Legislative Joint Auditing-State Agencies

Okay we have the first seven reports are without finding some without objection we will file those reports. This. Okay mister mister tom okay thank you medicare the birth the first report we have with findings of the department of craigslist june thirty twenty twenty two report findings one two and four of this report were deferred from the june meeting in the AC s provided this responses to these refines which you should have in your packets as well. The first finding the asia reported to us a loss of funds told me almost three thousand dollars in according to eighty major bashed deposit from the division of penny corrections for inma- banking activity was delivered to the bank on november twenty second two thousand twenty two. The deposit was not recorded by the bank and according to correspondence the bank has no record of ever receiving their deposit. Procedures in place at the time allowed division employees to obtain the previous day's process department slipped from the bank the next business day. In this planning was referred to the prosecutor in the attorney general. The second finding at two or three of the twenty twenty two physical session requires the department correct to conduct an annual auto the forms and ammunition owned by and in the possession of the correction of the salvies. With the audit submitted to the sector for review. After reviewing the audit submitted to the sector we noted inconsistency among the divisions in the systems they used to track and maintain records of farms and ammunition. As well as a lack of documentation of the procedure performed in completing the audit. These issues seem to be caused by limited communication coordination by a management to all divisions regarding the expectations of this audit. And the fourth finding the FY twenty one audit that we conducted included a finally regarding the division corrections unit in mate councils not receiving and or maintaining vendor invoices supporting purchase made during that physical year. Part of the eighty response original response to that finding included audit to the council by internal audit upon requests of the director the warden or the deputy warden and upon a change in the warden position. Additionally eighty c internal audit was performed random audits have inmate counsel state wide. The ac did not implement correct of action specifically we request a reports or other documentation of any audits completed from july twenty two through june twenty three which the age he could not provide. The manager that concludes those three findings thank you if we could have the agency come to the end of the table I believe we have some folks from the department of corrections here. If you could identify yourself for the record please. The. A windy wall as secretary for the arkansas department of corrections chad brown chief financial officer department of corrections. Jeff your controller for department of corrections. Thank you. If you could start at the first with your the responses you have and also if I would draw your tention members to this additional information here that the department has provided if you could start with finding one please sure so after the the last meeting with legislative committee. We went back and we tried to provide more detail into the process and into some of the history of what took place. When this happened. As you can see the dates listed in their mister jeff jury beside me to my right notified director brad show the issue on january eighteenth. Mister bradchew did not uh approve the recommendation to reverse the credit on the inmates accounts. So therefore that credit stood on her account. Headed today we haven't found any evidence that those money orders have been cashed since the money was put on their account. Everybody is only assumption that those money orders got process but that was on us though should have been reversed at the time but the previous director did not approve that request. So. We have yet to find any evidence that those in mates have received double. Once once they get to put on your books you assume that money or has been processed and the ticket stubs on the end of a money order. I would be surprised if the people that have those money orders still have those tickets to two years later so when somebody goes and get some money order and they bring it to us and that's what I was trying to explain in the first response. The screenshot is what I wanted to show revalue because that that's where a lot of the questions revolved around in the last meeting is how do we not know if. Something's been cashed where they paid for it where they got it. When we get the money order and that tickets of the perfect section has been ripped off. We keep the money order whoever bought the money order keeps the ticket stuff and they take it with them. And as you can see. When we put those numbers into that screenshot on the US p s dot com account all it tells us easy if that money order has been cast or not. It doesn't tell us where the money order was purchased whether gas station dollar general kroger. We had no idea. However going forward we now have scanners that electronically scan these in and so this finding should not come up in the future because now that we scan these in immediately upon receipt they automatically start hit and accounts. So this process is no longer but I tried to do my best to my staff to explain a little bit more detail of how the process works and will be the history that came with it okay thank you members do you have any questions. Alright they will move on. Finding number two. You can go ahead and i'll alec chad go ahead and kind of give a summary of this and then tell you where we're at currently in the review of the newest reports and go sit down but apparently that's not the case today not so lucky mr brown so yeah. I know at the beginning. We said we would use quick books after getting inside quick books and seeing just how tedious quick works here's it works for community correction not necessarily for the division of correction I know director pain and major shores explain that at the last meeting what I wanted to update the committee on is the process that we're going to use going forward so I have been in communication with a program called smart and when I talked to that those individuals