Legislative Joint Auditing-Educational Institutions

Members of chair sees the cores will call this meeting to order our first order of business is to approve approval of the minutes we have a motion to approve the minutes. Depth in second. Thank you minutes are approved or next item a business is item fee review the reports mister fank would you give you report place thank you miss share and good afternoon today we have fourteen educational reports to review none of these reports are for fiscal year twenty twenty three and five or four fiscal year twenty twenty two. There are far reports with findings and we will begin with the university of arkansas system report which was referred to the governmental bonding board. The university of arkansas system had six findings in FY twenty three and I will provide a summary of the findings instead of reading them word for word from the page and the first finding was related to employee overpayments across multiple campuses these overpayments were reported by management two legislative audit and. You a system internal audit the other payments were the result of clerical errors and timeliness in reporting and processing employee terminations and collection procedures have been established to recoup the overpayments as of the audit report date sixty three thousand dollars had been recouped leaving a balance of a hundred thousand dollars to be collected. The remaining fire findings for the us system were based on audits or reviews performed by us system internal audit department uh a summary of finding two as a result of an investigation by u m s and confirmed by internal audit. It appears the executive director made an unauthorized purchase of two thousand seven hundred and seventy four dollars and misused donations of gift cards in the amount of two thousand dollars as well as taking food from ums campus without proper payment. The executive director of nutrition services was terminated from employment on february eleventh twenty twenty two. Finding three. A pharmacy technician at ums was terminated on february sixth twenty twenty three upon discovery by the chief pharmacy officer that the pharmacy technician took cash. Internal audit determined the total loss was two thousand eight hundred and eighty seven dollars which included four hundred and thirty three dollars in prescriptions charged to employee accounts. Three hundred and thirteen dollars was recouped from the terminated employees final paycheck. Finding four. And administrative assistant incorrectly paid thirteen stipends totalling sixteen thousand nine hundred and fifty dollars to her spouse. Who was a student and part time employee at the university of arkansas home bluff. For the period january of twenty twenty two to february of twenty twenty three. Uap reported the potential loss of funds to internal audit who conducted the review. Four thousand two hundred and seventy nine dollars was recouped upon termination of both employees leaving a remaining balance of twelve thousand six hundred and seventy dollars. Finding five university of architect community college at rich mountain. Mannesman identified a hundred and thirty two transactions totalling a hundred and two thousand dollars. That appear to be fraudulent and were confirmed fraudulent by internal audit. The age back housekeeping supervisor made unallowable purchases equipment was missing from physical inventory or adams were charged to the colleges. Or two two UACCRM that were for the supervisor's personal business. Employment was terminated april of twenty twenty three. And finding six university of arkansas for smith management identified and an apparent loss of funds related to unreturned lease technology assets to students and employees upon review va internal audit the loss after taking into consideration equipment that was damaged misplaced or subsequently returned total seventy two hundred dollars. As of september of twenty twenty three. The university had recovered three thousand dollars and written off twenty five hundred dollars leaving a remaining balance of fifteen hundred in their response the the university noted that they did actually recover more since that time and you will see that in their response to the finding that concludes the findings for us system. And officials are present if the committee has any questions. Members of anyone have any questions. Saying that if you're a member of the math I would like to come forward and you're not required to not ask you to just offering the opportunity if you like. Would you like to come forward and make comment you're welcome if you'd like. I just want to make sure I heard did you say you eight system or uam i'm sorry you a ms system are you a system whoever were reporting on do you have a comment to make okay thank you and I see no comments our questions from the committee uh having done so this item is reviewed. Next item is to fay the next report for review is south arkansas community college which is now south arkansas college due to the passage of act two forty five of the twenty twenty three regular session the college had to findings the first one is a repeat finding and I will summer as it the college has policies and procedures to properly record and classify transactions in the financial statements however the college's internal control did not detect or prevent material misstatements in the financial statements. The financial statements were subsequently corrected by college personnel during audit field work a summary of the errors includes the following on the statement of net position there were airs and misclassifications ranging from eighty six thousand to seven hundred and six thousand dollars related to various line items. On the statement of revenues expenses and changes in that position there were airs and misclassifications ranging from six hundred and eighty thousand dollars to four point nine million related to various line items. In the notes of the financial statements there are various overstatements and understatements rating from a hundred and sixty eight thousand to one point eight million a similar finding was reported in the previous seven audits. And finding two in july of twenty twenty two the college was notified it had incurred two hundred and eleven thousand dollars in penalties and interest for failure to timely file and furnish forms ten ninety five c and ten ninety four c to the internal revenue service for the twenty nineteen tax period in december twenty twenty two the college was notified by the irs that the penalties and interest will be deducted from a two hundred and seventy eight thousand dollar overpayment the college made on the quarterly now forty one form for the period ending september twenty twenty two. This concludes the findings for south arkansas college and there are representatives from the college present if the committee has any questions committee do you have any questions. If someone is here i'd like for them to come to the table please I think some of these findings are seven years old are repeat from seven years. And if you would please introduce yourselves. Good afternoon i'm stephanie teledatas and the interim president south arkansas college. If you would pull the microphone up pretty close please it's kind of difficult to hear sometimes. Thank you and sl volvas president of finance administration if you could I think so a few of these are repeat findings it seems that we've had the same issue for several years could you speak to that point please. So