Legislative Joint Auditing-Counties and Municipalities
Video
Transcript
1 document
Machine transcript
May contain errors. Verify important quotations against the official video.
About transcript accuracy
- Source
- Whisper
- Model
- ggml-large-v3-turbo.bin RTX5060
- Processing date
- October 8, 2026
Representative Danny Watson
Unverified
0:00
Glad to have everybody. By the way, we are in the legislative joint auditing committee. This one is counties and municipalities. If someone is in the wrong room, hopefully everybody's in the right room. We have quite a number of items on our agenda that we're going to be going through, taking care of. First item on the agenda will be Arkansas County.
Okay, I'm going to slow down here in just a minute. We're going to go ahead and after I call this chair to order, I'm going to go ahead and discuss the adoption of minutes from the June 6, 2019 meeting. If y'all had a chance to read them, if y'all have a motion to go forward on these. We have a motion, Justin Gonzalez, we have a second. We have a second. Okay, no further discussion, all in favor, motion passed, thank you.
Okay, item C on the agenda, discussion of Arkansas Code 1459117. The first one up is
the town of Allport, town of Allport.
Speaker 6
1:19
Okay, so these five municipalities are ones that we either have already started the
Speaker 7
1:26
process of withholding turn back per 1459-117, or one of them is on the list for your approval
to start the process. I'll go through each one. Allport, the latest on them is that we have not seen any substantial improvement there. They are almost at the end of their second round of this. This would be the step where we would withhold 100% of their turn back, but they're not receiving turn back because this is their second round. We've continued this per the bill for the act from the 2017 session about the revocation of charters.
And so in 60 days, if you approve to continue the process this time in 60 days, that will be the end of the second round of this. and then the committee would have to decide what you wanted to do from there. You would have the opportunity to
Speaker 10
2:28
decide if you wanted to do that. We have any questions, Mr. Sample? No,
Senator Bill Sample
Unverified
2:34
I was just going to make a motion to get on with him
because they've been up here annually for as long
Representative Danny Watson
Unverified
2:47
as I've been here. Okay. We have a second. Justin Gonzalez, any further discussion? All in favor signify to file, uplifted hand, motion. To file for the town of Alpour, is that correct?
Speaker 7
3:06
Yeah. Okay. Okay, the next one on the list is the city of Bradford.
We started them last, the last meeting, but
Speaker 21
3:12
we have seen substantial improvement on them, and we would recommend that we discontinue the process for Bradford. You've heard the explanation
Representative Danny Watson
Unverified
3:29
motion, Senator Cooper. We have a second. We have a second. Senator Sample, we have a second. Representative Cooper.
All in favor, signify up with lifted hands. Those opposed? Motion carries. Okay,
Speaker 7
3:47
the next one is the town of Jericho. We have seen no significant improvement there and we would recommend to continue the process there. The next step would be to have the state treasurer withhold 50% of their turn
Speaker 28
3:57
back. Motion. Second. All in favor? Aye. Those opposed?
Speaker 7
4:10
The fourth one is the town of Wabaseka. They also have improved, and we would recommend taking them off the list and discontinuing the process of 1459-117. We have a
Representative Danny Watson
Unverified
4:23
motion. We have a second. Do I have a
Speaker 34
4:25
question? Go ahead. Just to make sure, are there any representatives for any of these towns or anybody here? Not yet, but the next one
Senator Terry Rice
Unverified
4:37
today. They won't make any statement before we vote on that.
Representative Danny Watson
Unverified
4:41
No, sir. Thank you. Did we have a second on town of Wabaseka? Yes. Okay. Those in favor, signify up, lifted hands. Opposed? Carries. Town
Speaker 36
4:59
of Fulton. The town of Fulton, there are representatives from Fulton here.
Speaker 7
5:04
And we are just now recommending that they be put on this list to start the process of 1459-117.
And we can look at their, go ahead and look at their findings if you wish. Now we can wait and do them
Speaker 42
5:23
in the order that they are on the list. Do we
Speaker 7
5:28
want to look, do we want to go over their findings or do we want to wait? They're on page 25
Representative Danny Watson
Unverified
5:38
through 27. Everybody go to page 25, Town of Fulton.
Speaker 28
5:44
We have both findings, repeat findings. And we just may have repeat findings. On the mayor, we have the street fund disbursements for 17 exceeded appropriations by 4,549 in non-compliance with code. And we have
Speaker 7
6:03
budgets were provided but not adopted by ordinance or resolution. Audits are agreed upon procedures reports have not been obtained for the water and sewer department for 17, 16, 15, and 14.
And then if you go to the next page. which, well, actually, these are not listed as repeat findings because we have a new recorder treasurer. But starting under the recorder treasurer where it says accounting procedures for municipalities set forth in 1459, 101 to 118, starting on page 25 and then going through page 26, these are all, and then on page 27 as well, these are all violations of the Municipal Accounting Code,
which are what the 1459.117 refers to if there are violations of these laws, if there are substantial noncompliance with these laws is when turn back is withheld. And then we have on 27 another repeat finding. Bank account reconciliations for all funds for 17 and 16 do not indicate approval by someone other than the prepare as required by 1459.108.
This was actually on the recorded treasurer and the mayor, and it's a repeat for the mayor. And the mayor is here. Mr. Hale.
Representative Danny Watson
Unverified
7:39
Mr. Mayor Hale, if you would like to come to the end and possibly Ms. Hendricks, maybe? If you want to take a seat at the end.
Darryl Kirby
Unverified
7:51
Try to position yourself close to the, close as comfortable to the mic.
Representative Danny Watson
Unverified
8:13
Committee on the, if you will, go ahead one at a time. Go ahead and identify yourself
Speaker 54
8:19
for the record, please. Mayor Henry Hill III, Fulton.
Speaker 55
8:23
Francis Hendricks, recorded treasurer for the City of Fulton. Thank you all,
Representative Danny Watson
Unverified
8:27
it's good to have both of y'all here today. Committee members, if there are any questions, if you had a chance to delve into everything in print, the findings. If y'all may have some questions or concerns, I hope possibly we could get some of these answered. Senator Sample.
Senator Bill Sample
Unverified
8:59
me say thank you for showing up here. But I'd like to know why that you haven't had your budget approved and why your appropriations have been exceeded. Well, first of all,
Speaker 62
9:15
our budget was approved according to how we set it up.
Senator Bill Sample
Unverified
9:21
Yeah, but was it approved by the way that the law sets it up?
Speaker 64
9:27
Well, I'm going to try and get to that. Okay. All right. We adopted the budget. We posted budget according to the locale that we have there. We don't have a local newspaper. So in posting these things were the places that we did. But he said that we didn't have an adequate record showing that these things had
Speaker 68
9:55
been done. So what we was doing is between one secretary dying, another one coming in, and then stopping and quitting, and then trying to get it right.
This is where we ran into the problem that we was having. Over the course of since this has been going on, I've lost two secretaries, one up to death and the other one just decided they would resign. So now we are back at now trying to get everything done according to how it's supposed to be done by the state. So
Speaker 64
10:28
when he came in, we thought what we was doing was correct, but
Senator Bill Sample
Unverified
10:33
he's saying it was wrong. Okay, let's talk about why did you overspend
Speaker 64
10:37
your appropriation? Well, according to setting up this budget, we can either go back and say
Speaker 68
10:44
that if we had $50,000 last year and the next year we come up, I'm hoping you understand what I'm saying, I can either put $50,000 in it.
What we're saying is we thought what
Speaker 64
10:58
we was getting the next year was going to be a certain percentage. When I talked to the previous order before that, he said you can either go back and do it as what it is actually you're actually getting or what you think that you will get over on a percentage base. So when he came in, we went over the, he says, 142% over what was appropriate. He said all we need to do was to go back and pass a resolution stating that
Speaker 68
11:27
we had done that and which was not done.
So it was not done properly. There was a, there's no mass fees in saying that this money was ill
Speaker 64
11:42
spent or that he found out that it was misplaced. So the money was not taken out, nor was it not accounted for. So what we're saying is nothing in our report would show that any money that came into the the city of the town of Fulton was not appropriate, or
Speaker 66
12:05
I don't know if I'm answering that correctly for you, but I'm
Senator Bill Sample
Unverified
12:12
trying to. Okay, let's move to the agreed upon procedures about the audit for the water and sewer department. It looks like you're
Speaker 68
12:20
way behind on that. Yes, sir. That is because now I don't have the person
Speaker 64
12:26
in that. We have taken all the records that was bought in from the previous individual over the Water Department. It is at an accounting now.
Speaker 68
12:36
They are working on that. They've had it for at least three or four months for at least from this, and I haven't heard them. The last time I talked to the lady that was doing this, she said they was almost through with
Speaker 64
12:47
the last point. And so no sooner she get that done, I have told, also told Lance that we would take this and we would take it to the appropriate individual to actually get this done. So he told me we had to go back at least three years. Well, this goes all the way back to 14.
Senator Bill Sample
Unverified
13:06
Yes, sir. Surely that someone would have noticed or you'd got somebody competent to
Speaker 74
13:12
take and do that, having that much time. Well, we thought we
Speaker 64
13:19
did, but there wasn't. So now we're going back to getting
Speaker 66
13:25
a complete record of everything. It is at the accountant right now, and they are working on those papers.
Representative Danny Watson
Unverified
13:37
Mr. Chairman, I'm done. Any more questions
Representative Johnny Rye
Unverified
13:46
about the committee? Representative Ryan. Thank you, Mr. Chairman. Yes, sir. I noticed on page 26 at the bottom of the page where $27,625 was spent on the street fund where it was taken. Was that taken from the street fund to the general fund? Yes, sir. Boy, that's, sir, that's something we've really got to be careful with.
I know counties actually cannot spend any county general money, no, any county road money for county general. And the city road money is not supposed to be spent for city general. That's true. Yes, sir. So we've got to be very careful with that. We understand
Speaker 64
14:29
that, and when this came up. But the point is, I want to just give you a brief thing. We don't have any revenue.
We don't have any revenue that's coming into the town of Fulton where we're located. There's no other revenue than what the only thing that we get is from the state. And a sweep of coal turnbacks, which is a small amount for the taxes. So at this time, we didn't have any money to pay any of those bills. Now, according to the state's auditor up here, they told us that, and we didn't do it, we should have called an emergency meeting and say we could transfer those funds over
Speaker 68
15:13
because of the emergency point, and we didn't do that. But we found
Speaker 64
15:18
out it was a no-no. So now we're trying to pay it back, but it's awful hard to pay back this amount of money when you don't have no visible income coming in to the town of Fulton. There's no businesses to produce revenues for this. So we are just trying to, and it's going to take a long time to pay this back.
