twenty twenty three this time I would recognize miss miss michel actually to present the report thank you mister chair in good morning can meeting members this presentation will cover two items first the city a boxer did not obtain private audits tomorrow and submit the reports to legislative audit as required by arkansas code. In october of last year emotion was adopted by the staining committee on county's minister palodis to involve the mayors and city council members of four cities obtaining private audits to a teen one at a time over the next four committee meetings to explain the lack of timely audits the box thought mayor in council members attended the november twenty three meeting and were asked to attend the january of twenty twenty four meeting to follow up on progress regarding completion of artists at the january meeting the recorder treasure and provide auditor were present and discussed the two thousand nineteen twenty and twenty one AUP reports the committee voted to involve the mayor to the february meeting to answer further questions the city attorney attended the meeting held in february but the mayor did not therefore the committee voted to involve the mayor to attend the june meeting at the june meeting the city attorney attended but the mayor was not in attendance therefore the committee voted to recommend this committee request the legislative auditor issue a subpoena for the mayor's appearance at today's meeting the subpoena was issued on june twenty fifth and served the following day additionally the city has provided copies of the delinquent private audit reports to legislate about it. The remainder of this presentation covers an investigative report issued in response to a request from the twenty second judicial district prosecutor attorney for legislative audit to review questionable transactions at the city the first objective was to determine if selected disbursements were for proper purposes our review revealed over three thousand three hundred dollars in payments to various vendors without adequate documentation therefore the validity of these disbursements could not be determined the city also used almost five hundred dollars in street funds to purchase auto parts that did not appear to fit any vehicles owned by the street department the second objective was to determine if proper amounts were withheld from employee paychecks for health insurance coverage the mayor and a family member began receiving additional insurance coverage in may of twenty three but payroll deductions did not begin until august of twenty three as a result the city in properly paid three hundred and nineteen dollars for the additional coverage the third objective was to determine if the city complied with arkansas code requirements for obtaining financial audits as previously discussed audits are aups for the city and it's water department were not obtained timely and reports for two thousand nineteen thirty two thousand twenty one were not received by legislative audit until last month. The fourth objective was to determine if the water department paid its water provider tomorrow based on documentation provided by bent utilities we determined that the city had fell to pay some invoices timely resulting in an outstanding balance of just over thirty six thousand dollars as of november thirtieth of last year additionally documentation showed that the city's month monthly average water usage had increase from two thousand twenty two to two thousand twenty three causing the cities average monthly bill to also increase we confirm that the city has paid the outstanding balance that was do in january this year however been utilities has indicated that the city once again has a crude and outstanding balance the fifth objective was to determine if department collections were properly deposited in citibank accounts and accounted for funds totalling seven hundred dollars consisted primarily of manual cash receipts for me deposits were not deposited in a city bank account the recorder treasurer was responsible for making the bank deposits and was castodian of those and deposited funds the final objective was to determine if internal controls were adequate as shown on the screen several deficiencies were identified financial duties were not adequately segregated invoices were not always retained a support disbursements proper amounts were not always withheld from employees pay checks invoices were not paid timely may not receipt it by the water department we're not reconciled and management did not provide adequate physical oversight during this review it was brought to add its attention that the city had resumed collecting funds in fees and was potentially in noncomplaints with certain sections of arkansas code specifically the code requires that far and cost collections be deposited in a separate court account instead they were deposited in the court automation firm. Additionally the district judge was removed from the court automation fund account and could no longer review or approve expenditures as require back code the district court judge also has the authority to appoint a district court clerk but the council allowed the mayor to fill this position furthermore the city consistently failed to remit a report for the state district court judges program which may result in state turnback funds being withheld from the city mr chair this can close my presentation the report has been forwarded to the twenty second judicial district prosecution turning and the attorney general there's a management response from the recorder treasurer provided in a pindics a every report in the recorder treasure and mayor are present to respond to committee questions. Thank you miss actually so my understanding is that there are some officials from the city here the mayor and other officials if you would come forward at this time. Yeah. Would each of you state your names and to be recognized renature okay. As is the custom in this committee we swear witnesses in so if each of the would raise your right hand do you solemnly swear firm that the testimony you're about to give will be the truth the whole treat and nothing but the truth so help you god all right thank you very much you can be suited. All right at this time if you have an opening statement that you'd like to make our recognized you to do that and then we'll open it up to committee questions first off my security class to microphone first of all I apologize for not being at the last three meetings as some circumstances come up there with behind my control and in our would appreciate that that the council or the committee understand that that's why that we are here today to try to correct these issues. Yeah. All right thank you miss waters did you have our chesting i'm sorry did you have a statement that you'd like to make all right. At this time I don't we'll open it up for committee questions representative landing fight your recognized for a question. Thank you miss chair mary jones were clad you hear today in preach you're coming you know last summer we got started there was fifteen audits that you had failed to file counting the port the city and also for your water in your sewer have you got all those are its completed completed internet i'll get the sewer in the water are completed also okay and I understand you also have some you were having a piece of percent water laws in your water and I understand you're working on that can you give an update on there yes sir miss your fat we are in a sandy areas hearted fund or leaks because it goes down it doesn't come up I have brought numerous pictures of water leaks and we have found i've also got a study that we don't showing the amount of leakage we had in our procedures water all if any of the committee would like to see some liam i've got copies for you to look at we are down roughly last month we was billed for two point three eight million we build out one point three million so are water loss is went down significantly from what it was last year okay I know that in two thousand seventeen it was a forty five percent laws and then last year there was a party percent laws gone by health department records also you hit ninety three violations in your sewer plan how are you on that right now the sewer plan I met with you last week I think we've had some failures on bowls and a sewer plan that was hard for us to determine what it is we've got those corrective last week or so or a sample week here to escale the waters clear so hopefully we're on the rat path to fix this issue the sewer plants twenty one years old. In stuff is sorting to go out and it doesn't always show itself right away when something is wrong with them when was the last time you sure plant was in compliance I took over two thousand and that thing so we was in compliance for roughly probably a year and then we've had some break it's on the the planet and from tan but home were in compliance and then we're out so it's not steady every month or every week that we take one week will be good the next week we've all so we're trying to adjust the airflow and sell town to take care of the amount in the essence which chairman I know but is several questions could have couple more years you're right okay also on the dish record what was your purpose in nine taking them trying to take that money back in the district court. We had requested several meetings with the judge myself and in the the police department the money was not coming into our city monthly the lack it should have been we had requested several different bank statements that we never received from the judge the city council may have last year requested that the court the court clerked come back to our city it went over to brand and our thanks sir it was in two thousand and eighteen i'm not sure prior to their the city was responsible for everything even though we were still going to bring this court are we done with move the court cards and the fine collecting and the the war is everything back over to the sea instead of having district court we was paying bright twelve hundred dollars in my to do the the court paperwork okay course the judge has to sign up on the order motion but I did not take that away from her steel we put money in it every month according to state law if we have anything there the pd or the court needs we send her an invoice request in her approval then we pay the involved she still has control of their all the phone into in the bank statement stuff comes to the city okay will you be here next month for the next daughter if you request me to be here I will be here yes okay I tried it nothing happens I told you I know i'm a busy guide in things happen and II am not a boarding community all but I will be here if all possible okay thank you miss share senator hammer you're recognized thank you mister chair good morning mayor and the would you give us explanation chris year