from that vendor we already have a few license with them anyway so when I set up a meeting with them I talked to them to see if they had an audit function with within that program they said they did. That is the process in the path we are going down at this moment is it going to pan out I can't tell you that I don't know I just know we're trying to find a way to satisfy the committee in the audit finding going forward to better track in our firearms but as of today that is the path we're going down as with the vendor called marchy it does have an audit function but we are looking into what that are functioning too. When using a excel spreadsheet or something of that nature. From my understanding what legislative all is looking for is when they go in to find out how the ambo is being transferred around the agency. They want to know who touched all those entries and excel spreadsheet cannot do that so that's what i'm looking for in this program. Uh the smart sheet program and i'm still in communication with that vendor very well you think it will solve the problem of the messing rounds of email when we had thirty two thousand rounds go missing do you think it'll address the situation like that I think it will so the way you can set up a program like smart she is you can create forms that once you fill the form out it populates everything that it's tied to within the system and legislate about it should be able to go in and track who fill the form out when it was last terse with the date and everything in between. That's what i'm verifying with his company that it has the functionality to do that if it doesn't we're gonna have to keep looking because I just don't think quick books is an adequate way especially for the division of correction they have so many ends and out but we'll keep looking at we'll keep you all updated as we go very good questions from the members representative richmond thank you madam chair. I know we're always looking for system solutions to systems on this but my concern special with things like gamble and weapons and stuff is there a specific individual within the department that are director can call in and say why is this a problem is there anybody that has that kind of supervision then overseas the other people that actually have contact with the type of material because the so easy to offer those things that if you just rely on on a system I fear that it will at some point somebody will figure out the system and find another workaround you need an individual that he knows that here's rear ends in a slinger. If he doesn't keep up with the is there somebody like that so behind me in the audience is major rainy shores he testified at the last committee meeting also for the vision of correction as soon that would be here is that correct worker so that would be major random shorts. One thing that that's been in conversation with director paying and major shores is there's also a paper trailer for that paper trail. If that audit system works the weights suppose to in the way that they explain it that paper trail will be included into that program so if we go in and track. Major rainy shores he smooth this entry on this date there should be a paper trail that alliance too bad that's the best way we figure out how to try the I can't I don't think I have an answer to your question on if somebody can go any manipulate the system i'm sure where there's a well there is a way in any system but we're trying to do our best to satisfy you and we're going to keep looking into this program to see if it does. Follow. I think that the again the paper trail was our paper trail before this problem that should have been able to identify this problem I believe the process always started with a paper for next week. I think the underlying problem was that we had a bad actor and at some point you're you're going to have to deal with the bad actors no matter what process you've got okay well that brings me back round to the other point in that whoever's a supervisor has got to be on top of it. So that that means you know I know that you get a many things to do but you got a million one things to do and that would be my suggestion that you manage. I'm major sure if you could just for it invite identification your title as well as name yes may my major radio shores on the march prepared to administrator for the division of correction into his question and the central armory falls under my area and we have a central armor at this point in the process that happened it calls and motorgo missing was this amount was obsolete ammo it was mo that we were turning into m and r and they're in the process of turning in at thirty eight special we care thirty eight specials for years before we transferred over to the global forty. Dearnet process of turning that amount we in the paperwork was not doing so it allowed that amount of ammunition to be set back. When they were taking up all that ammo from all the units and turning it in in that toward it was we had one bad actor in the group that is simply moved back it was all done with transfer forms into m and r and that's where the amount come up missing we did not have any electronic way of keeping up with this amount so there was no audit form other than going back and looking at every tranked for a form and accounting for every more and that's how the ambulance regionally came up missing through an internal audit we found there may then we self reported it but it was literally going back through patest pieces and pieces of paper to say hey this mountain ammo actually worded go in and are didn't have a record of it I never had a record of it going to him and already was. Now we got to start an internal investigation so that's how we ended up losing the thirty thousand rounds of thirty eight special ammunition now in the process of course we've already identified it we needed the forms we've got the forms bill that we believe we'll go right into the smart sheets and we've tightened up every unit every unit has a central or has an armor now that is trained we physically trying them on operation to that armory under our new standard operating procedure so we've done a lot since that happened you've also limited the number of ammunition that goes out to the unit so you don't ever have that huge on flood of mother's coming back and forth either now that the units before