Speaker 86
15:44
Yes, follow up, please, Mr. Chairman. Even with the $200 a month
Speaker 68
15:53
now that we are putting back in there, it's still going to take quite a while. Yes, go ahead. Yes, sir. But now
Representative Johnny Rye
Unverified
16:01
each year you're getting turn back money for the road? Yes, sir. Now you're not spending any of that for the general, are you? No. Okay. This has been completely stopped. Okay, sir. Thank you. Thank you.
Representative Danny Watson
Unverified
16:15
Thank you, Danny. Any more questions for the committee?
On this situation right here, let's
Senator Bill Sample
Unverified
16:50
this recommendation. Do we have a motion for the committee? The staff would recommend we go ahead
Speaker 7
17:01
and file the report,
but then we'll still start the process under 1459-117. It's my understanding that we're there doing the 18 engagement now. Is that correct, Mr. Hale? Yes, ma'am. So we'll see fairly soon if there have been any improvements, and
Speaker 21
17:14
we'll report back to the committee. Go ahead, Senator Sample. I just can't
Senator Bill Sample
Unverified
17:22
see how that they're ever going to get out of this hole. If they don't have any income, I mean, I think the best thing for us to do is go ahead and put them out of their misery
and stop so they don't have to worry about this any longer because we're not doing them a favor by letting them stay in business.
Speaker 43
17:47
I'll make that motion. What does that mean by putting this out to me?
Speaker 21
17:54
Your motion. Okay, to file it and start the process of 1459-117?
Representative Danny Watson
Unverified
18:01
Do we have a motion to file as explained under the statute
It's a matter of time to figure out which route we're going to go. Whether to try to end the municipality or to see if Fulton can dig their self out. There's an assortment, as you all can see, there's an assortment of findings in here and also many of them are reoccurring. We do not want to set y'all up for failure is the last thing.
We would like for y'all to be able to dig out of this. If there was any other recourse or any answers, we're willing to listen. But we have not seen
Speaker 110
18:50
anything yet. Well, he said put us out of our misery. Well, hopefully that wasn't my words. No, that wasn't your word. That was his. And when
Speaker 68
18:59
I hear the word misery, is that you're talking about if I'm looking at an animal, I'll be saying that that was a death penalty. So I was trying to get an understanding of what he'd mean by that.
But we've talked to our, we've
Speaker 64
19:14
talked to the last auditor to come in, working with us because of the previous individuals that we had working with the city to correct those things there. And I always believe in that in any life, in any situation, there's a time that a matter can be corrected instead of, what he's saying, putting us out of misery and saying the death penalty.
So I'm asking you to give us a chance to look at the 2018 report to see the improvement first before
Speaker 68
19:52
you start saying the death penalty. Okay. Senator Sample, go ahead. Yes,
Senator Bill Sample
Unverified
19:59
I would like to respond to that. It didn't mean that I was giving you the death penalty. I was just trying. You had told us what you tried to do. How many people you've had there holding office that's either died or left?
and what I meant by putting you out of your measure was trying to take and keep you from having those problems and those difficulties trying to do that with no visible sign of income. Thank you, sir. Thank you,
Speaker 7
20:42
Mr. Chilling. Mr. Hale. Yes, ma'am. The process of this 1459-117, the first step is just to notify the city,
and then you'll have 60 days to show us if your records have improved. So we are giving you this chance
Speaker 28
20:54
before anything else happens. Does that help any? Yes, ma'am. Now, my
Speaker 64
21:02
auditor has already told me that he's already sent in the 2018 review. I don't know if you have it or not. It's in the
Speaker 66
21:09
review process. I have not seen it yet, but
Speaker 21
21:13
it is in the review process. All right. Thank you. Any more questions, committee?
Representative Johnny Rye
Unverified
21:22
Representative Rye, go ahead. Thank you so much, Mr. Chairman. The amount of money that we're paying back for the street money that we used, have we started
Speaker 121
21:33
paying that back in July? Yes, sir. Have
Representative Danny Watson
Unverified
21:38
you? Yes. Okay. Any more questions, committee? We've heard the explanation, do we have a motion to file with the explanation, and let it run its course of action to ultimately get a remedy for the town of Fulton? Do we have a motion? Motion.
We have a motion, do we have a second? Second. Any further questions, all in favor signify uplift your hand. Opposed, like sign, motion carried. Thank you.
Speaker 123
22:09
Thank you. Y'all be careful going back.
Speaker 7
22:28
list of reports. The first one we'll look at is Marion County. This is on page one. This was deferred from the last meeting. The committee had questions for the librarian on the finding. Marion County Library paid $100,000 of public funds to a nonprofit organization to establish a charitable fund for the benefit of the library. The agreement establishing the charitable fund states in part, donor irrevocably gives, delivers, transfers, and assigns to the Arkansas Community Development Foundation, the nonprofit organization, all of its rights, title, and interest to, in and to the assets gifted.
The agreement also stipulates that a minimum of $50,000 be maintained with the nonprofit organization for three years. This agreement appears to conflict with Arkansas Constitution, Article 12, Section 5, which states in part, no county shall obtain or appropriate money for any corporation, association, or individual. And there has been an update to this since our last meeting. It's my understanding that the money has been returned to the county library, and the county library director and the board chair are here to address this finding.
Ms. Scott and Ms. Bearden. Thank you.
Representative Danny Watson
Unverified
23:56
didn't... Ma'am, ma'am, just would you back up and just go ahead again and identify who you are and
then your name, please. Thank you. I thought you
Speaker 128
24:06
meant physically back. I'm going to start rolling back. I know I'm loud. I'm Dana Scott. I'm the library director of the Marion County Library in Yelville, Arkansas. Thank
Speaker 135
24:16
you, ma'am. And I'm Judith Bearden. I'm the chair of the administrative board over the Marion County Library.
Representative Danny Watson
Unverified
24:22
Thank you, ma'am. One of you can go ahead
Speaker 136
24:26
and proceed. Well, we understood you had questions. If not, I
Representative Danny Watson
Unverified
24:34
will proceed. From the notes that I have read,
from the findings, they appear to have been satisfied. But if you want to go ahead and do a brief explanation, go ahead, either
Speaker 135
24:47
one of y'all. Well, we objected in writing to audit twice on this finding.
The board, five-member board, all professionals, all very dedicated to the library, thought this was considered an analogous to a three-year CD. We put in our money, we get it back. That did not strike us as a gift. And so we've made those objections. The last conversation I had with audit was we agreed to disagree.
So if you all have any questions for us, to us, it was an investment for the purpose of earning extra money to the library to meet its future needs. We are a small library, county's only 16,000, we have space problems. And so we see, long term, a need for money to alleviate that space problem. And that was the purpose of the investment. Arkansas Community Foundation people are here if you have any questions for them.
But, like I said, to us, it was an investment. It was not a
Representative Danny Watson
Unverified
26:07
gift. Okay, thank you, ma'am. Any more input from either of you? Okay, do we have any questions, committee members?
Senator Terry Rice
Unverified
26:15
Yes, Senator Rice, go ahead. I appreciate what you said and probably the intent that you meant it, that there
were professionals and the thought to do it the right way. Did you seek any legal interpretation before doing this?
Speaker 135
26:30
No, but we did read the agreement. The important thing to us as part and parcel of this agreement was the information furnished us from our staff regarding this investment. It's called, we made an investment under the so-called leadership fund. And those, we met twice with them in public meetings, asked them questions. We were satisfied with their information that this was what it was, a short-term investment, and they've met the terms of it.
So I considered it part and parcel of that agreement. answered your specific question, the answer was we did not have it reviewed specifically
Senator Terry Rice
Unverified
27:18
decides to do something and we consider it an investment, but it does not meet current law or guidelines, that we will get called up on it also, just because you think that, and it doesn't mean audit is right, but they
have a pretty good legal team, so
Speaker 135
27:42
I'm a little concerned, Mr. Chair, with who's right. This finding was referred to the prosecuting attorney, and he has
Senator Terry Rice
Unverified
27:50
declined to proceed. Yes, ma'am. I can guarantee you everybody sitting here gets pretty raw when we understand, because The prosecuting attorney is basically not going to do much unless it is a, one, a severe case or a case that they can really wrap up.
There are probably not any prosecutors going to do anything on this size case. And so we hear that a lot. But let me assure you, just because he hasn't taken it up doesn't mean you're totally right. It means that prosecutor decided not to move forward. I understand what you're saying. Thank you, sir. Thank
Representative Danny Watson
Unverified
28:37
you. Thank you, just a minute. Senator Johnson, you have a question?
Senator Mark Johnson
Unverified
28:43
Thank you, Mr. Chairman. I actually would like to hear from the Arkansas Community Development Foundation people. Is anyone
Speaker 152
28:51
here from that organization? Two of them. We'll cheerfully defer to them. All right, thank you.
Speaker 156
29:04
Okay. I'm Ashley Coldiron with Arkansas Community Foundation. Yes,
Speaker 158
29:08
ma'am, and gentlemen? I'm Corey Moline with the Arkansas Community Foundation.
Senator Mark Johnson
Unverified
29:14
Okay, so y'all, Arkansas Community Development Foundation is part of Arkansas Community Foundation. No, sir, that's
Speaker 156
29:20
an incorrect terminology that you're using. It's Arkansas Community Foundation. So this was just
Senator Mark Johnson
Unverified
29:25
a typo or a mistake that was in our paper. This is the same one that Ms. Larkin is Executive Director. Okay, so I know her, now I know who you are. Considering you all serve a whole state, I think we need an explanation of first, what you did for the folks in Marion County.
And I'm sure from intent and a goodwill part, it was probably a good idea. Our auditors just had a little problem, the fact that it violated the Arkansas Constitution, in their opinion. Could you explain to us, first, how this worked, and second, if there are other public entities? And by that, the library in a county is a governmental entity, just like a city or county government is. So could you all answer
Speaker 159
30:15
those two questions for me, please? You bet. the Arkansas Community Foundation, we administer charitable funds for individuals and organizations
almost exclusively for, you know, for those within the state of Arkansas. When an individual establishes a charitable fund at the Arkansas Community Foundation, all of the paperwork in the fund agreement declare it to be an irrevocable transfer of those funds to the Arkansas Community Foundation. That is in order for it to meet the Internal Revenue Service guidelines and requirements so that they can claim a charitable deduction on their income taxes at that point in time. That same fund agreement terminology and everything also works with nonprofit organizations,
and I guess in this case governmental entities such as the library, where they are able to establish a fund at the Community Foundation. But unlike an individual that might create a charitable fund and name a specific charity to receive the benefit of those charitable dollars at some future time or later on to advise which charities would receive it, in this case, the nonprofit or the governmental entity would be the named beneficiary. And so under accounting terminology for auditors, this is a reciprocal transaction.