city attorney gave uh some explanations why you were not at the previous meetings would you give us the ex. As to why you weren't here I don't hold me to the minutes or thank you maybe worried we had to snow storm coming and I had to try to get the city street going in work on equipment march i'm not really sure I hate covie or i'd be in a headache certain employees in the city that had copied and I didn't want to bring in a product april I do not remember april in june in in the middle of my may be off in june I had market pass away the day that I was supposed to be here is funeral was at ten o'clock and and I could not make it okay and in the report indeed do you have a for you provided a copy of the report okay so in the report the uh position is that it's not in complaint with arkansas code yardi do you do you have a response to the statement that you are in noncompliance with the decision to move the district court over the over back hour is my opinion this or we have talked to the court clerks that the judge worrying is been in contact with the administration they have told us that is the cities court and we are doing everything that we're supposed to be doing we do have the right to have the court club and the separate over in the city it was their prior to going to brah. An and tell me again who was you spoke to in making the decision to do that while well I have spoken to the city attorney the city council we had spoken I do not remember the name at the court at the also the courts apologized for there but we have we speak to them at least once a week maybe twice ever two weeks you know if we have an issue we call them we've also had the less and the city going through the paperwork we informed them everything it was going on what we spoke what we had done and at that time my understanding was that everything was okay because we done everything like we should have so which you having our position because I don't think judge casties in the room would you have any opposition coming back next month and judge cast becoming here also so that we could have explanation from both sides and get out of your own problem okay mischair i'd like to request that please okay thank you senator hammer center johnson and you have a question okay so mayor just so you know our next meeting this committee will not meet in august will meet again in september so that'll be the next time they will be there we'll make sure you know the exact date of their representative dollar but you're recognized thank you mister chair thank you mayor for being here I want to follow up on some questions that senator hammer had in regard to the violation of arkansas code 16 dash ten dash two or four has the city now segregated those phones because according to the report we have formed audit it says that the finding court collections or it be positive and separate account which to be exclusively for the deposit the settlement of fines instead you're coming those funds with the court automation fund are you still doing that we had two separate checking accounts a judge and when did you do that. We done that the the first one that we were got the step brought back to the court it's never never been told mingle so you saw your disputing what legal it is said that it's been come ingold when we've met with the legislative auditor that come to the city we showed in the check and account that the money was being put into in the judge has a separate account for her phones so there's two separate accounts that the money goes into all the court phones goes into an account called the town of boxing that money is distributed from that account into the judge's account and into the city general fine when it comes down to do there and if um add it came back you would be able to show that the court automation funds were being strictly used for court automation yes mail i'd like to see some of that if at all possible also in the second paragraph it requires that the district judge approved those instead the judge was removed from the account as the judge now back on the bank account she's not back on the bank account no man but it's like a told senator hammer in order we will not issue any fines out of that count until the judge approves she will get the invoice she will approve the invoice and then the court clark and the reporter treasure will wrap the chain to purchase what she has approved is the district clerk the one that the judge appointed or is that the one that city council appointed in contravention to our consolidation sixteen dash seventeen dash two eleven subsection a city council and in the judge appointed well i'm not and I will say the judge gives me a letter city council appointed them the judge for them in her office are in the court room at branch so she knew about the two court processes I understand that that's not my question my question is did the city council or did the judge appoint the district clerk. I'm hard to I did not upon them so the clear account so down or two and a counter so that's invalidation of that code section sector it may be yes ma'am. And when is the last time that the report has been made to the state district court judges program we send money in every month and pay you for paying by the tenth of the month according to the the the law when did you start doing that because this says that the city was not noncompliance back in may so has it been since may of this year that you started doing that we took the court over in march or april and once we got everything done and got the paperwork figured out we started seeing everything yet as I say april my usement so it's your position there are the city council controls the judicial branch the district court is that correct i'm not going to say that they can control it know me a mom just go about what i've been informed that the city is responsible before that court system and that's what we've done thank you thank you representative dobby senator and your recognized thank you so you have a copy of the report correct yes okay so paid for is where the arkansas state law is outlined let's represent the dobby was referring to about what's allowed and what's not allowed and the actions that were taken that are in contradiction to state law is that your intention is mayor to fix that so that you'll. Actually before we go any further we're going to have to swear yeah like we do all the other witnesses I can ask if you want to do that so if you would stand and raise your right hand do you solemnly swear firm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you guard alright thank you. Thank you so much thank you for being here so my concern is this section here because of I understand this and I know that it can be difficult but however you know if what I don't want to see happen is a retaliate retaliatory type of ah an avent where if the judge is night i'm ordering enough fines together the city the city gets mad and they take over and that's what to me looks like it's happened here so yeah i'm can i'm concerned about that because it seems that the city is really not taken any action to come in compliance to state law do you unpaid for and these different coat sections is your interpretation that the city has taken the steps to become compliant with state law or is there further action that needs to be taken for instance to put the judge back onto the bank account or anything else in your opinion that you would legally advise that it was a long questions work through this so let me back up and limit the history of the contract because I was actually with the city of bryant when we did the agreement for the brian court to take over okay and I actually drafted that agreement when I was with the city of brian and at the time it was they were paying twelve hundred dollars a month for boxite for the brian clerks to run the clerk system because they had as part of that agreement we had a period we had the ability for boxing to cancel that agreement with the thirty or sixty day notice well when we went to go give the notice to the clerks they said here you go they handed us all the stuff that one time so there was not that thirty day transition period which was in april of this year this look was looking at the paperwork in may and there was some push back from the brian side about boxing coming in and want to run the clark office again so there were some. Conflict going on there I have not had an opportunity to sit and work with the judge through this i've been dealing with other issues I can say that the the mayor and the council want to do things correctly we're working through what those are I can't testify today that we're doing everything correctly today because I don't know but I can't say that it is something we are working towards and it was one of those things we showed up try and exercise our authority into the contract to do the thirty or sixty day transition they gave us the stuff that day okay and so our clerks weren't sworn in yet our clarks hadn't been to the training yet they have now they have been sworn in now so it was part of this audit came in at the same time that we were in this transition so where there's some thanks master I have no doubt there were are we trying to fix those absolutely we are and I hope that answers your question I can't really give an opinion on this right now because I don't know the facts well enough but I can say that we are definitely trying to get to the right place with those I appreciate that is that also your intention to continue to work with like add it and the people it to the report to give you however recommendation just to make sure that you are in compliance with state or I think absolutely yeah in their welcome to speak to me or speak to the buyer and we're happy to get these things resolved thank you center hammer you're recognized i've got a motion to proper time is chair alright thank you so I have a couple of questions so the way I understand it is this is the saline county district court is that right so you have the district court but they're over the district court in sling counties about it among two judges judge forward does bitten the the city of benton and county wide tickets judge cassidy does boxide alexander has and brian as the judge their state judges but those are the jurisdictions that they represent right okay so you've got two district courts in selling county judge cassidy covers the city of box items and other. All right some other areas okay so i've seen this before I take it that the city of boxite has its own district court occurs in box site and so there's a clerk and box site is that right correct it had so historically it was all done in boxing in the end as I worked with brian back years ago we could solidated the court appearances people showed up to court at the brian court because security and all of those things. Box site in the other city still maintained their clerks and