before this actually happened there was no monitoring of how much am I they could have at the unit level it was left up to the unit wardens in the facility wardens about how how they ordered duramo we went to a central emmo point and now they only have a using a male of ammo when they get ready to go qualifying stuff now they have to come to the central issue and point and draw that amount they don't keep an old side anymore so that's helped a lot all they've got is what we call a working load in that's further transportation their field officers the officers are actually issued these weapons every day so there's a lot less amount floating round out there at the units. Yes. Any other questions members. Yes thank you all I got currently going through another audit is is we're going to be back in for another next back of one of those committee next year with the same thing that is not my intention sir no this will be the first time that I will have ever later it's on these reports as secretary I just got both reports last week or the week before and it is my intention to move forward with the smart sheet option and try to work through whatever the issues are on either side of the house so we can streamline as much as we possibly can and then make changes to our secretarial directive that kind of guards the procedure and get us as streamlined like I said it's possibly as we can um cause I understand the intent of the law and I certainly want to do whatever we have to do to meet that loves that you're currently going through an audit right now and those are being issued both divisions and the reports have been submitted up to us for a review okay there were no findings in in I know for the adc for the division of correct it's sunday cc was same way of leg it came in and did their audit there were there were no findings and we also have started in internal audit procedure or the central armor is responsible for do it internal audits before the list and there was no findings in that either so procedure seems to be working that we have in place it's just a matter of rolling it into something that can be odd easier or thank you members any other questions. Alright let's move on finding number three. I'm gonna let cheap council row explain thank you major. Hello everyone err chief legal council for the department of corrections tony rowell so in evaluating our respiance to the original finding here uhm we really looked into where resources were being used the initial response was that we were going to have our auditing employees conduct these very comprehensive and burden some manual accounts after discussion with the inspector general's office and the department of internal audit and house within their. We we talked about how better a more programmatic comprehensive policy based audit could be used to help us identify places where we can target department employees took him in and do these manual accounts so when we have something like an inmate council that has you know enormous amounts of paper that has to be gone through when we're taking two employees and sending them down to do these accounts by the time we get the results they're not relevant anymore and by the time we get all of that information you know someone's had an opportunity to really conduct poor behavior for a long time so I met with mister bomb and we discussed them looking at policies helping as implement you know consistent operational policies that provides them the opportunity as our auditors to go in and more quickly identify where there are deviations from that policy so in keeping with that and we are going to really put our auditors doing actual audit work like legislative audit I was just at an earlier step and we're gonna sign department staff outside of the trainer coming in where those and make counsels or being house and allow those individuals to go in and do those comprehensive reports and report that upward. And you feel this is going to speed it along and give you more closer to real time yes absolutely it's any anytime that we have work being done by more people it gives us the opportunity to kind of surge and and address those issues more quickly members questions. Okay I think that kaloo concludes the department of corrections we can report those with finding without findings with that objection alright let's move on thank you for coming. Yeah. The last port we have to date with findings is the department of military june thirty twenty three report and this report contains two findings the first bounding our review of payments made shortly after year revealed three payments told him a hundred and forty two thousand dollars for services rendered practice and that should have been identified as accounts payable as of june thirty two thousand twenty three in accordance with the face financial management guard. The second banding are review the department's federal receivable balance were built on a statement of almost eleven million dollars. The department operates on a cash management improvement act system with federal funds which allows a cash balance to become negative the state tax responsibility for paying in business first and then request reimbursement from the federal government at the beginning of the following month turnover experience by the department at the interfiscal year twenty three resulted in reimbursement request being delayed. Additionally many expenditures already incurred by the state in physical year two thousand twenty three and a white he reversed from the federal government we're also delayed into physical year two thousand twenty four. Those amounts should have been accrued as a federal receive at the end of the physical year. Initially any receipt recorded in this week year two thousand twenty four as a reimbursement of the prior physical you're expensive that was not received in the first forty five days of this group should I have also been recorded as a deferred info resources because the department did not record the proper federal receivable the deferred influence resources was also understated by almost eleven million. And these are just interest on their accounting books there is no money missing from this do we have some folks here from the department of military. If you could take a seat in addition ourselves along with your title. Yeah. Diane warm cheaper staff say fo gift word chief