So although maybe the terminology in the document says that it's an irrevocable gift, it's an irrevocable gift that's going to irrevocably essentially go back to that organization. And so, you know, the way that Ms. Bearden was reflecting it was that they were the named beneficiary. So for this period of time, they were going to take advantage of the pool of assets that we have. to administer, you know, charitable funds. So in lieu of them going out and investing with a Merrill Lynch broker and Edward Jones broker, you know,
and having to break that off, we already have the built-in investment portfolio that they were going to participate in for that specific period of time. And then they have the ability to request that it be granted back to the
Senator Mark Johnson
Unverified
32:20
Marion County library. I understand everything you told me, and I
work in the nonprofit world in real life, and I'm familiar with what you do. And basically, if I'm putting words in your mouth, correct me, but you guys are, in effect, a mutual fund that these entities can buy into
and get a better rate of return if they tried to make these investments
Speaker 165
32:44
on their own. I mean, that's a problem. We wouldn't say
Speaker 159
32:48
that we are not a fund manager. I understand. We don't hold ourselves out to be a fund manager. We have very competent investment professionals that are hired, but we do have a pool of assets that is very diverse that these individuals have the opportunity to invest their funds.
Senator Mark Johnson
Unverified
33:03
Would it be safe to say that philanthropic interests can band together and get a better rate of return essentially
by going through a process such as what you did?
Speaker 159
33:13
When you pool lots of $100,000 amounts, yes, you have the opportunity to pool
Senator Mark Johnson
Unverified
33:19
together in that way. The problem I think we have, and this is why I'm interested in where else it is around the state, is that unlike a private donor, even a private foundation or, you know, a 501c3 nonprofit that has, say, a pool of money that was given to them by their small local donors, this is a governmental entity, and those are public funds and not private 501c3 funds,
regardless of what the IRS says on the federal level, the state says this is Marion County. This is tax dollars or government money, and that's why we have such a problem and why I'm really interested in what other entities that are governmental, and maybe they're all libraries, maybe there might be something else, have participated in this. I'm trying to forestall this problem reoccurring. Do you want me to answer that?
Speaker 156
34:17
Go ahead. So I am the chief development officer. I didn't say what I did at the Community Foundation. So we have 2,100 funds, about 2,100 or more funds at Arkansas Community Foundation. 260 of those are funds very similar to Marion County Library's funds. So they are what Corey referred to as organizational endowments, that when they make a gift to us, the irrevocable gift to us, we can only grant back to them and them alone.
That's what's in the agreement. So we have about 260 of those. Of those 260, I would say about 23 of those are some type of government or municipality. Okay.
Senator Mark Johnson
Unverified
35:02
Okay, would you be able to provide to our legislative audit staff who those 23 are? Because we're, I hope you understand, we think what you do is good. But the Constitution is not something we can thumb our nose at,
even though people are doing good things with this process. If you could provide those to us, I think, I appreciate that you all are taking corrective action. I appreciate our two ladies, Ms. Bearden and Ms. Scott. Thank you for- Sir- But we've got to do this to stop this abuse, or not even abuse, this violation of the Constitution whenever we see it. If
Speaker 135
35:43
I might make a comment- Yes, ma'am. The library has three sources of funds. One is millage fund from the local taxpayers.
One is money that's been allocated by the State Library Board. And the third source is library generated funds. Yes, ma'am. donations, whatever, this investment was made with library-generated funds. It's public funds, but it's not taxpayer funds in that sense of millage funds or state funds.
Speaker 144
36:11
I might disagree with you, Ms. Bearden,
Senator Mark Johnson
Unverified
36:15
in this regard. It's the library itself is a public entity, and any money it brings in are public dollars,
whether it came from state turnback or from the state library or from someone had a book overdue and paid that money in. And once it becomes under your jurisdiction, those are public funds. Now, if you set up a Marion County Friends of the Library Foundation that's a 501c3, then I could see how this could be done and
it wouldn't have been anything. It probably wouldn't even be subject to our audit. Would it not, Ms. Steele? if this were done with a separate beneficiary foundation?
Speaker 7
36:58
We would not normally include that with our audit under certain circumstances. I would have to get Mr. Ayer or Mr.
Speaker 33
37:06
Norman to confirm this, but I think that we probably could in certain circumstances, but it's
Speaker 135
37:13
not something that we would normally do. Sir, definitely public funds. I was not
Speaker 144
37:18
questioning that, but they aren't taxpayer funds. in that I'm differentiating between those
Senator Mark Johnson
Unverified
37:24
three kinds. Yes, ma'am, I understand, but constitutionally we can't make that distinction, unfortunately.
But I hope you all understand where we're headed on this. And if our friends
from Arkansas Community Foundation could provide the staff with those 23 you mentioned, just, you know, we want to help them and keep everybody in compliance, and you could do us a service by just sharing that with us. We'd rather close the barn door before the horse gets out, so to speak. So thank you for your candor and your information, and thank you, Mr. Chair. Thank you, Senator Johnson. Representative Meeks, go ahead.
Representative Stephen Meeks
Unverified
38:01
Thank you, Mr. Chairman. I have a question for staff and for you all, for the Community Foundation. And I'll start with you all first. What is the risk involved in these investments that they're
Speaker 159
38:16
making? How much risk is involved? It is market risk. You know, there's no, there's not a fixed earnings rate that they were receiving on it. You know, their earnings would increase as the market, you know, increases. I mean, we have, you know, as in any balanced portfolio, you're going to have a component that's in fixed income,
some that are in equities, others that might be in alternative investments. And so the blended earnings rate on that is what they would receive based upon their fair value
Speaker 169
38:44
proportion of the overall fair value of the pool. So potentially they could
Representative Stephen Meeks
Unverified
38:49
lose money in this. Potentially they could. And then my next question to staff is, based upon what they have said, are we arguing over a question of semantics here versus it being a gift versus an investment? Or are there general guidelines, because we're talking about taxpayer dollars being put at risk here.
What are the, can you give us a broad overview on, because I know the state treasurer does some investing. What are local municipalities allowed to do in
Speaker 186
39:17
the investing world? I'm not going to come in. Are you a
Speaker 188
39:31
clerk? Frank? Mr. Airy? Go ahead and sit here.
Speaker 191
39:51
Frank Gehry, Legislative Audit. Thank you. Go ahead. Mr. Meeks, there is a specific code section that governs how fines, donations, fees, that sort of thing received by county libraries can be used. That's Arkansas Code Annotated 13.2404B. B1 describes the kind of funds that we're talking about, and there's an AG opinion that says those funds are considered public funds. B2 says funds retained by the county library board, which is what happened here, That's where the money started out.
It was retained by this county library board, shall be used by it. It doesn't say by it or a foundation it chooses. It says by it, for the establishment, expansion, construction, maintenance, and operation of the county library. So to our way of thinking, those were the parameters within which this money could be used. And that is part of the reason that we have
Representative Stephen Meeks
Unverified
40:46
a question here. And how can, so going beyond that question, that sounds like a question maybe the General
Assembly needs to fill out, but what can a library or city in general do as far as investing goes? I didn't bring that
Speaker 191
40:59
funny red book with me, but there are a set of code sections that govern investment of public funds. If I remember correctly, the bank department prepares a list of banks that are acceptable. the public entity goes out. There are collateral requirements, that sort of thing, to protect the funds in case there's a loss at the bank or what have you. So there are code sections that deal
Representative Stephen Meeks
Unverified
41:23
with that. And so a last follow-up, Mr. Chairman? Yes, go ahead, Mr. Meeks. So if they wanted to do an investment in the future, provided it was permissible by law, a city or county would have to go to this list or would have to go to these guidelines in order to make sure. So they just couldn't go out shopping on their own and pick a fund,
Speaker 191
41:48
they'd have to pick something from this approved list? Mr. Meeks, I didn't research that before I came down here, so I'm not certain,
but I believe that's what would happen. If they wanted to put these monies with an institution, with a bank or whatever for it to be invested, they would have to follow that process. Whether there are other options, I didn't come down here prepared to answer that particular question. All right. Thank you. Thank you, Mr. Chair. Thank you.
Representative Danny Watson
Unverified
42:13
Any more questions? Thank each and everyone for your testimony on this. Thank you.
Thank you for your time. No further questions, we'll consider this report filed.
Speaker 199
42:27
All right. Next. The next report we'll look
Speaker 7
42:39
at is the town of Carthage. This is on page four. We have repeat findings. This is under reports previously deferred. We have repeat findings on the recorder treasurer. An annual financial statement was not published or posted in noncompliance with 1459-116. A similar finding was issued in prior reports dating back to 2012.
Cash restricted for street purposes totaling $19,306 was transferred in 2016 from the street fund's certificate of deposit to the general fund without supporting documentation. As of exit date, these funds have not been transferred back to the street fund. A similar finding was issued in the prior report, and I believe Ms. Wesley is here to address this. Yes, I'm Rita Wesley
Speaker 201
43:20
from the City of Carthage, a reporter-treasurer. Thank you, Ms. Wesley. Go ahead and proceed. Okay, as far as the financial report, the end-of-the-year financial report that has since been fixed, printed, and posted,
the mayor took care of that, and he posted everything, I printed everything out. And the CD that was transferred from apparently that was earmarked for the street fund and they deposited it in the general fund, that was done by the mayor, I guess, on his own volition. He took it, deposited it in the general fund. And I guess the city operated on that money at that time. I guess he thought it was there.
Dorman had been there for how many of the years, I guess, apparently before I came along to do it. Anyway, he transferred it to the wrong account, and nobody informed him on it. He did not bring it to the council, but he has since brought it. The new mayor has since brought it to the council. In April, they started paying that money back to the street fund from the city department. So that's all I know on that. Well, it's since being paid back since April.
Speaker 202
44:38
Thank you, Ms. Wesley. Any questions for
Representative Johnny Rye
Unverified
44:48
the committee? Have a question, Representative Rye. Go ahead. Thank you, Mr. Chairman. I may have missed something, but I have a question. The money that actually on page four that speaks about city street funds of 19306 was transferred in 2016 from the street fund certificate to deposit of the general fund.
Now, how is that going now? Are y'all doing any transferring of road money or street money? No, we don't normally do that. That mayor that did that, he deposited that in
Speaker 201
45:19
the wrong account. He took it upon himself to do that. I don't know why. All I know is they brought me a deposit slip and said, here, record this. And that's just what I did. But, no, no money is being transferred over because that's just not done. So, but it's being paid back now. Thank you, ma'am. Thank you, Mr. Chairman. Senator Sample, do you have a question? Yes, thank you, Mr. Chairman.