then boxide under the agreement moved their clarking responsibilities to the city of brian and that was the agreement I was just talking about that we had the thirty day notice we took that back so that the clark works at box site but serves the court in the bright courthouse and under the judge is still box eight court is done it box site as far as the paperwork in the files in the receiving of money. It's just people appear at the brian city hall for court if they need shop record yep I understand okay and i've seen this before where there's this power struggle essentially between the mayor and the district court judge about who controls the city court and who appoints the clerk and all this sort of thing that appears to me to be kind of what was happening here the mayor thinks that the mayor and the council points the clerk when arkansas law I think it's pretty clear that it's the district court judges responsibility and and obligation to s- to appoint the district court clerk do you disagree with that I don't know the law well enough to express an opinion on that and so and and it's representative of dalby asked. The the clark that's there was is that clerk appointed by the mayor in the council or was that the district court judges appointment so I don't know II can't answer that I know that the council blessed hiring someone to serve as the clark and that person has been sworn in as the clark by the judge do you know the judge is feeling about that as the judge happy with this clark with the judge like to have another clear I haven't II haven't had a conversation with the judge about that as I was just explaining the mom ago that's one of the things they this is on the list of things to work through the audit was a current at the same time that the transition occurred and I think you're right there was a bit of a power struggle to some extent in the fact that from the city side of it the money that was being paid by the court to the city every month had dropped precipitously and there were some questions about what was going on with that we're not getting good answers from the brian court and the brian clerk and so the city said okay we're going to exercise our authority to bring this back under hour auspice and that's what was done in and this was when the audit stuff was going on so it's still get worked out right and the other thing I would say you know and further evidence of the power struggle is the fact that this district court judge is not on the bank account and apparently this is still going through the mayor and not the district court judge in control the bank account what why is that happening I can't answer that i'd have to ask the officials mischairman I am model needed in technology I have I do not sign them it's a recorder charge in a court clark that signs in and in is far is are no sir the other courts that the the judge overseas their court clerk and stuff stands everything not the jet. That's my opinion to the way of that i've been told okay well that that's not the way I understood the testimony earlier my understanding was is that you were reviewing those who that they were coming to you and that they were essentially just being sent to the district court judge for them to review that not accurate I review everything it comes in but as far as signing the checks for the court money I do not sign any of those chance I review everything it comes in the city to make sure everything is is is working in going correctly and then I present it to my council but are I do not sign any checks for the court but so where okay. All right representative rigor recognized yesterday since both you gentlemen are here to table it signed down the mirrors this all motion for this been renewed is that bond in the hands of the the district judge now told me in other words every year when you prepare a budget is that money splayed over intersection it's covered by the district judge I can't answer that question on that so that may be a question that the recorder treasurer could i'm not familiar with the automatic phone circuit you could you explain to me where you're talking about the money where you were saying the money comes in and split up to the different accounts the money that comes in goes in the town of boxed court phone and then we take that money the recorder chairs are in the court car takes it money we've paid the state of colleague what they get we take money out of there and put in the judge's account that is required proceeded wires each month it all goes into all the accounts we've paid the swing county treasurer their share off of the tickets at a written we call we paid the state of architect there's here of the court calls police the phone money because we are considered a half court according to the law so half of the money that comes in is dispersed back to the state so we keep pay for the after we pay all the stuff that you'll sound so we are dispersing in accordingly to the way it is supposed to be done for a place okay but once that money is actually broken out once that money is actually broken answer in it goes into a phone that's for the court does a judge have complete control of that phone she has complete control of hard judges account yes sir once it is cleared out it goes in. Once it is approved by the the the monthly day that we transfer that it goes into the city general phone which we distribute it to the pd so we we do it according in the way they were supposed to I think if I might mister chairman and represent it is if we're gonna be back then next month we can bring out we can bring some documents it might help show the actual flow of money through the system where the money's coming in and an alternate answer these questions all right thank you representative dollar your thank you mister chair I want to follow up on representative rice question in my question previously now i'm hearing kind of something different from you the lower requires that fines in costs collection b n one account all on its own and the court automation find which is collected from installment fees for paying out phones and collect for somebody paying the on their fine goes into a separate account now you're telling and I ask you you said all those are separate now you're saying they all don't into one account and then you separate a map that is not what the law requires and I ask you earlier head you've separated those out you said yes but then you've told representing from it's all one big account and that is in violation of the statute do you not understand that mister mayor may and when we took this back over we had one checking account from the south did you just check an account that was all that we received is one checking account that's all brought ahead to begin with they had the fund the the account where the money went into and they had the judges account where they transfer money out this account into the judge's account that is to do be done each month we followed what they had we read on the check and account well just be if. Brian it was doing it wrong it doesn't give you the right to do it saying it does what we had in in what we thought was a correct way of doing it correct water we need to correct okay well good I am glad to hear that because I keep asking that question in I want confirmation from you that you're going to follow the law and have separate accounts you can't just do it because somebody else has done it maybe we need to look into bright and how they're doing it or whatever maybe we need to dissolve the box side district court I mean that's a possibility and that would in this problem and we could just dislove that court we have a task force it's looking at merging some of these courts so there's not all these little divisions and maybe that would solve this problem i'm sorry mister chairman on my sub box and I apologize but the law is really very clear and just follow it and so no I have made my point and I hope that I hope that with your council that he will work with you to get this straightened out because you can not come ingo these fires and I ask you that otherwise other you said you're not willing yes you are when you put him into one account so it let's follow the law that all this that's all we want thank you thank you representative dolby and just as a point of clarification I want to ask staff to be clear about who appointed or hired the district or clerk for boxing did what was audits finding with regard to that issue mr chair i'm gonna just briefly summarize the may fifteenth of twenty twenty three last year's council minutes the mayor ah during that council meeting the mayor asked for permission to bring back duties of the court clark to city hall. To dismantle the duties at the broad district court the mayor stated that he had spoken with the judicial council and received no push back for him uhm when on the state that anyone needing to meet before the judge will still have to appear at the broad court that payments warrants etc will be out of the box out city hall in order to do so efficiency efficient efficiently the mayor recommended an individual to serve as the box out court clerk and the council approved this so that was last year then if we moved forward to march of this year the mayor sent a letter to the financial institution that the box out court automation fund where they held the the automation and he included the copy of the minutes from the may fifteenth meeting that I just summarized and in this letter to the bank he asked to remove the judge as an authorized signature on the account and then as he previously state stated he added the treasure and three different individuals serving as court clerks okay that's what I thought that's why I understood it thank you very much any other questions senator patent you're recognized thank you miss thank you mister chair I guess my question is for audit staff when the law talks about keeping funds in a separate account it does it mean cha- a separate bank checking account or is that just a counts on the treasurer's books when you have a treasure for a city or just something like that is that separation on the treasure's books satisfactory or or do we have to have a million different bank accounts center right now i'm not the expert on saving country however looking at my expert in the audience he shake in has had that our interpretation has been that it is two separate bank accounts as what is required and that's what we ought it. To two separate bank accounts okay thank you thank you mister chair hammer okay you're right as requested emotion but would you would you mind what did you say is back in the may twenty third meeting did you say judicial council or what phrase did you use yes he stated that he had spoken with judicial council and received no push back okay and may I mayor what when it says you spoke to judicial council who was judicial council that you talked to to get