is there after a bit cf. Well now that we know who we are going ahead and start uhm could you fill us in on what happened and what the process is done to correct this. I got which one are you when start with number one okay number one is the that's the hundred and forty two thousand okay. So. What happened whereas it's just pretty much forgetfulness I guess on our team and everything they're supposed to put a wi in front of the document whenever they pay it and everything so some of them or utility some of them were just our vendors that got paid or contracts and stuff like that that we have set up to where we are meeting with them. Before the year in to go over all the processes we did have a little bit of turn over last year or so they renew to the process than everything but we are getting that straightened out. Okay so it's a training issue questions from the members. Yeah. Am finding number two yeah i'll take that when we basically work on a you know the majority of our funds come from the federal government on what's called a massive cooperative agreement in so in this instance we just had again turnover and staff were very lean you know lean office so when one person kind of leaves a you know we don't have a lot of depth there so we had the kind of spread it out so it was just a matter of the timing of it not getting the what we call the two seventies are kind of the form we use to get reimbursed it was just getting those through the system and to correct that our old system because we have a federal system on one side of state system asus on the other don't talk to each other we have to do a lot of manual injury of data back and forth and so when we found this finding we have are stacking up with a way to comment with a new tracking system that both the state in federal employees can get to so previously things were going back and forth through email so there really wasn't a very good tracking system on it and so now we have that you know we have it down to the by the each two seventy and a tracking system where we can see exactly or everything's going so II think work kind of back in the near the year twenty twenty four now with silver tracking so I don't think this will be an issue in the future it members any questions. And thank you just just want to let me make sure I understand this so what all of these were federal funds that were going to come in and they they came in later then then what they were actually would if we had done it on time is that correct yeah the way the system works is we have to want to do seventy goes up to defense they pay it there's about a thirty day but you know wag there and so what we didn't do is we didn't log that as an anticipated you know cash that's coming in and so with that with us getting behind a couple months because of staff that's how their number group and they didn't put you all in a cash flow issue help I mean because the the actual phones from the fears did not get here as quick as they normally would is that correct that's correct it doesn't person a bin cause because i'm one of these rules we're allowed to go to we're allowed to go negative because it's a federal agreement we know we're going to get the money back there sure but it's for enough appreciate you all come up with a new deal because I do want to say this because there was a loss to the state and what the way I see it because you're talking about ten million dollars that we would have been invested in treasuries that we actually laughed down in that you know at these five percent rates I mean it was a it was a significant amount at least so I appreciate you all doing it a hope that none of our other entities that are set up this way I don't know if they are I mean I mean that might be something that leg out it wants to look at since we're hearing this because you know do I and finds of that size you know when rates were down at one maybe not been bigger deal but now it it can sell so again maybe a fire leg old it could look into we have any other agency is on these federal phones you know that they have the same tracking in place or we make sure we develop something to so that we stay on top of it such as they have yesterday there's something that we look at when extra logical negative like that we all were always looking at to see if they record the proper receivable and we this will just add abnormally amount of lag time because of their turnover they were like two or three months behind the state of. The tip the typical one month so it is something that we look at our normal basis and also their name but some are other agencies of course one that receives federal funds like that we always look at there's also so yes now that the other one they're not all on the same system that they are as far as reimbursement someone get that money in advance so that's different if they do get the money up front okay by thank you and thank you all for you that you do think your system now will will catch the in a very prudent fashion roof which yes if it was to happen again yesterday we did bring us up to our in our arkansas forward working groups because really the big issue for us is i've got a federal system they can't talk to asus and so literally I have folks that have to hand key and pay role and when you're hanky and that in there just you know if we get one error then we've got almost completely throw out the whole month and start over so sure I think we've got the best system we can get in place but we're looking for improvements every day great yeah may just let me indoors forty five days that bads lately cause all the state so thank you sir how is the system working right now is the new system functioning better yes I believe the letter we get update every friday on kind of where we're at it seems like we've been able to catch up to uh to within thirty days of our payroll and other things and we've actually we're justified to bring on an additional account so we have a little bit of a of a stating at the system so that if we do have an account and leave that we're not you know scrambling getting behind because of a just not enough staff to process okay thank you members any other questions all right we will report this completed thank you members any other questions for the good of the body alright thank you have a wonderful day. 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