Senator Bill Sample
Unverified
45:44
How are you paying this back? I mean, are you paying it back on a monthly installment plan? Yes, he's taking it just like
Speaker 201
45:49
the, let me get my accounts right, the general fund would just write a check and deposit it back in the street fund on a monthly basis. How much are you doing that? He started out at $300 a month, but there's no money in Carthage, but he's just paying it as that. He just brings it to the council every month, and they just pay it out like that. Okay. It's going to take a long time. It's going to take a while, yes. Thank you, Mr. Chair. Thank you.
Speaker 202
46:15
Thank you, Ms. Wesley. Committee, any more questions? Mr. Chairman. Representative Rye,
Representative Johnny Rye
Unverified
46:23
go ahead. Yes, sir. Thank you, Mr. Chairman. Ma'am, do y'all have like an ordinance or something in place that would state each month how much you're going to pay back into the— He did—I
Speaker 201
46:31
don't know if he did it as an ordinance. They took a vote on it, but I don't know if anything was just said as an ordinance, but they voted on it and discussed it. Yes, ma'am,
Representative Johnny Rye
Unverified
46:41
but is it a set amount that y'all did in black and white? No,
Speaker 201
46:45
not a set amount because they never know what's going to be there to pay.
So they just pay it. You know, it's what's left at the end of the month. They just pay it according to what, when we go into the new meeting, they just pay it according to what's in there. So there's no set amount set. Yes, ma'am. Thank you. Do we need to do that? We need to do a set amount as an ordinance? Okay, I'll let him know that. Do you think that's okay? I don't know that
Speaker 7
47:14
I could say they would have to do it by an ordinance. I mean, that would be a legal question.
Representative Johnny Rye
Unverified
47:19
Okay. Marty, let me ask you this, though. They're saying that they're going to pay it back, but we don't know how much. It's not going to be consistent. Do they not need to have a set amount each month that we know how much is going to be
Speaker 176
47:34
paid back? We normally recommend that. Yes, ma'am. Again, but we've
Speaker 7
47:37
recommended it before, and it doesn't happen. And as she said, sometimes it's not there to do with, um, like I say, I don't know that I could say it had to be by ordinance, but we do normally recommend that it be a set
Representative Danny Watson
Unverified
47:50
amount each month. Okay. Thank you. I'll let him, I'll let him know that tonight. Thank you committee. Uh, Ms. Wesley, I'm sure you're
going to make sure and follow up to make sure that this is resolved, uh, as timely as possible. Okay. Oh yes. Thank you ma'am. No more questions for
Speaker 19
48:11
the committee. Uh, consider this report file. Our next report is on page 5, the City
Speaker 7
48:17
of Parkin. This is also on reports previously deferred.
We have, under the clerk treasurer, we have a finding that was referred to the PA and certified to the bond board. The clerk treasurer issued herself three extra payroll checks in 2017, totaling $3,807. On September 26, 2018, she signed a confession statement admitting that two of the three payroll checks, 2538, were salary overpayments. The clerk treasurer indicated the third payroll check, 1269, was a reimbursement for city purchases she made with personal cash.
She provided invoices totaling $1,044 as documentation for the reimbursement. However, the vendor indicated to audit staff that the clerk treasurer had not made any cash payments for the services provided. Also, city personnel indicated these invoices were not authorized to be paid. Therefore, we were unable to substantiate the claim that the third check was for a reimbursement of expenditures. Then we have a repeat finding that property taxes restricted for street purposes of $4,320 were not transferred from the general fund to the street fund in noncompliance with $1459.104.
Also, restricted funds of $7,417 noted in previous years were not repaid, leaving a total due to the street fund of $11,737. A similar finding was issued in the previous report. If you go to page 6, we have repeat findings there as well. Continuing on the Clerk-Treasurer, employee state tax withholdings again were not paid timely, resulting in penalties and interest paid of $1,482. Internal Revenue Service Quarterly 941 forms for 17 were not filed until June 7th of 18.
A similar issue was noted in the prior report. Federal tax withholdings, again, were not remitted timely to the IRS. As of October 24th of 18, we could not determine 2016 federal taxes due of 7738 had been remitted. In addition, we could not trace 17 federal taxes due of 924 to a payment, leaving a total due of 8,662. Final penalties and interest could be assessed by the IRS due to late filings and unpaid balances. The city failed to withhold the proper amount of insurance costs for various city employees.
A similar issue was noted in the previous report. Then the district court clerk. The district court bank account was not properly reconciled and the cash receipts disbursements journal was not reconciled monthly to bank deposits. And ending balances remaining in the bank again were not identified with receipts issued for cases not yet adjudicated. And I believe
Speaker 28
50:54
the clerk treasurer is here to address her findings. Ma'am, if
Representative Danny Watson
Unverified
51:00
you will, state your name and your title, please, and proceed, please.
Pernita White
Unverified
51:04
My name is Pernita White from the City of Park and City Clerk Treasurer. Okay, go ahead and proceed. Where do I start? It was a long list. I know all of the money from the general to the street, All of that has been paid back. As far as the insurance payment, somehow we found out whenever the CSA software did, whenever it would do an upgrade, somehow it would kick out the insurance on there.
And some of the people, like it doesn't randomly, it'll just kick it out as not being active. So, now I know to check, you know, go in every time for payroll to make sure that the check mark is checked. That's how I was doing it. As far as the withholdings, we've been paying those back, and that's on the withholding. We've been paying that back also.
Representative Danny Watson
Unverified
52:07
Okay. Any questions from the committee?
If no objections, consider this report filed. Thank you, ma'am. Thank you. And next we have. Next, we have the City of Strong.
Speaker 19
52:42
So that would be on page 10 through 12. We have on page 10 under the Mayor and Recorder Treasurer, we have findings
Speaker 7
53:01
that were referred to the bond board. $36,201 in expenses and $516 in vacation leave were paid before services were rendered. $5,839 in payments to individuals and businesses without adequate documentation.
Therefore, the validity of these disbursements could not be determined. Continuing on page 11, these are also referred to the bond board. $270 in travel-related expenses without a business purpose indicated. $182 in undocumented petty cash reimbursements and $140 in undocumented cash withdrawals $150 charge assessed by a hotel for smoking in the room $147 spent on a Christmas dinner in apparent conflict with Article 12, Section 5
as interpreted by Attorney General Opinion Number 1991-410 $60 reimbursement for meals without an overnight stay 15,721 in questionable payments to individuals and businesses that were supported by handwritten invoices not signed by the individual receiving the funds. It appears that many of these invoices were actually prepared by the city. And then under the recorded treasurer, it came to our attention that on December 10, 2018, an individual used city bank account information
to process unauthorized withdrawal, totaling $2,700, an outside accounting firm utilized by the city discovered the unauthorized withdrawal upon reconciliation of the affected bank account on April 23rd, 2019. Due to not being caught in a timely manner, the bank will not reimburse the city's funds. And then continuing on page 12, we have repeat findings under the report of Treasurer. Accounting procedures for municipalities are set forth in the following state laws.
Arkansas Code, annotated 1459-101, through 1459-118. The city was not in compliance with these codes and other proper accounting procedures as enumerated below. Prenumbered receipts were not issued for all funds received. Receipt numbers were not always listed on deposit slips, nor were deposits always made in a timely manner. Receipts did not always indicate the check cash composition, nor were they issued in sequential order. Checks were not always issued in sequential order. A detailed listing of all certificates of deposit was not maintained.
Invoices and supporting documentation were not always retained. Disbursements were documented by statements rather than original invoices. Funds were dispersed through electronic funds transfers without approval of the legislative joint auditing committee. These totaled $10,330. Expenses were paid with cash, totaling $600. A fixed asset listing was maintained. However, it was not updated to include additions. Sales taxes restricted for solid waste purposes totaling $115,355 were deposited in the general fund and should be transferred to the solid waste fund.
Payroll disbursements were made without supporting timesheets. And I believe Mr. Howell, Darrell Howell, the
Speaker 235
56:05
mayor, is here to address these findings. Mr. Howell,
Speaker 22
56:11
if you will, go ahead and identify yourself. Darrell Howell, the city of Strong, mayor. Okay, go
Speaker 236
56:19
ahead and proceed. In particular, those larger ones, that $36,000 and those expenses, I think that was, we had an incident where we had a street payment done,
and actually that individual company started that process and ran into a situation where they couldn't get any asphalt. And so it prolonged a couple of months, so we actually paid them a draw on that, and we further found that we can't do that. So we have corrected that, and so we end up paying him prior to him completing the official work, all the work. But we have corrected that, and those payments that was on the businesses,
we have actually hired an accountant there at the city as well as an outside accounting firm that will help us make sure that all those invoices are documented and taken care of with that. And then we had some of those additional expenses that we had from invoices. We had some local workers that did not actually have invoices, so we actually filled those invoices out for them. And we have also corrected that to make sure that we provide invoices
along with the invoices that the contractors are using now to make sure we have their invoices and, as well, we are generating invoices to make sure they sign both of those and have those filed. Thank you, Mr. Howell. The other
Representative Danny Watson
Unverified
57:52
findings, you have a, Shirley, you have a understanding now of the findings? Yes, sir. Okay. Committee, do we have any questions?
Senator Terry Rice
Unverified
58:07
Go ahead, Senator Rice. Thank you. For staff, on the $15,721 payments, questionable payments to individuals and businesses just discussed on the handwritten invoices, is that not fraud to
make invoices after the fact? Sir, this was referred
Speaker 203
58:36
to the prosecuting attorney and certified to the bond board,
So that will be up to the
Senator Terry Rice
Unverified
58:43
prosecuting attorney to determine. Yes, ma'am. There's a former legislator that is in prison right now that did that same type thing. But it wasn't the actual people that submitted them didn't know about it. Uh, you know, this is a $15,000 may not be a lot of money, but that's the part of this
that goes over the line to me. And do we get any response
Speaker 7
59:26
back from the prosecutor? He would have gotten a letter the same time that the officials
Speaker 7
59:35
had a chance yet to... Do they normally respond back to
Senator Terry Rice
Unverified
59:40
audit? They have to yearly in the prosecutor's disposition report. Could I ask that staff contact that prosecutor and ask specifically for that
if there's not reasoning that that would be considered fraud? Yes, we can. See what the response is. We can
Speaker 28
59:58
reach out to him and see. Thank you. Any more
Representative Danny Watson
Unverified
1:00:10
questions come before the committee? Senator Rye, go ahead.
Representative Johnny Rye
Unverified
1:00:20
Representative Rye, go ahead. Thank you, Mr. Chairman. Sir, as many things that are coming
through on this right here, I would, you know, just, I would think that you would need to have a, actually a policy book to know the things that you can legally do, because there's about ten different items here that's written up, and just like Senator Rice said here,
You know, it could be something that you could be looking at. It could be some real wrongfully things being done. And I would get a handbook, and I would really know where I was at because there's some things in here that we ought to know better than letting it happen, you know? Representative Cooper, go ahead. Question?