guidance to do this the member if I understand if I remember correctly center it was the office of the court's administration who overseas our court system as they we talked to the inquirer beer it may have been misinterpreted on the minutes but we we contacted the office of the courts to figure out if we could legally do that and that's what we was told it was the cities court that they that we can do that so that's why at the time it was done okay so so that's who you took guidance from as far as the structure is concerned okay because chris you're saying down there that you can't you're not familiar with this I just want to make sure because i've seen well if it was you that they were getting council from in your sydney near saying you're not they lance these questions that might have been a problem so it was good judicial counts height thank you when you're a master all right any further questions alright senator jester field she might she may need a microwave since we're recording this we won't make sure your questions heard by the public okay thank you senator gilmore thank you mister chair where is the world's the judge may imagine not answer that I don't know she was asked to be here today or not well even though she was not asked to be here I think it would be enlightening to hear from. The judge because as we deal with this issue of separation of powers which is what it seems to me I would love to hear from that individual sense it's the use of patient of her duties that we seem to be dealing with here today m am I right around okay and I would ask the chair then to not only invite whomever it is if you've about reading invited but to invite the judge so that we can have a clearer understanding of this push in pool that seems to be so evident here today and I think that would give us more more concise information and be able to deal with both issues so that we can come to a resolution more quickly that would be my request thank you all right thank you center just for we'll take that. Request likely as a motion here in just a moment representative lady in your recognized thank you mister chairman i'll try to be brief but mayor who who pays this clerk the city pays the clark the city comes through the city budget who whom is day that they supervision of this clerk is that you are the recorder trade the the city recorder treasurer superbase and may not be the right word but is responsible for day to day activities right yes sir so how far is it from box I dement how many miles probably two to three to the court so it's close so does the judge is a judge agree or does the judge want to supervise this court lay the day and pay this clerk or I mean how do you all work that out between the city budget in the court budget the day to day operations we have always in the past always paid the court clerks out the city even when it went to bright the twelve hundred dollars a month was to pay for the judges court clarks them for their salary of their payroll for doing box at court once a month in doing all the tickets so the city is always paid their fines or their salary out of the city during the phone but the court supervised that person and then sir i'm not in court to say who supervisors who if it was over brought out were assumed yes sir i'm I wasn't there so I can't answer that correctly so the I think the question is that the judge disagree with you hiring this person or picking choosing recommending this person to judge agreeing or not agree she did not have any objects if you will mean we got pictures where she swallow me in her courtroom and in so far they have been working to get their good the judge in the court clarks are emailing each other back. Requesting vains getting information from each other so to my knowledge they're all they're working good together thank you. Thank you represent inflation in any other questions alright seeing nine I know that senator hammer had emotionally believe that commissioner i'd like to make a motion to hold this report over until the next meeting with the following stipulations and request number one notified judge casty her appearance is requested number two ask legal audit to review the accounts and how the money is being accounted for and bring your say uhm bring us a report of the of the accounting of the money the number three like to request judicial council to be available to answer questions and also that the city attorney be present at the next meeting and if we would notify all them this week or first next week because the judge may have a docket she may have to adjust and let you get that handled quickly they'd be my motion all right thank you senator hamburg. Before we as a before we second and and vote on the motion I see senator representative dalby would like to be recognized you're right nest sir hammer and it it wouldn't be the excuse me the judicial council it would be the administrative office of courts the district court division it's not it's not the judicial council that's a whole separate thing so if you're asking for them they'd be the wrong people i'm asking for the ones that are referenced in the city counts for meeting I think they reference the wrong one but it's going to be out of the administrative office of courts it's going to be the district court division local attitude mischief mayor who did you say that you took council from who who was that you said you talked to to get guidance about how to do this a while ago the court was the office of the court's administration okay that's why i'd like to add that to that should i'd like here then okay so the motion is that we hold the report over until the next meeting which will be in september that we request judge cassidy's presence that audit presented report of the accounts and that the administrative officer the court's district court division along with the city attorney be present to answer questions and to give any further explanation that may be needed that senator hamber's motion I believe I heard a second from singer chesterfield is the rediscussion seeing none all those in favor say I all those opposed motion carries this report will be held over and we will make all those requests thank you very much for share yes does mr white know what the date of that meeting is september thirteenth so to nine o'clock thank you we should be back in big mac by then hopefully right. Okay thank you okay the next item on the agenda is a special report related to review of cyber security controls for sixteen arkansas rule hospitals receiving discretionary or performing approved our console legislative council this time I recognize mister coals to present the report thank you mister chair pursuant to a request from this committee legislative audit reviewed cybership cyber security controls at arkansas hospitals that received or performing approved by legislative council a separate report issued for each of the sixteen hospitals reviewed and these reports are available on our website. The objectives of this review these reviews was to evaluate the adequacy of their policies procedures and security controls assessed the effectiveness of the risk identification and mitigation process and confirm the present of an adhere it's to internet response in prepared this plans. As of january thirty first of this year this. The arpa funding approved by ALC. We assessed each hospitals adherence to cyber security standards for protecting sensitive patient data while most standards were well implemented we identified some areas for improvement the slad shows the total number of finance issued for each standard across all sixteen. Due to the sensitive sensitivity of security issues the findings were reported in a separate letter to each hospital the hospitals responses are provided in the report and describe corrective action being taken. I decide about it recommends that our hospitals reviewed incorporate suggested modifications to access controls and policies resolve detective vulnerabilities and priorities risk mitigation strategies conduct periodic training sessions in simulations to maintain internet response preparedness and undergo routine cyber security audits to stay in formed of emerging threats by ample manning these editional steps hospitals can strengthen their cyber security defenses protect patient data and ensure the continuity of critical health care services mister chair this concludes my presentation representatives from definitely our present to respond to committee questions thank you mister coles you've heard of presentation of the report. There are witnesses here with the committee like to hear from the witnesses at dfa. Okay seeing no request to hear from the witnesses dfa this time i've entertained a motion to file the report most of our report senator gill more second representative dobby all those in favor is the discussion on the motion seeing none all those in favor say I all those opposed report is filed next time on the agenda is a special report related to review of state data centers. Department of transformation and shared services and the division of information systems prepare this report january twenty twenty fourth this time I would recognize miss becky lane to present the report sling your recognized thank you mister chair this presentation covers our review of state data centers overseeing by the division of information systems the is provided secure centralized hosting services for state agencies and offers various products and services including data center and network connectivity services as well as cloud backup and customer storage the rs is the primary state entity responsible for managing at core infrastructure across state and local government entities. The first objective of this review was to evaluate whether dias has implemented and maintain sufficient I take controls to save guard state assets within its data centers legislative audit can concluded that they are as generally provided adequate I teach controls in its data centers and that computer equipment networking systems and components are protected against physical access and operational environment threats we also determine that lost prevention insurance coverage was sufficient to ensure all critical equipment and facilities were protected in case of a loss the second objective was to determine if the state's network transmissions are encrypted and secure and if automated intrusion detection isn't implemented in adequate we concluded that transmissions over the network were encrypted or made secure and noted no issues with implementation and adequacy of automated intrusion detection. The third objective was to assess policies procedures and other documents to ensure they the center operations can be restored in the event of a disruption or disaster we issued two findings related to risk assessment first the is lacked established processes are procedures for conducting risk assessments and did not engage and proactive risk assessment activities there was no history of the is performing a risk assessment and procedures were in draft form second multiple ad equipment items were missing asset tags or could not be located on the fixed asset listing and asus was compared to the listing maintain by the IS. And finding three we noted that multiple internal policies and procedures related to security internet management sober security training and software updates were incomplete non existent or not approved by a per management in finding four we noted that multiple documents related to disaster recovery and contingency planning were also incomplete or non existent additionally the dias disaster recovery contact list of current employees was not up to date. The is offers its customers several different levels of disaster coverage services and then finding five we identified policies that contained incomplete information in warrant draft form additionally all customers were not build for disaster recovery testing exercises and master service agreements did not exist for all customers. The fourth objective was to assess back policies and and services provided the customers for adequately and completeness as noted in bounding six dias did not provide formal backup reports to customers except my request additionally are review revealed six hundred and one servers affecting many customers that were potentially not being built for backup services we also could not determine customer identity for specific servers. Mr chair this concludes my presentation management response is provided in appendix b and representatives from the is our present to respond to committee questions. Thank you missus leine there are representatives from disand I believe uh uh TSS that are here i'd ask that they approach the table at this time. And if you want to take your seat that's fine but the people each place identify yourselves you'd need to speak into the microphone jarton interim director of dis and chief operating officer courtney trailer cheaper staff at ts. In a feature he would stand as we customarily do we're going to swear the witnesses and beat each raise your right hands do you solemnly swear firm that the testimony you're about to give in this matter will be the truth the whole truth and nothing but the truth thank you. All right I recognize each of you whichever would like begin first to make an opening statement if you have one so you know we work very closely with legislative we weren't very closely with legislative audit and we appreciate this audit going forward this is the first time that they've done a full day the center on it we DIS does get audited from other entities that host their systems directly on the data center floor from a backup and recovery perspective that one of the findings there we were um then twenty nineteen it was determined not to do the master service agreement with the department anymore dated the transformation and we have since implemented that and out of the fifteen departments we have received thirteen of those back we're having to do some amendments with two other ones do to special regular regulatory requirements with r s data so we are working diligently and we will legislate about it and that other departments to bring everything back up to snow and then on the the one thing that definitely stood out on the six hundred and one servers that were not being built they were actually being built we were in the transition between two different backup systems are we removed into a more modernized somewhat cloud based system so that we were in that transition so we were making sure that we were getting good backups on the new system before removing the backups on the old system. Alright thank you mister hearton mambia statement you'd like to make this time I don't have anything to add to that but thank you okay this time i'll open it to member question speaker shepherd you recognized thank you mister chairman and I guess this this would be a question both for I guess the division and and audit as well it appears that that the what was looked at largely relates to policies and procedures there is some I guess technical items that were looked at as far as encryption but I guess the ultimate question I have it it appears that there's some things that need to be addressed from a policy and procedure standpoint asset identification contact list and other things but just in terms of the infrastructure itself from the division standpoint and from audit standpoint are there any deficiencies in the actual system setting aside policies and procedures i'm edit in terms of the infrastructure itself for the from the division's perspective now there's not back in twenty twenty one the division got some money from the care's act and that's we utilize that to upgrade and modernized most of the equipment there are some applications that departments manage and run that the division doesn't that you know they are in the process of modernizing currently and I guess from from from audit's position I mean it seems to me that this would be something i'm not sure that that audit necessarily has the bandwidth of the expertise to evaluate other than to ask about encryption or other things but are there any deficiencies structurally in the infrastructure that. That exist so we looked at the general controls around a data center was a full data center audit and the good thing is is there were any issues with the actual operation of the data center it's a very well run a data center so we did look at the general environmental and access controls to that data center we just didn't have any issues with it so we we we crafted this our audit program to cover not only that piece of it but we know that we wanted to get the policies in the procedures in there as well and I guess to the extent that there is anything that is beyond your expertise that's something that you would have flagged as part of this I mean it just seems like to me that that we we looked at policies procedures we looked at controls but ultimately if if you get in the infrastructure of the data center itself I mean to me that would be something that in order to to absolutely know that the system itself is secure seems like me we'd have to have all kinds of consultants involved in all that but to the extent that audit was asked to look at it from the infrastructure standpoint things are looking good yes or we've looked at data centers throughout the state before so we do have some expertise and looking at data centers uhm this data center and the the one here in little rock is fairly new and that's why we decided to look at it but we can we didn't know any severe issues with the operation thank you and to follow upon speaker separate question I guess. To be clear and you you may have answered it not just in fully understand but how can you appropriately stress test if you will or in other words put these systems through the appropriate kind of testing to know if they are truly vulnerable to to attack I would be surprised if audit truly had the capability to do that and I don't know what internal capabilities that you guys have but I would have to think that there. Is some way to stress test the systems that we have to make sure that they're not vulnerable so how exactly did you do that so we are currently implementing one of the findings was a risk assessment so that would be the external risk assessment so like you're talking about the actual external scanning of the systems we are starting to bring that into play we do weekly scans of all the systems for any vulnerabilities or security issues um that the tool said that we have employees but we don't currently have external scans being done by third party or anything like that we are looking towards implementing that we've done recently we have done one in cooperation with department of finance and administration on one of their systems and we did an external bonobility scanning to make sure that it from an outside perspective nobody can get in okay and so I think you know one question I would ask would be how those are security compare with what other states have with regard to the protection of their data centers from a from a cyber security perspective um you know a lot of them have a little bit different funding model than what we have today from a cost recovery so some of their cyber security positions are funded by general revenue instead of cost recovery so they have a little bit more of a larger cyber security team you know currently our cyber team is about ten people and you know oklahoma which is of course one of our neighbors they're running about forty to fifty cyber people now we do have a couple managed services that were currently utilizing cyber warning critical start to do twenty four by seven monitoring of all the inpoints and all the servers for a mouth vulnerability perspective and if they see any. Activity that might look like somebody's trying to attack and to be clear for the committee what exactly are the assets that would be at risk should there be a successful attack I mean it's you know citizen data at the end of the day it's all citizen date of the towels on the data center floor from you know the criminal systems all the way to tax and revenue all those systems or house on the data center floor so it's a tremendous amount of. Data that most people would hope would be private secured that tell by the state correct to be fair okay representative makes your recognized banking with chairman I have a one for staff and then I wanted to for the witness for for staff the language here on objective one it states that different generally provided adequate it controls I guess my question is the way that's where it is it's attic adequate it controls and depending on how you interpret it adequate could mean or good or adequate could mean well there's a lot of room for improvement in so i'm wondering you know the adequate could mean it's okay but it's not great so in this context is adequate mean they're well they need to be they've got adequate controls for everything or is adequate mean were okay but not great so we're auditors we never give positive assurance to anything right so but yet they they're their controls we didn't note any significant issues so that's why we use we would never say that they were a hundred percent because representative makes you know as well as I do your only as good as the day here here right thanks change in their dynamic but we did out any big deficiencies in their and we looked because we do our own external scanning our own firewall testing and we did that in the case of the I as and we have done that for a lot of a lot of time sport d I as and we do it for other energies so so far as you're subsidiar in good shape that I believe so I want to make sure i'm interpreting that that sentence probably okay now for for the for the agencies uh just