Representative Cameron Cooper
Unverified
1:01:21
Thank you, Mr. Chair. I see a pattern here of several small amounts. They add up to nearly $1,000. But considering that it looks kind of like a pattern, was this traced back to a specific city employee or city official? What I'm talking about is the charge assessed for smoking in a hotel room, travel-related expenses without a business purpose, et cetera. Did y'all trace that back
Speaker 236
1:02:00
on the $270 and what that was on the travel expense-related, that particular individual in one of our departments did not bring back that actual invoice for that meeting. It was for that. And so it was somewhat totally different on the warning in relation to the $150 for the smoking room. That was where we had a fall festival in the city, actually had that room set up for the performer.
And then they actually, they was charged and then they billed the city back for that, for the $150 where they was actually smoking in that room. So it was two, it was different individuals. Okay,
Representative Cameron Cooper
Unverified
1:02:39
so each, each instance is a different individual. It's not one person that's abusing their position. Yeah, actually, each one
Speaker 255
1:02:45
of them was a different individual. Any more questions
Speaker 194
1:02:51
for the committee, from the committee? Yes, Senator Johnson, go ahead.
Senator Mark Johnson
Unverified
1:02:57
Thank you, Mr. Chair. On the 15,000, this was, I guess, a question for staff or for the auditor. To the $15,721 that were supported only with handwritten
invoices, not signed, how many individual invoices were there and how many people or
individuals or businesses did those go to? We got an answer for that.
It's okay. I mean, it says payment, so there's at least two, but that could be two and it could be a whole lot. But I just, and I don't want to know how many people or businesses
were involved in that. I mean, if it's one or two instances, I'm not as concerned as if there was a pattern
Speaker 203
1:03:53
there. Jimmy Locke will address that. He worked on that issue.
Speaker 260
1:04:06
Jimmy Locke, legislative audit. At least like about 20 different invoices. And how
Speaker 262
1:04:12
many individuals, Jimmy? I only see- Or businesses. About 18. So,
Speaker 263
1:04:16
okay, totally scattered over several people then, or
Speaker 161
1:04:20
companies or whatever. But I will say this, it's not unusual for small cities
Speaker 260
1:04:25
to, if you hire somebody to weed eat a bitch, and they're not going to have their own invoices. It's not unusual for a city to make it, but they need to be signed.
Senator Mark Johnson
Unverified
1:04:39
We need to know who it was. Yes, sir. Okay, thank you very much. Thank you, Mr. Chair. Thank you, Senator. Any
Speaker 202
1:04:49
more questions? No further questions, consider this report filed. On to the next. Thank you,
Speaker 199
1:05:01
sir. All right, thank you. The next report we'll look at is the City of Bay. This is on page 15.
Speaker 7
1:05:12
This is under reports, refer to the prosecuting attorney, excuse me, it's on page 16. We have a, this is a repeat finding and it's referred to the prosecuting attorney. The city disbursed funds only $1,797 in apparent conflict with the Public Purpose Doctrine and Article 12, Section 5 of the Constitution as follows. $790 for advances for travel and fire runs.
$366 for lodging for volunteer firemen's spouses. $358 for lodging for a council member's spouse. $283 for an airline ticket for the mayor's spouse. During June of 2019, the volunteer firemen, council member, and mayor reimbursed the city a total of $924. And the mayor, Mr. Kirby, is here to address this. Mr. Kirby, go
Darryl Kirby
Unverified
1:06:07
ahead and identify yourself, please. Yes, my name is
Speaker 269
1:06:10
Darryl Kirby. I'm the mayor of Bay. On the fire runs, we were told from last year's audit that long as the fire chief signed off on them, that they were allowed to get them.
That was my understanding. But as this year, we got audited again by Mr. Harris. that was not the case, because it was a different auditor. So I have drawn up a resolution on how the firemen get paid, and that is corrected. And on the lodging for the spouses, on the firemen's, because they was going to the fire convention, we did not know the hotel was charging each spouse $10 a night. We did not catch that on the ticket, and that was reimbursed by all the firemen
that went for their wives and husbands and then the lodging for the council member his spouse he just forgot and I did too and he has paid that back and on the airline ticket my wife is handicapped and I just when I bought the ticket I was trying to pay for with my debit card and the city pay my ticket
and then my debit card mine it would not work out that way and I was actually buying a ticket for our councilmember to to go out to the National League of Cities and they would not let my wife in a seat beside me so it was bought with the city credit card and I did pay the city back on that he just said it wasn't in a timely manner and I asked him what a timely manner was and they couldn't tell me so but I have drawn up an ordinance in our handbook that will take
care of all of that and that is going to be passed at next month's council meeting and it's all that will be addressed in our city handbook 4-10 on all of that in any spouse or anything that travels with their husband or wives, they will pay that by the end of the month before the bank recalcations are made to the Treasury quarter. That's going to be in our policy. And I included a sub chapter nine on travel regulations
in through the Department of Fine Administration in our handbook on this
Speaker 59
1:08:49
issue. Thank you, sir. Senator Sample, you
Senator Bill Sample
Unverified
1:08:54
have a question? Thank you, Mr. Chair. Mr. Mayor, there was a total of $1,797 that you can't, I mean, that is in these charges. And it looks like that you have reimbursed the city 924.
Where's the other $873 at? Thank you.
Speaker 269
1:09:45
I think that $17.97 is where we pay the firemen $500 a year for fire runs. I think that that was already paid to the firemen. I think the other stuff, the lodging for the volunteer firemen's spouses, the 358 for the lodging for the council mayor's spouse,
and the 283 for the airline tickets for the mayor's wife, that was all paid back. I think the difference in that is a 790 that is automatically paid to our firemen for fire runs. That's the difference, that they're paid through the city for their service, Volunteer Fire Department.
Representative Danny Watson
Unverified
1:10:51
If I might add, Mr. Mayor, the finding, the response, in the future, no checks be written in advance. That's why it's taking you so long to recall that. So, needless to say, I know you're going to be more careful in the future on something like this. I have a resolution drawn up for that. No doubt. Senator Sample, you have
Senator Bill Sample
Unverified
1:11:15
another question, please? Well, it's, I mean, I'm sitting here with my calculator, and these numbers don't account for each other.
I mean, if it's just, I mean, well, I think that we need a more accurate description on the reimbursement so that we'll know that the reimbursement, I understand that you can't go back and take the money away that you've given the firemen for their runs and everything, But still, yet, if you discount that, the money still doesn't have that.
Speaker 276
1:12:00
No. Thank you, Mr. Chair. Question, Representative Gonzalez. Thank you, Mr. Chair. I guess my question is more for staff. Do we allow advances for travel expenses and that type of thing, or does it all have to be reimbursed afterwards? Because from what I heard him say in their resolution, they were going to account for advances. No. No, I did not.
Speaker 279
1:12:31
They'll have to turn in a receipt and get reimbursed. Yes,
Speaker 280
1:12:37
yes. I quoted the sub-chapter 9 in the book. Okay. And then it will be
Speaker 7
1:12:42
in our handbook. To answer your question, counties do have a provision for travel advances, but cities do not in the law. Okay. Thank you.
Representative Danny Watson
Unverified
1:12:59
No further questions, no objection, consider this report filed.
Speaker 7
1:13:04
Thank you all. Thanks, sir. The next report we'll look at is the town of West Point, which is on page 21. this is under reports referred to the prosecuting attorney and this one is also a repeat under the mayor and the reporter treasurer the town paid $438 and $9,207 to council members in 2018 and 17 respectively for lawn care repairs and miscellaneous labor although the council
passed an ordinance in August of 17, allowing the town to conduct business with elected officials. The ordinance did not specify the extent of the authority as required by 1442-107. A similar finding was noted in the previous report, and the Mayor and Recorder Treasurer are here. If you will,
Representative Danny Watson
Unverified
1:13:58
at this time, if you will identify yourself and your title, please go ahead. Ronald Faith,
Speaker 286
1:14:06
Mayor of West Point. Marie Faustinelli, Clerk and Recorder, please.
Darryl Kirby
Unverified
1:14:10
Okay, at this time, if you feel like any explanation on the finding, you have any response, go ahead. We were using the
Speaker 289
1:14:20
council member to do mowing and stuff. And last year, we were called on it. So we did pass an ordinance and thought we had it covered. And so he continued to work and then we found out again, we rewrote the ordinance three times and it's still not correct. So I fired the council member.
Darryl Kirby
Unverified
1:14:42
He's not working for the city anymore. Okay. Ma'am, any
Speaker 290
1:14:57
response on your part? No. Okay. Committee members, do we have any
Representative Stephen Meeks
Unverified
1:15:02
questions? Go ahead, Representative Meeks. Just a real short, it sounds like the issue you have is trying to get that ordinance right. And,
obviously, we want to try to help you be successful. Have you talked with the auditors or with the Municipal League and checked on their resources?
Because they have people that can help you if this council
member is your best option. Every time we rewrote
Speaker 289
1:15:22
it, we sent it in to the person that did the audit. And they would send it back saying it wasn't correct but wouldn't tell us what we need to do to correct it. So that's why I took the course
Representative Stephen Meeks
Unverified
1:15:36
of it. That sounds weird. Yeah. Okay. Right, right, but you might have also checked with like the Municipal League or other resources to
try to make sure that it's done right.
Because there are people that can help you with that, so,
Representative Danny Watson
Unverified
1:15:55
anyways. Thank you. Thank you, Representative Meeks, very much correct, Municipal League. They would be a
good ear, to be in their ear, get some good legal instruction on it. Any more questions from our committee members? No objections? Consider this report filed. Thank you. Thank you all. Thank you very much.
Speaker 199
1:16:22
The next report we'll look at is the City of Gurdon. This is on page 27.
Speaker 19
1:16:35
This is under reports with repeat findings. This is on the recorder treasurer. Approval of salary or hourly rate
Speaker 7
1:16:41
of pay was not documented for 11 employees. A similar finding was noted in the previous report. The recorder treasurer is here to address this. Hello, Tambra Childers.
Representative Danny Watson
Unverified
1:16:56
City of Gurdon. Thank you, ma'am. If you would like
Speaker 301
1:17:02
to begin an explanation, go ahead. Yes, sir. It was definitely just an oversight. I think we have about 25 employees that we have folders on that we keep all their pertinent information in. And each year it should be updated if there is any type of raise or insurance changes.
And I think they found 11 of them that were not in their folders out of the total of all the employees. And you can bet that they're in there now. We don't want a three-peat. As
Representative Danny Watson
Unverified
1:17:42
well as us. Thank you, ma'am. Thank you. Any questions
from the committee? No questions? No objections? Consider this report filed. Thank you, ma'am.
Speaker 19
1:17:56
Our next report is on page 28. It's the town of Jeanette. We have a
Speaker 7
1:18:01
repeat finding on the court of treasurer. Cash receipts and disbursements journals for the general fund were not properly posted or classified in noncompliance with 1459, 110, and 111. Similar findings were issued in reports dating back to 2012. And Ms. Thompson is here to address this. Good afternoon, Ms. Thompson. Good afternoon. And your title is, ma'am?
Representative Danny Watson
Unverified
1:18:26
Recorded treasure. Okay, thank you. Do you have some explanations on
Speaker 307
1:18:32
the finding? Yes, sir. We pretty much completed the correction. The last audit, you know, all the rest of the accounts was corrected. And the general find, what happened with that, I lost a whole month of records in my computer. and the computer crashed and everything. And so we've since purchased a new computer with Microsoft 365 software,
so everything should be okay. We are in the process of getting
Representative Danny Watson
Unverified
1:19:05
everything up to date. Excellent. That's what we like to
hear. Committee members, do we have any questions? No questions, no objections? Consider
Speaker 7
1:19:18
this report filed. Thank you, ma'am. You're welcome. Our next report is just below that, still on page 28, under Reports for the Repeat Findings, the City of Terrell. Under the Record of Treasure, we have repeat findings. The City contracted with payroll services to an external agency without establishing an ordinance detailing the method of internal accounting controls and documentation for accounting purposes in noncompliance with 1459-115.
In addition, we determined federal and state tax reporting forms were prepared, but documentation was not provided to substantiate the remittance of federal and state withholdings by the contracted payroll agency. A similar finding was noted in the previous three reports dating back to 2011. Restricted street fund monies of 1965 were transferred to the Water and Sewer Fund without documentation of an allowable purpose. Also, state aid for highway fines from previous years of 257-103
owed to the street fund was not transferred during the engagement period, leaving a total due of 259-068 in noncompliance with 2679-107 and 2772-07. A similar finding was noted in the previous nine reports dating back to 2003. Fireman's pension funds of 26373 were transferred to the general Fund in previous years and not used for the sole purpose and benefit of the Fireman's Pension Fund is required by 2411-805.
This amount was still owed as of December 31st of 2017. A similar finding was noted in the previous six reports dating back to 2007. And Ms. Jordan is here to address this.
Representative Danny Watson
Unverified
1:20:58
Thank you, Ms. Jordan. If you will, go
Dora Jordan
Unverified
1:21:01
ahead and identify yourself, please, ma'am. My name is Dora Jordan.
Darryl Kirby
Unverified
1:21:05
I am City Clerk and Recorder. Okay. Thank you. You would like
Speaker 311
1:21:09
to give your response on the findings, ma'am. Well, the money that was written up on are being paid back monthly.
And the city council did an ordinance on the payroll. So in order for us to know now whether our taxes are being paid, every time payroll does our paychecks, then I would call the IRS to make sure that the taxes and everything is paid. And so we are doing that now. And to be honest, I called them on Tuesday. And as of Tuesday, September 10th, we are up to date on our taxes.
And we are paying the money back for the fireman's pension. and we are going to do another separate account and put all the money into the Fireman's Pension Fund so when we get it all, then we will give it all to the Fireman's Pension.
Representative Danny Watson
Unverified
1:22:18
Sounds wonderful. Committee members, do we have any questions?
Senator Bill Sample
Unverified
1:22:24
Senator Sample, go ahead, please. On the money that you owe the street fund,
Speaker 311
1:22:33
how are you paying that back? We are paying $1,200 a year. We're a small town, so we don't get a whole lot of money. So we pay them back $1,200 a year, whether it's in monthly or over the year, we pay
Speaker 314
1:22:48
it back. That's how we do it. Yeah, just
Senator Bill Sample
Unverified
1:22:51
quick math. That's over 100 years it's going to take to pay that back.
Representative Stephen Meeks
Unverified
1:23:08
there. I understand that. Thank you, Mr. Chair. Representative Meeks, go ahead. Thank you, Mr. Chair. Just to follow up on Senator Samples, it looks like, you know, you owe the $257,000 of the street fund, but then it says during this same period you transferred $2,000 from the street fund to the water sewer fund. and
you're only paying back the street fund $1,200,
so it looks like you dug yourself another $700 into
Speaker 311
1:23:35
the hole. The only thing I can see about that, 1965, was that it was transferred to the water fund. The only money we transferred to the water fund, we got men working on the street, and all of our payroll comes out the street. So we have to determine what their salary is every two weeks. for water, so for the streets and then we are transferred from the streets
Representative Stephen Meeks
Unverified
1:24:01
to water. Okay, so this 1965 is legitimately from the street fund? Okay, why did audit then ding it is coming from the
Speaker 311
1:24:13
water fund? I don't know because we have transferred like general we transfer them so much
Dora Jordan
Unverified
1:24:19
money for whoever gets paid out of general and same thing for
Representative Stephen Meeks
Unverified
1:24:24
sanitation. Okay. That may be something staff takes a closer look at,
because it looks like they're, according to what we see here, they're paying back $1,200, but we've got
Speaker 323
1:24:35
another $2,000 that they're in the hole.
Speaker 28
1:24:39
I don't have the work papers in front of me, but my guess would be that it was not properly documented, so that we could not tell that that's what it was. And I'm guessing
Representative Stephen Meeks
Unverified
1:24:48
that I don't have the work papers in front of me. So potentially it is a legitimate
Representative Danny Watson
Unverified
1:24:57
expense, it just wasn't documented properly? That could be. Okay. Thank you, ma'am. Committee members, any more questions? Representative
Speaker 326
1:25:03
Gonzalez, go ahead. Thank you, Mr. Chair. I guess I have a question for staff again. All
Speaker 276
1:25:07
these cities that we're dealing with that are making payments back on these funds,
are we going to continue seeing them back in here for repeat findings until that's paid off? How is that going to work
Speaker 7
1:25:22
out? most likely there are some who are making um like good progress toward it that sometimes we'll have the repeat binding but we won't invite them to come because they are doing what they can but these that are paying you a hundred two to hundred like you say it's going to be a couple of hundred years and sometimes even those don't get i'm not talking about turrell in particular
but the ones that a lot of times even the hundred and two hundred
Speaker 33
1:25:47
doesn't get made like it's supposed to
Speaker 325
1:25:53
we will keep seeing those and yes so at what point are we going to be looking at
Speaker 279
1:25:59
taking back turn back funds from these places i mean we're dealing with stuff from how far back 2003 2007 on some of this i mean what at what point do we start looking
Speaker 7
1:26:13
at that the only thing that uh
1459.117 addresses is substantial noncompliance with the municipal accounting law. And though this is part of the municipal accounting law, that they're supposed to have that in a separate account, it's hard for us to say that if that's the only thing they have, that it's substantial noncompliance with the whole municipal accounting law. And so that would be something that the legislature might want to look at if they want to change something on that.
Representative Danny Watson
Unverified
1:26:46
Any more questions by the committee? Representative Rye, go
Representative Johnny Rye
Unverified
1:26:50
ahead. Thank you, Mr. Chairman. Ma'am, question for you. Like for your
general fund each year, have y'all got budget set of how much that you actually are going to have to spend during the year for your city and how much that you actually would have left over each year? Do you have anything like that? Yes, sir. Do you? Yes, sir. Well, maybe you could take that particular portion that would be at the end of the year,
and if it was consistent on what you were showing that was going to be left over, and maybe you could start to kindly consistently paying this, ma'am, a certain portion. It might help
Speaker 319
1:27:28
you all. We don't have that much left over, but we'll consider
Representative Danny Watson
Unverified
1:27:37
it. Thank you, committee. Any, no further questions, no objections, consider this report filed. Thank you, ma'am. Okay, that's all the
Speaker 36
1:27:46
ones that I have listed that we have visitors for.
Speaker 7
1:27:51
So we'll go back to the first page on Arkansas County. This one was only deferred last month or in June because there was a finding that had been left off of the report. And so, we went back and added the finding, and this would have been referred to the prosecuting attorney because it's an Article 12, Section 5 finding. The county paid $3,000 to the Imagination Library of Arkansas County without a contract for services in apparent conflict with Article 12, Section 5,
which states in part, no county shall appropriate money for any corporation, association, institution, or individual. Staff would recommend we file.
Representative Danny Watson
Unverified
1:28:34
We have a question, Senator Johnson, go
Senator Mark Johnson
Unverified
1:28:36
ahead, please. Okay. Is Judge Erie still
here? If not, I'll just ask the question, Ms. Steele. We spoke about this in a different county in the past, it was actually Pulaski County, had the same finding. And it just happens to be one I know about.
I think we've given six figures in state money or more to the statewide Imagination Library program. And I just don't want to see, you know, 73 others like this. We need to come up with some kind of a resolution if we have to send out a bulletin to the other 73 saying you need to follow X procedure. Do we have more in the pipeline with this same thing? Imagination Library is a wonderful program. It gets books to kids from birth to five years old.
But like everything else, we've got to do it legally. And I'm just curious, where are we on that? I have not seen
Speaker 7
1:29:33
any more. I'm not saying that there aren't any more. They just haven't come across my desk yet. But the only thing we need to do is have a contract for services. It's not that we totally agree that it's a good program. But we just need to do it, like you said, go through the right procedures. We just need a contract for services, you know, like in exchange for this $3,000, we'll be getting these books for these kids.
Just something to show that something's being received for the
Senator Mark Johnson
Unverified
1:30:01
money. And if I could follow up, Mr. Chairman, I don't want to take up a bunch of the committee's time on this, but this looks like it could pop back up again and maybe we could avoid it by, and I'll talk to Senator Rayford about the best way to proceed because he's also a proponent of this program. But there is a statewide organization of the Imagination Library that perhaps can educate, maybe is the right word, their affiliates on a procedure they need to follow to keep them out of trouble with us.
So I'll follow up with Senator Rayford, Mr. Chairman, on that. All right. Thank
Representative Danny Watson
Unverified
1:30:39
you, Ms. Steele. Thank you. Thank you, Senator Johnson. Appreciate your insight on that. The Imagination Library, needless to say, is really popular, really a hot educational tool all across the state. Any more questions from our committee members? Without objection, we consider this report file. Thank you.
Speaker 7
1:31:00
On page two, we have Washtenaw County. The collector, Mr. Norwood, was invited to come, but he did not.
Representative Danny Watson
Unverified
1:31:07
Staff would recommend we defer this. Without any questions or no questions on this one here,
Speaker 235
1:31:25
consider this report filed. On page four, we have the City of Noble. At the last meeting, the
Speaker 7
1:31:32
committee allowed us to do a staff visit to this one. The recorded treasurer was in bad health, and we have visited them.