kind of following up on on their so red hat testing is usually when we have outside people trying to to get in and I know the FBI offers all services to state for free is that something that you have looked at or considered. We are working with um ceasa and all them so we do have some of their what they consider in point within the network and they are notifying us of any you know attacks or anything that they see as well okay and then the last question I have is on the the the backups one of the findings was in and I think you looked into this was that that the backups were being built make sure i'm interpreting this correctly so for a time period we had energy that we're getting too back ups to the new system to make sure it worked into the old system to make sure that they have continuity there and so you are only my assumption as you are only billing for one of those two backups and that's where the finding was it wasn't that the customers is more being below we're not getting money that we should be getting my correctly interpreting that yes thank you thank you mister. Any other questions okay seeing none II do want to just leave with with one comment which is if the state of arkansas were to be successfully attacked in some way and private data of our citizens stolen deleted whatever the case may be be extremely embarrassing and extremely troubling for a lot of people to know that that that's happened I hope that we're taking appropriate safeguards what representative meets just mentioned by outside testing involving the FBI and others you know foreign state actors other private criminal actors that try to access this information into cost harm and I sincerely hope that we're taking all the efforts that we can to ensure that this information is secure so without. And i'll entertain a motion to file the report cm senator urban second senator gilmore all those in favor say I are those opposed as habit the report is filed thank you very much next item on the agenda is a special report related to review of selected transactions and procedures for the east arkansas planning and development district for the dates of january one twenty twenty one through december thirty one twenty twenty two which is early released june twelfth twenty twenty four this time I would recognize mister charlie camp to present the report mr can't be recognized thank you mister chair this report is issued in response to requests for legislative audit to review certain transactions and operating procedures of the east arkansas planning and development district which creates programs for long range economic development is twelve member counties in northeast arkansas the first objective was to determine if public funds were used in accordance with applicable arkansas code and regulations according to reports from asus the district is not received give money sent september two thousand and fifteen additionally we verified that to district returned over six hundred and thirty four thousand dollars and give funds to DF and I in october two thousand and eighteen after the program was terminated. Additionally we selected very small business lounge made during the review period and tested for authorization monitoring documentation and repayment no discrepancies were noted into the three lounge review however we found numerous discrepancies surrounding a two hundred and fifty thousand dollars small business long made in december two thousand and seventeen from the districts revolving alone fine to radiate conference systems a timeline of advance related to this loan is included in appendix a regarding the district handling of the loan we were unable to verify that r c s filed required written quarterly reports in subsequent tax retirements additionally the district did not maintain or provide to the bank adequate documentation to support the sparsel of lounge proceeds the district did not verify the purchase of equipment designated as collateral and we were unable to verify that the required life insurance policies were obtained maintained or signed to the district as required by a loan agreement finally are so yes I did not reply the loan and the district did not seek recourse regarding the default the second objective was determined status of the civil law suite involving our csr in may two thousand seventeen had joe tenth corporation file the civil suit that included several seven causes of action against our csr in its individual wonders in april twenty three the randolph county circuit court entered a notice that the case was dormant and would be dismissed and thirty days if no action were taken as a report date the case remained open the third objective was the determined if employee compensation credit card and other expenditures as well as other transactions were properly documented and authorized. We determine the district provided the executive director with the vehicle she used for both personal and business purposes the district paid for vehicle expenses such as gas maintenance and a gbs subscription data plan a car allowance of just over eighty six hundred dollars was included on the executive director's twenty twenty one r s form we time however we can not determine that accuracy of this allowance and no allowance was included on her way for twenty twenty two. Additionally the district paid for employees over seventeen thousand dollars for unused vacation leave I shout and exhibit one on page five of the report and on the slad in non complaints with the district's employee hamburg district personnel indicated this practice was in place for the last five years and was authorized by the executive director rather than the board employees or allowed to receive compensation for up to one half of their annual accrue of leave at any time furthermore during twenty twenty two the director of regional analytics and planning received a salary increase of over forty four hundred dollars that was authorized by the executive director but not approved by the board. Based on the public purpose doctrine as well as the purpose of economic development districts outlined in arkansas code we identified numerous improper credit card charges over fourteen billing cycles reviewed the executive director might over ninety three hundred dollars in purchases they were undocumented or inadequately documented did not have a business purpose or made on behalf of a relative additionally over two billing cycles reviewed other district parser mail made over eleven thousand dollars and purchased as they were undocumented or inadequately documented or did not have a business purpose. We also reverged made over twenty five billing cycles using fourteen credit cards issued to district employees of nearly two hundred and forty five thousand dollars in charges reviewed supporting documentation was not provided for purchases towing approximately ninety five thousand a detailed analysis of these expenditures it's provided in the eight appendix bay and the total amount of credit card charges back our user is provided an appendix c during this review we know the questionable spinning patterns that appear to conflict with the state of purpose of economic development districts and with the public purpose doctrine specifically we identified over twelve thousand six hundred dollars and charges for christmas and birthday party's gives me alcoholic beverages and other food. As part of objective three we also identified several payments to a company I won't buy an employee's relative specific lane two thousand nineteen the district paid almost twenty nine hundred dollars to this country for economic development development services with that board approval additionally the city win a member institute of the district pay the same company over fifteen hundred dollars for preparation of grant application. Yeah. The fourth objective was to determine if the district obtained annual audits and submitted proper information to definitely the district obtained annual financial audits from a private accounting firm and the auto reports contained unqualified or clean opinions on the district's financial statements and on its complaints were requirements of this major federal programs no findings were issued in any of the reports which covered five fiscal years in the june thirtieth twenty twenty three additionally the district filed is off as auto reports with the f and a each year is required barclays. The fifth objective was to assess the adequacy of certain district policies and internal controls as well as management oversight by the board we determined the board did not insure the terms and provisions of a loan agreements were met and monitored and all required documentation was received and maintained furthermore the board did not always approve document or authorized individual employee salaries or pay increases approved in document i'll related party contracts and expenditures a stable's policies for the use of credit cards establish a comprehensive travel policy and provide adequate fiscal oversight mister this concludes my presentation this report has been refired to the second judicial district prosecuting attorney and the attorney general management response to the report is provided in appendix day and representatives from the district are present to answer me question. Thank you mister kim this time I believe we have at least three witnesses here for the east arkansas planning and development district if all of you would come forward if you need to pull up a chair you can so that everybody has room. Yeah the feature of you would turn on the mike and identify yourself and what agency you represent or who what position you hold so ima originally for hards from the city of wine and the current elected chair of the board for the east are complaint argos are planning and development district yes my name is james morgan sorry but I was saying it's more going to executive director of e a PD d mcmellan green county judge board member uh vice president of the board alright. Beat you would stay in and raise your right hands to be sworn to each of you solemnly swear firm that the testimony you're about to give in this matter will be the truth the whole truth and nothing about the truth alright thank you very much let me just begin by saying that it's good to have my county judge arrested mcmillan here today it has an excellent job we're very proud of even glad to have him here today today so with that we will begin with this issue involving east arkansas planning and development district depending on you have an opening statement that you'd like to make irrecognized to make it at a started march twenty twenty four the board is provided significantly inside and we while we don't look forward to any kind of report it's an opportunity for us to make a improvements on our internal control and make changes to make sure that we can do the best for the community and under the will