The repeat finding is on page five. Bank account reconciliations were not approved by someone other than the preparer. And we did do a staff visit, and we determined that this has been corrected, and staff would recommend that we file. No objections? Consider
Representative Danny Watson
Unverified
1:31:57
this report filed. Thank you. On page 7,
Speaker 7
1:32:09
we have Clark County. Well, I guess it starts on page 6.
The sheriff was invited to come. They called this morning, and he had an issue he couldn't get out of, and he requested that we defer this to the October meeting. So staff
Representative Danny Watson
Unverified
1:32:28
would recommend we defer. No objection. We'll defer this to
Speaker 235
1:32:34
the October 17th meeting. On page 7, we have, this is a
Speaker 7
1:32:39
report certified to the bond board under the city of Carlisle, the clerk treasurer. Receipts totaling $34,794 were not deposited into city bank accounts, including the water department, during January 1-17 through September 10th, 2018.
Of this amount, the clerk-treasurer was custodian of $33,917, and the water clerk who resigned from employment on September 7th of 2018 was custodian of $877. To explain the discrepancy, the clerk-treasurer indicated that certain funds had been incorrectly deposited into the Water Department accounts. However, we found only one receipt that was incorrectly deposited to the Water Department. Again, this has been certified to the bond board and referred to the prosecuting attorney, and staff would recommend we file.
Representative Danny Watson
Unverified
1:33:22
Any questions, committee members, on this report? No objections,
consider this report filed, thank you. On page eight, this
Speaker 19
1:33:37
is still under reports certified to the bond board. The City of North Little
Speaker 7
1:33:43
Rock Park funds, in July 2016, the parks director discussed with the finance director a potential problem with revenue missing from various park facilities rentals. Parks Department staff pieced together information that led them to believe a former employee had stolen Parks' rental income.
The finance director and parks director met with the police chief who assigned a detective to investigate. The former employee was arrested on November 21st of 16 and charged with felony theft of property. It's alleged the total amount of the theft is approximately $172,007. At the time of this report, the employee pleaded guilty to a Class B felony on February 8th of 2018 and was sentenced on March 8th of 2018 to three years probation and $25,000 in restitution.
Again, this was certified to the bond board and referred to the prosecuting attorney. Well, it's already been adjudicated. Staff would recommend we
Representative Danny Watson
Unverified
1:34:42
file. No questions, no objections. Consider this report filed. Thank you.
Speaker 235
1:34:47
On the same page under Perry County, this is still under a report
Speaker 7
1:34:51
certified to the bond board. According to a Sheriff's Office incident report dated May 28th of 18, a former Road Department employee was arrested for being in possession of fuel and fuel drums owned by the county.
This individual was charged with two counts of theft by receiving Class A misdemeanors, pled guilty in December of 18, and was sentenced to 12 months of incarceration in conjunction with other non-related
Speaker 333
1:35:14
charges. Staff would recommend we file. No
Representative Danny Watson
Unverified
1:35:19
questions, no objections. Consider report filed. Thank you. Next, still on
Speaker 19
1:35:25
page 8, under report certified to the bond board, we have the Bee Branch Water Association. The
Speaker 7
1:35:32
former bookkeeper of the association was issuing disbursements to herself, but recording
the disbursements as disbursements to specific vendors. The total of disbursements in 18 that occurred as a result of this inappropriate method of of cash disbursements amounted to $35,646, staff would recommend we file. No objection?
Representative Danny Watson
Unverified
1:35:53
No objections. Consider this report filed. On
Speaker 7
1:36:11
page 9, we have the Runyon Sanitary Sewer Improvement District No. 211.
This is still under reports certified to the bond board. During a routine investigation into an inquiry from a maintenance contractor, the operations manager discovered the bookkeeper had paid herself and fraudulently recorded the check as payable to the contractor. The fraudulent transactions totaled $165,935 for the year ended December 31st of 2018. Again, this has been referred to the prosecuting attorney and certified to the bond board. Staff would recommend we file.
Representative Danny Watson
Unverified
1:36:46
No questions, no objections. Consider this report filed. On page
Speaker 19
1:36:55
10, we're still under report certified to the bond board. We
Speaker 7
1:37:00
have the City of Diamond City. The 14th Judicial District Prosecuting Attorney requested our assistance in conjunction with the Arkansas State Police to review the financial records of the Diamond City Community Center. Allegations received by the State Police included improper use of center funds by City of Diamond City Mayor Jan Hudson, as well as other matters.
Hudson was charged with one count of theft of property, a Class D felony, on May 18th of 18 and resigned her position as city mayor on June 13th of 18. The trial is scheduled to begin, this says, on August the 5th. We have an update now. It's on September the 30th, and there will be a separate report regarding this matter issued at a later date. Then we have in 17 to 16, the city paid $12,000 annually to the Diamond City Community Center, a 501c3 nonprofit organization to fund operations.
In 16, the city paid $578 to Lady Bass Angler Association for sponsorship fees and $500 to the winner of the Diamond City Beauty Pageant in noncompliance with Article 12, Section 5 of the Constitution. In 17, the city paid $21.50 to a storage rental business owned by a council member without an authorizing ordinance in noncompliance with 1442-107. Staff would recommend we file.
Representative Danny Watson
Unverified
1:38:26
No questions, no objections. Consider this report filed. On page
Speaker 6
1:38:35
13, and we're still under report certified to the bond board, we
Speaker 7
1:38:41
have the BODCAL water system. There were several cash disbursements not properly documented or authorized, and you can see them summarized in that table. They totaled a 37,826. If there are no questions, staff would recommend
Representative Danny Watson
Unverified
1:39:01
we file. No questions, no objections. Consider this report filed. Thank
Speaker 7
1:39:17
you. Starting on On page 14, we have reports referred to the prosecuting attorney. Under the City of Austin, the City paid $842 to a business owned by an employee without an authorizing ordinance in apparent conflict with 1442-107.
There are no questions. Staff would recommend we file. No questions. Consider the report filed. The City of Pine Bluff disbursements from the Police Special Fund included $3,000 in cash withdrawals and numerous debit card transactions and noncompliance with $1,459-105. These disbursements included $1,560 for alcoholic beverages for the Policeman's Appreciation Banquet and apparent conflict with Article 12, Section 5, as interpreted by Attorney General Opinion No. 91410.
If there are no questions, staff would
Speaker 6
1:40:19
recommend we file. No questions? Consider the report filed. The City of Stuttgart, on
Speaker 7
1:40:23
December 5th of 2018 and December 14th of 2018, an individual used Citibank information to process two unauthorized withdrawals totaling 4,706. The bank immediately notified entity personnel of the unauthorized withdrawals and funds were recovered by the bank.
Staff would recommend we file, but I will explain this a little bit. We'll see several of these. There's been a rash of, at first it was only on cities, but now it's coming on counties and school districts as well. Someone is getting checks from these entities and, like, lifting the signature and issuing fraudulent checks under the entity's name. The one, we're required to refer these to the prosecuting attorney under a certain code section.
I don't have it with me right now, which is why you'll see them. But the entities, for the most part, have done nothing wrong. I mean, they've done what they're supposed to do. They've caught it, and they've gotten the money back from the bank. There are a few who have not gotten the money back from the bank, but that's because they have not reconciled their bank statements timely, and therefore the bank is in the position that they have waited too long. So, we'll have several of these, and I just, if anyone has any questions about that, I'll
try to answer it, but you'll just see that a lot.
Speaker 326
1:41:53
All right. Faulk? I do have a question on that. Okay. Representative Gonzalez, go ahead. So, I looked
Speaker 276
1:42:00
through there and saw that, you know, we did have a lot of those, and it seems like they're all across the state.
Speaker 28
1:42:05
They are. How are those checks getting out like that? Somebody's hacked their computer system. Right, they've somehow gotten, David, Mike could explain more, but David Coles, he's our IT guy.
David Coles
Unverified
1:42:16
Is there not physical checks missing then? No, it's electronic. Feel free, David. David Coles, legislative audit. There's really no clear-cut reason all this is happening. There's been a lot of speculation as to what happened. And the Secret Service is investigating this. It is an ongoing investigation. We spoke with them Monday. There's no resolution in sight. You know, they're just recommending that the entities reconcile, try to take advantage of the bank's security procedures
and the check security procedures that the banks are offering. And it's pretty widespread. And I think it's happened not only in Arkansas, but all over the country. Thank you, David. Could I ask that we just batch these and not read through every single one of them? That would be up
Speaker 276
1:43:08
to you. That's up to the committee. I'll make a motion to batch all. We have a motion. We have a
Speaker 351
1:43:14
second on that. Followed. Will I have a second, Representative Hillman?
Representative Danny Watson
Unverified
1:43:25
I didn't pick up on that? Okay, if we will, we'll go ahead and batch that,
Darryl Kirby
Unverified
1:43:29
is it okay, Ms. Steele? Okay. Does anyone have any questions about any
Speaker 7
1:43:35
of the rest of the reports? What are we going to do after that motion? Oh,
Speaker 326
1:43:48
was that just for those checks? It was just to batch those. Oh,
Speaker 353
1:43:53
okay. I'm sorry, I thought you meant the rest of the reports.
Speaker 308
1:43:56
No, the ones with the similar occurrences there. I knew I was getting too excited about that. With the cybercrimes. We're not getting out
Speaker 19
1:44:04
that easy. Okay, all right. Okay, then so the next one is on page 15. It's Faulkner
Speaker 7
1:44:11
County. This is still under reports referred to the prosecuting attorney. The county gave gift cards selling $1,050 as prizes in costume contests in apparent conflict with the public purpose doctrine as described in Attorney General Opinion No. 91410.
If there aren't any questions, staff
Representative Danny Watson
Unverified
1:44:33
would recommend we file. No question? No questions? Consider
Speaker 235
1:44:37
this report filed. Thank you. On page 15, we have Greene
Speaker 7
1:44:42
County. The county paid two deputy sheriffs a total of $2,800 to perform duties as deputy coroners without a contract or authorizing ordinance in noncompliance with 1442-107. If there are no questions, staff would recommend we file.
Speaker 89
1:44:56
Representative Rye, go ahead. Thank you, Mr. Chairman. Ms.
Representative Johnny Rye
Unverified
1:45:03
Steele? Yes, sir? These folks, these deputy sheriffs, is the reason that we had a problem, they were already on salary for the county for one time? It's an
Speaker 7
1:45:14
ethics finding. In order to do that, they really need an ordinance that would authorize it. Yes, ma'am. It's almost like double pay,
Speaker 235
1:45:22
isn't it? It is. and that code section pretty much says that anyone who, any officials or employees of a county,
Speaker 7
1:45:30
in order to do extra work like this, there has to be an ordinance. Yes, ma'am.
Representative Danny Watson
Unverified
1:45:42
Thank you. Representative Hillman, go ahead. I'll try
Speaker 360
1:45:49
to be brief. Uh, those reports that we have not acted on at the current time, uh, that have, uh, recommendations from the staff that we file them, I move that we file those and move on to other business.
Speaker 7
1:46:07
I'll second. All right. Uh, okay, then we'll move on to the city of Amity, which is just a fraudulent check one. We've already said that we were going to file those. On page 16, we have the City of Callion. The mayor paid the treasurer $1,200 for janitorial services without an authorizing ordinance. Staff would recommend we file.
Speaker 6
1:46:37
Consider the report filed. Then we have page 16. Still, we have the City
Speaker 7
1:46:46
of Cotton Plant. On the city of Cotton Plant, we'll have some findings referred to the PA, and I guess that's all okay. So on December 13th of 18, the city paid the former police chief whose employment was terminated on July 15th of 16 for unused vacation leave from 16, totaling $969, an apparent conflict with city policy, which states that no vacation pay will be allowed unless vacation is actually taken.
Although payroll taxes of 141 appear to have been withheld, IRS Form W-2 was not provided for review, and documentation for this payment was not provided. Staff would recommend we file. Consider the report filed. On page 18, the
Speaker 28
1:47:32
City of Dyer was fraudulent checks, which we've already said we're going to file. The City of
Speaker 7
1:47:38
Glenwood was fraudulent checks, which we said we're going to file.
The City of Luxora, still on page 18, this is still under reports referred to the prosecuting attorney. The City paid bonuses to six employees totaling $3,150, which exceeds the $2,400 that was approved by Council. And the City paid credit card charges totaling $99.73 for meals, lodging, et cetera, without supporting documentation or indication of a business purpose in noncompliance with 1459.105. Staff would recommend we file. No objections? Consider this report filed.
Speaker 19
1:48:18
On page 19, we have the City of Marmaduke. The recorded treasurer was paid $546 for
Speaker 7
1:48:26
unused annual leave and $18 without timesheets or other records to document leave accrual and usage. Because the City had no policies relating to annual and sick leave documentation guidelines for elected officials, we could not verify the
Speaker 333
1:48:35
authenticity of the undocumented payment. The staff would recommend we file. No objections? Consider this report
Speaker 19
1:48:47
filed. McRae, just below that, still on page 19.
According to city officials, the city
Speaker 7
1:48:52
had a verbal agreement with an individual to sell a city scrap metal, with that individual retaining one-half of the proceeds from each sale. Documented scrap metal sales totaled $4,005, with $2,266 deposited by the city and $1,739 potentially retained by the individual in conflict with Article 12, Section 5. Staff would recommend we file. No objections. Consider the report filed.
Speaker 19
1:49:20
Mineral Spring, still on page 19. The city paid $5,350 in wages and utilized
Speaker 7
1:49:25
city equipment to mow private citizens' yards in violation of the public purpose doctrine in Article 12, Section 5, which states in part, no city shall obtain or appropriate money for any corporation, association, institution, or individual. Staff would recommend we file. Consider the report filed. Thank you. On page 20, Murfreesboro just had fraudulent checks.
We've already said we'll file those. The Town of Norman. The town conducted business with an employee in 2017 for improvements tolling $665 without an authorizing ordinance as required by 1442-107. Staff would recommend we file. Consider the report filed
Speaker 119
1:50:08
on Murfreesboro and Norman. On Norflit,
Speaker 7
1:50:13
the city purchased a flatbed railroad car on July 31st of 2018 for $3,285 to replace a wooden bridge on private property at the request of a citizen.
This individual agreed to pay the city $100 monthly for one-half the cost of the car. The city replaced the bridge in April of 19, but as of exit date had received no payments from the citizen. The city appears to have loaned its credit to an individual, and this transaction does not reflect in exchange for fair and equitable consideration in conflict with Article 12, Section 5, and Attorney General, Opinion No. 8852. Staff would recommend we file. Consider the report filed. On page 21, this is still in the reports referred to the prosecuting attorney under the city of Shannon Hills.
The city paid the following organizations in apparent violation of the public purpose doctrine in Article 12, Section 5. They paid $400 to the Bryant PTO Davis Elementary School and $1,000 to Healing Water Outreach Program. It should be noted that 615 was generated at the city's ball festival through a bake sale and raffle ticket sales for items provided by HWO. Staff would recommend
Speaker 333
1:51:25
we file. Consider the report filed. Thank you.
Speaker 19
1:51:35
On page 21, the town of South Lead Hill, the town paid $31.75 to the spouse of
Speaker 7
1:51:41
a council member for mowing services in 18 without an ordinance. Staff would recommend we file. Consider the report filed. The town of Valley Springs, the town conducted business with a council member in 18 for road improvements, totaling $4,076 without an authorizing ordinance. Staff would recommend we file. Consider the report filed.
On page 22, under the city of Wrightsville, The city paid $432,000 for non-business food and flowers in conflict with Article 12, Section 5. Upon the approval by the mayor, the city paid advance salaries of $5,584 to the district court clerk in noncompliance with Article 12, Section 5. The mayor also approved allowing the employee to repay the city by withholding funds from her paycheck until the advance was paid in full. However, the agreed-upon repayment terms are not being followed. As of June 14th of 2019, the employee still owed the city $2,034.
And then the other finding is a fraudulent check. Staff would recommend we file. Consider the report filed. Bradley County, still on page 22. The county dispersed $2,400 to the Bradley County Historical Museum in apparent conflict with the Public Purpose Doctrine. And the county clerk, the county overpaid principal interest in the amount of $3,097 on a note payable to two individuals. The full amount of the overpayment was
Speaker 333
1:53:11
returned to the county on July 28th of 19.
Speaker 28
1:53:15
Staff would recommend we file. Consider the report filed. On
Speaker 7
1:53:27
page 23, we have Fulton County. Under the county judge, we were notified of potential misuse during June of 19 of county road department equipment and materials on personal property owned by a county official. This matter was disclosed to the 16th Judicial District Prosecuting Attorney. who indicated an Arkansas State Police investigation had been requested. Staff would recommend we file.
Consider the report filed. Grant County, on page 23 still, cash receipts issued at the transfer station and exceeded cash remitted to the Treasurer's Office by 1716 during the period January 1st of 18 through March 31st of 19. It appears that unreceded checks were included in the remittances to conceal the unencounted for cash. In addition, the amount was altered on some receipt copies and several cash receipts were voided without explanations or the original copies being attached.
Therefore, the actual amount of unencounted for funds could exceed the amount
Speaker 28
1:54:31
shown above. Staff would recommend we file. Consider the report filed. On page 24, we're still under reports
Speaker 7
1:54:37
refer to the prosecuting attorney. under Lee County, the county judge, the county identified and we verified payroll disbursement discrepancies. Specifically, salaries for three officials, the county clerk, circuit clerk, and assessor, exceeded the 3% increase authorized by our ordinance.
Overpayments to each official totaled $9,427 in salaries and benefits. The county clerk and assessor repaid the county prior to December 31st of 18. The amount overpaid to the circuit clerk, who is no longer a county official, remains outstanding. Staff would recommend we file. Consider the report file.
Speaker 19
1:55:15
Pike County had a fraudulent check. So we've already said we'll file those.
Speaker 245
1:55:27
Okay, now we're on page 25 to reports with repeat findings. The City of Falk
Speaker 7
1:55:33
Mayor called this morning, and he had a council meeting tonight and requested to defer this report until the October meeting. So staff would
Speaker 22
1:55:44
recommend we defer. Report deferred to the
Speaker 35
1:55:54
October meeting. We talked to Fulton and Gurdon, Jeanette and Terrell.
Speaker 19
1:55:58
Okay, so on page 29, we had four reports, reports with findings, which indicated that we did not have a response, but we have since received responses to all four
Speaker 7
1:56:11
of these, and staff would recommend we file Garfield Water, Gillum Water Works, Luann Water and Sewer Fund, and United Water Association. Consider
Speaker 22
1:56:21
the report filed on these four entities here. Thank you.
Speaker 19
1:56:28
Okay, now we're cruising to the end. On page 30, on
Speaker 7
1:56:33
pages 30 through 43, there are 58 reports with findings with responses. If no one has any questions about any of these, staff would recommend we file them all. Consider this report filed. Then on pages 44 to 48, there are 160 reports with no findings. Staff would recommend we file those as well. Consider a report filed.
Representative Danny Watson
Unverified
1:56:59
That's the end of the reports. Thank you, Ms. Steele. Nothing else comes before the committee. Be aware the next committee meeting will be October the 10th. Nothing else comes before the committee, meeting adjourned. Thank you.
Agenda
A. Call to Order by Chair
B. Adoption of Minutes of the June 6, 2019 meeting
C. Discussion of Ark. Code Ann. § 14-59-117:
1. Town of Allport
2. City of Bradford
3. Town of Jericho
E. The next meeting will be October 10, 2019
F. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - COUNTIES AND MUNICIPALITIES, Sep 12, 2019 | Agenda | 1 | Official source ↗ |
Speakers
Representative Danny Watson
Unverified
Speaker 6
Speaker 7
Speaker 10
Senator Bill Sample
Unverified
Speaker 21
Speaker 22
Speaker 28
Speaker 34
Speaker 36
Senator Terry Rice
Unverified
Speaker 42
Darryl Kirby
Unverified
Speaker 54
Speaker 55
Speaker 59
Speaker 62
Speaker 64
Speaker 68
Speaker 66
Speaker 74
Representative Johnny Rye
Unverified
Speaker 86
Speaker 100
Speaker 43
Speaker 110
Speaker 121
Speaker 123
Speaker 128
Speaker 135
Speaker 136
Speaker 144
Speaker 143
Senator Mark Johnson
Unverified
Speaker 152
Speaker 156
Speaker 158
Speaker 159
Speaker 165
Speaker 33
Representative Stephen Meeks
Unverified
Speaker 169
Speaker 186
Speaker 188
Speaker 191
Speaker 199
Speaker 201
Speaker 202
Speaker 176
Speaker 19
Pernita White
Unverified
Speaker 235
Speaker 236
Speaker 203
Speaker 242
Representative Cameron Cooper
Unverified
Speaker 253
Speaker 255
Speaker 194
Speaker 260
Speaker 262
Speaker 263
Speaker 161
Speaker 269
Speaker 276
Speaker 279
Speaker 280
Speaker 286
Speaker 289
Speaker 290
Speaker 301
Speaker 307
Dora Jordan
Unverified
Speaker 311
Speaker 314
Speaker 323
Speaker 326
Speaker 325
Speaker 319
Speaker 333
David Coles
Unverified
Speaker 351
Speaker 353
Speaker 308
Speaker 89
Speaker 360
Speaker 119
Speaker 245
Speaker 35