the board and they provide a significant or oversight since i've been here thank you. This time we'll oblige to member questions. Looks like senator pinzoger question okay representative makes it recognized thank you the new executive director sounds like so I might and my question is this counter looking through here that there's kind of a you know when you're in the public eye that the no parents of evolve can a doctor and that we all should be following makes or for working in the best public interest and when I can review what's happening in this report it's almost like the I guess it's a former executive doctor was almost using it like our personal piggy bank enrichment type scenario as board members I guess were view the board back then we were where this is going on in what steps you taking to make sure that going forward that the public can understand this is for the enrichment of the community and that for the originate of the people involved and it is it seems you know like that's what was going on based on this report so some of the activities that are reported were prior to mad term on the board I was elected in two thousand nineteen so the loans and things like that I was at present for since I have become chair one of the things that we've done to reduce some of this is the number of credit cards that are available and they're not hailed in the possession of any employee there checked out so to speak a pine of need for a travel and we're working on a written policies and making sure that we have more oversight and more transparency excuse me I work very closely with mr morgan and the end the executive committee on our board and then worst informating transparency policies at each automating okay and then the car for up I might have is you know that the one that that two hundred fifty thousand dollar loan that was given if there are i'm assuming that we just pick a random would that be correct from s. Staff or we picked we picked two at random and we knew there was a specific problem with the one lounge we it was picked on purpose okay ah that was going to be my question because if there is one picture random and there are there's problems than changes are there with problems with with the other one so from your perspective can you talk tell us or give us confidence that the other funds that are outstanding or being handled correctly and we don't have these issues ongoing or are there ongoing issues that still need to be resolved with uh the hire of james and him coming here and and and kind of take in ownership of the organization and what we need for him to do and your comments are earlier about this public phones we want to utilize this in the right way a number of fines millions of dollars that uh through the revolving loan found in another funds in grants that are received by our cities they've benefited from that which benefits the general public and what we're doing moving forward uh james will be reporting to us and an internal policies and responsibilities and even by following code that we receive the updates that we need and to be sure that the companies are the small businesses in which are receiving these lounge are turning in the appropriate documentation are thank you thank you mister center johnson and recognized thank you mister chairman in judge my mister moore and thank you for coming I do not want any question that I ask to be taken any of you personally I know our elected officials serve on this board is is a exhibition of comparison because of their position mister morgan it sounds like you. Willing to step into what was probably in can words a mass and I want to appreciate you doing that but because you're now there I have to ask these questions of you and your candor be deeply appreciated have and you might not know these answers but if you could provide and for the committee later that's far the first one is why was no recourse sought against this acsi lounge do you do you know why the district didn't go after collecting any of that money at this point do you know the statement was there nothing to be had as far as so is the turn up theory so to speak as in you can't get blood out of a okay and when they waited they just said that the course would be a signature good answer sir on these christmas parties and again you might not know they say there but when you're talking about eleven thousand one hundred and twenty three dollars over two years for christmas parties i'm taking a single us but I guess or is this you know in jalsburg where was this i've i'm just trying to do you have any idea how in the world you could spend that much money on a christmas part two christmas parties for it small originalization stay uhm they were locally that was with the predecessor there when I looked at the details again it's something that should never have happened and would not happen under me and appreciate that the on the on the credit card and again that's probably deeper uh thing to go into I mean someone has a company credit card they abuse it I mean what we see this more often but not these numbers this is you know it's just a whole lot of money there but how many outstanding at this moment car company cards are there we have three sir one for the CD major one for the financial. Services director than one for myself all receipts come to me with their sought off on it in i've been very clear that no lunch now dinner or any kind of stack we paid for and then had to fall with the gsa rules as for thank you in an absurd you've corrected the illegal use of vacation time in this being paid for okay again I think all of you now the one that one thing I want and this might be a staff question mister camper the the private are it came back in with unqualified or clean opinions over how many years was that I believe is was around four five this is my point in question it's really for staff. Did this private firm simply miss all the things that uh are going to solve less found or was there some other explanation for that discrepancy is there some irrelevant answer there thank you sir thank you senator so we couldn't really answer that question you know the private firm is going to be held to the same standards as we are held to they're going to be doing financial audits which has a little bit of a different scope as opposed to this review where we're targeting and looking at specific items per se. You know without looking at the work papers that are underlying support you know that's a question we can answer but they are going to be held to the same auditing standards as we would okay what well i've always this probably irrelevant but I will say it to benefit of my colleagues for over forty years i've worried that and some of our pds are excellent some of them are okay and some of this happens but i've always felt that there was a administrative issue that when it was there they're benefit to show that their private non profit they were that had it was when their benefit to say we'll we're governmental they were that had and I think it gives them an opportunity for abuse and probably something that general assembly in a bigger sense needs to take a look at but i'm i'm real concerned when we allow an entity uses tax money too to have an outside auditor and there's that outside auditor does not just yield things we're going to slip through the cracks I mean we understand you cannot find everything but when you see that the level of this problem i'm I just want us to systematically look at in a way that we can make sure that these entities that that a whole lot of money passed through you know that competent people and when I think of carpet at people II think of our staff air delege leave at our consolidation to do that so what I could go on indefinitely miss chairman but I will will yield much back because i'm sure others want to ask some of the same kind of questions thank you thank you mister camp for this thank you mayor judge miss morgan represented five you're recognized thank you mister chair judge who has for this audit the board in that asking for the audit uhm we had. Suspected and we had some challenges within the the district and has we began to uh be suspected about that we believe this would be our our best step forward as a board to be take responsibility for there uhm appreciate representative of gas away recognize me as his career judge and not definitely don't want this to be a black out any my representatives our senator or any anybody else in our district but we begin to be very proactive once we'd be beginning to suspect these things are they these small business lounge or there are the they can't get these lands through traditional banking candidate they're considered how real scratch correct yes and so being not being successful is not anything new you know yes we're reviewing a couple right now with two two pizza businesses that are defaulting on online as well thank you sender hammer sick of his shares I want I just want to say thanks for stepping up doing the right thing and it's not pleasant to sit from this committee but I think we understand your inherited they're saying couple questions number one those that it appear to have misused funds have they been extended the opportunity to repay those funds or is that even a consideration of possibility I believe there's not in there i'm not I can't tell you what page it is one airline ticket was refunded the the airline take it that was partisan for family was refunded by the former director but was at the only thing that was deemed as needing to be repaid or that was the only thing that was repaired okay the second question is in our own will take on what center johnson was talking about you know from time time we find these auditors come in front of us and. The entity has been using a private accounting firm who is the private accounting firm that was providing these reports during this time i'll i'll say the name wrong but it was hold in more to what my brain sticks i'm sure I couldn't hear you please into the mike I do apologize I don't have that information from me so i'm shooting from the holden marine and more it is what my brain is telling me okay are you still using them they are currently yes sir I mean it is far for this audit that has amendment determined that ended on six thirty twenty twenty four okay and I know sometimes private audience firms are given direction by whoever deals that is hired them as far as the latter two to what they should be looking for based on where you are now with what are legislate about it auditors have found and what this private accounting firm did not find have you given them instructions to your little deeper or what what have you given them in the way of instructions to make sure none of the stuff happens again so dance your question is at the will the board a lot of that is going to go and back to the board but and what we do moving forward we have until december thirty first twenty twenty four to kind of get someone in there so if we they choose a different direction with a different auditor that's up to the um but also too if we do move forward with the current auditor we will have a very candid discussion on this okay effect out of a good because I think some of this is you are where you are because somebody go deep enough and I don't know where that was because they were instructed only to do this much and that that's what court the the investigation will determine but thank you. Senator when you're recognized thank you again I appreciate that you called for the added results and so one of the questions I have because this isn't new I mean we've seen actually where the development planning and development districts we've seen some pretty agreed us issues and it's not just what has happened with your so with that sad when you have the different types of expenditures previously you've been on the board since twenty nineteen I believe and i'm not sure how long you've been on the board twenty fifteen okay so does the board approve different types of expenditures like the bonuses and gift cards or did was any of that ever brought before you as a board to you like what is the boards of role when it comes to expenditures and decisions that are made by the executive director of the pedite right so we would hire the executive director and then establish the annual operating budget we do not review receipts and just review the annual the the budget monthly and the reports that they come to us I think we would have expected the taxpayer dollars that and understanding on what expenses are allowable water not allowable would have been followed that so we operate green county and so with our policy him and procedures where we looked at that at our most recent meeting that's tabled and we're at at the moment we're going to hire an attorney and dig into it a little deeper so that we're clear on how this is going to be handled as we move forward so those are all be addressed in in policy and the understanding with that been on the northeast arkansas chief elected officials board as well with mr james morgan here as the responsible party for the allowed. Way w sorry work force development he's handled that for twenty plus years and very in any very excellent manner and when I started talking to him about what he come over here and help us with east arkansas planning and development turning he's gonna be walking into a mass but uh felt he was an individual of integrity that could help us navigate through this and and do better as we move forward so I think I appreciate that I think my challenge would be for you as a board and with the new executive director to really dig deep and figure out what is an appropriate role for the board set to prevent this from happening because we've actually seen people got a jail from other planning development districts uhm they've gone to jail and we've we've seen some major fraud major corruption and you know these are all tax payers dollars I mean I know I think that point has been made very clearly by my colleagues where it's just aim credibly inappropriate umm and so ultimately from me that falls to the board that scott has some controls there and so as you're moving through that I really think that this is an area that the general assembly really does need to dig debate to bring a whole better level of accountability um not to replace the board but to give the board a little bit more of a direct oversight and accountability and transparency into the actions of the it would just keep everything I think more clear and and and to prevent hopefully anything like this you know from to continue into occur because it it bothers me you know not knowing do these people in a hot what are their work hours but it seems like very kush shops on i'm gonna be honest with you that and so I just again want to make sure we're being good. Stewarts of taxpayers dollars so my challenge would be really worked through their opportunity that don't just leave it with your organization please inform your local legislators and how we can improve state wide because I think it would be very very important as we may forward into the next legislative session for that to occur and and i'm just tasking yell to do that if you will accept it thank you center johnson says yet one more short thank you mister chairman mister morgan it said that you decreased and size of the board recently and mayor you're not in could you tell me who get knocked off but obviously that's a thirty eight people's big board and I think the bigger they get the less dedicated and I realize you know you've got a county in a city to run and even count my earth you had a tornadoe to deal with them you each have individual priorities do you feel that this could have been avoided at least mitigated if the board were about more manageable size or there was an executive committee that had a little bit more of a direct oversight to ugh keep an out how the shell was being right yet yes are so our board was reduced in size um we worked closely with our attorney in doing that it is now made up of twenty five members and all twelve county judges and for the twelve counties in the planet district service the board there is one mayor from each county appointed to the board and that is decided either bad accounting judge or a months that mayors in that county and then the twenty fifth member is and elected amongst the twenty four members we elected a economic development representative. Who ended up being seven hundred from cross county and it is I think proving more beneficial that have that reduced board size we had a hard time getting a core on there when we had the large board we had a lack of participation and I think it was just another as me as a new mayor going on in two thousand nineteen I had no idea what the role of planning district was and that fire wouldn't burn in the hardest so I attended the board maintenance because I was appointed to the board didn't know what I would you know I assume the executive director that we had in place at that time knew what she was doing is she sold a good game and whites where you realized there was a problem we took action and asked and just took that vote of lack of confidence and had her removed and it's been a journey every sense but i'm proud to be a part of the journey because I think it's going in the right direction and mister morgan's going to do a good job and we as the executive board are working closely together and then again with that the four twenty five member board okay and and if you would our echo what center urban said if you have suggestions to us for potential legislative almost started say tweak as primarily a good word wholesale changes by way to how the structure should be so we could help avoid this in the future we'd be very grateful that input and thank you mayor judge mister morin thank you mister chairman representative lady in your recognized thank you mister chairman senator maybe I can help and through the question I have gone to their mean I think I was at the meeting you're talking about where you reduce the number but they have a real challenge and look like this in wrong way but I was a mayor in northwest arkansas when people want to prison that she was talking about and I was part of that group and then i'm attended these meetings the challenge is the same state wide it's it's a real challenging thing because these mayors and judges they they're doing this part time it's really hard. They met their own budget to work to look over so it's really difficult to figure out in the executive director that we had in this district was there for many many many years and very good at what she did and not letting a lot of people know what was going on so you know you have an executive that knows all the ropes and then you have people there come and impart time trying to control that and it's it's really a challenge it really is you know II don't know how you could improve it but hopefully you'll can II think by reducing the number of your dear that I think that's a really good start in in hearing a good person that you can depend on so you know if we can help you the way let let us know. Alright any further questions seeing nine I would entertain a motion to file this report motion center johnson second representative all any discussion seeing now and all those in favor say are those opposed. Motion carries report to be filed next we'll move to other business at this time i'd recognize representatives all be related to a district court report thank you mister chair is this committee will recall there is a the senate and house judiciary committees are a task force looking into the funding of district courts and how to streamline that process and in that regard back in december uh twenty twenty three senator stubborfield and I came to ask the committee of for leg audit to help us with that report and they have been working on the funding aspects in the different things that happen and so with that in mind the next meeting of a leg of this joint committee won't be until september however the task force needs to meet prior to that because we're under an obligation under that at to prepare report before october the first and we've got a lot of work and we need this particular aspect of it and we're asking and with that in mind I have a motion I would like to move under rule seven c two that this committee wave its right a first present resetment of the final report concerning funding a state district courts that was approved by the ljac executive committee on december seventh twenty twenty three and that is so the if we if they if you so desire to do that then this report can be percentage to the task for some we can ask questions that's my motion. Representative toby has made a motion as he second by senator urban is there any discussion center johnson just just a question mister chairman representative dobbie that's so since we're off for a month the the year your test force can meet in and come back and report tests in september set the ad thank you this committee will still see that report is just so that we can have it and we can ask questions of like audit in progress can continue yes progress can continue and so that we can incorporate that to our final report that's do october the first very good motion thank you thank you mister all right we have a motion in a second any further discussion seeing non all those in favor say I thought those opposed as have it motion carries the next meeting of the legislative joint out in the community will be thursday september twelfth and friday september thirteenth twenty twenty four or the call the chairs this time I would entertain a motion to adjourn so you motion representative dobby second sender jods and all those in favor say i've all those opposed meeting is adjourned thank you very much.