this is I have been interim for the past uh since august one and during that time I can say that we have identified a number of issues internally that have contributed to this both in the previous fiscal year as well as long term. As such we have made position changes not just personnel changes position changes to better functionality alignment with an effective structure for financial management we have also made personnel changes at this point none of the individuals that contributed to the leadership on the current that on the. The issues that were a present in the audit are still at the college. We have done professional development specifically addressing the audit findings and concerns with the staff that could have contributed to. Ah to the actual audit findings. We've revised our processes to create more internal checks and balances and address the issues found in the mistake. We have reformed more formatted or monetary reports to ensure more timely identification of the issues and allow for continuous monitoring we also took the time to do professional development of our board on the financial reporting to increase that uh layers of accountability we've also developed a multi contract which is been approved by the state with a local accounting firm they had previously provided us with support for audit development but we've also enlisted their assistance with financial operations as well as staff development um to progressively address the issue in the coming year. Yeah. Anywhere else do you have any other statement whether is anyone have any questions. Yeah good senator thank you very much mister chair and good afternoon I know it's not fine to have to take over something that is a mess. Because this is not the first time we've had to deal with with this particular entity i'm concerned about the inter on revenue service and your relationship with it. If the college was notified it incurred two hundred eleven thousand four hundred and sixty dollars sixty seven dollars and penalties and interest and it says that that amount was reduced could you tell me what the status with the rsse is currently at the college yes ma'am so what we've done is at this point we are fully up to date with the ten ninety four c's and ten ninety five documents everything has been submitted to the irs part of the issue was with our enterprise research with our european system and that has been addressed but we've also addressed personnel issues that contributed to the finding so we are currently up to date and we have also submitted a letter requesting a beaten to address the issue going forward and we have assurances that are current process will allow for timely and accurate filing at this unpaid on the other page where it says comparative statement of revenues expenses and changes in net position are we all think are we where we need to be at the school now as far as that's concerned as a miscalculations total information not thirty that one thousand two hundred is all of that clear now. Yes ma'am. Alright well thank you thank you mister. Center of any of the questions and thank you and I just this has been ongoing this repeat finding for how many years seven years. At any point during that seven years did you have an attorney. Uh look at the three advise the president or whoever was in charge of these personal issues that led to this. The personnel issues were discovered after the personnel. Issues were resolved as a part of the issues that were identified so we did not know ahead of time that the personal issues were happening these were the flags that caused the resolution but this is that but this article phoning that's a repeat finding has been there for seven years yes man the missed statements the the nature of the miss statements have actually changed each year indicating that we had issues with our processes in place but the actual the the individual elements have varied from year to year. Okay but at some point do you as an entity ever bring in an attorney. To look at these sayings and say we've got to get to the bottom of the. In terms of the financials yes I mean particularly because of what it was being stated as an. The that you are you are stating you were understating and you were uhm on the different liabilities disclosure and notes payable was understated and least liability was overstated. And so those are those could be lead to some serious legal issues for you I would imagine so my question is at what point do you have attorneys turn this over to attorneys to look at this to make sure yellow. You know. Uh not doing things that are illegal. Well at this point we have chosen to go the route of professional accounting firm to try and address this apartment and and as an independent to your college we're under the authority of the ag's office so and we have addressed with the ages office other things such as the irs issue that we felt like okay okay sure we have coverage on okay well II just I would recommend obviously that you have legal council look at the same sister in case because you know i'd have somebody right now is being prosecuted for overstating an understating liabilities so we will address our processes that make sure that we're covered thank you thank you. Center growing thank you some it's not for them but when we finish with this because i'm I recognize it you've just been there since august so i'm not when I don't beat you over the head with stuff but when we finish with this may I go back and ask the question of mister thank. Sure alright thank you. Our question were you an external are an internal higher to come in and clean the firm. Ah I was the vice president for academic affairs are and i've been with the college for fourteen years I haven't been in a roll with financial capacity but I have been in college leadership for over a decade I guess that be part of my question so i'm part of one center of his question is that we've been looking at this fire seven years and it hasn't come up to senior lettership before. The financials the the audit findings are typically kept within the president's office and the vice president for financial affairs. Okay well I guess the test is in how we do at the next day so we're hearing your commitment today so that this won't come back. Ah again for an eighth year and you're making that that commitment to us I am committing that we will address all of and we will address all of the issues to the best of our ability and do everything we can to not have any of these findings in the fiscal year twenty three audit. But I cannot assure you that that there won't be something messed but we are going to do everything we can to ensure in there but you're being doing everything we can i'm sure the people that said at that table and and your chair in briefly shares said the same thing so I understand you can't make assurances I get there but this is a significant issue that would expect leadership not only at your level but the university level to address these across the board yes sir I will I can say that we have taken a more aggressive approach since the beginning of the since august on handling this and that we are fully focused on addressing these issues and we said a goal that we want to be on the back page of the agenda with no findings thank you and I appreciate that I think everybody for seven years has been saying something similar and we appreciate the direction on the senator when you have a question of comment yet mr chair since this is a seven year repute finding i'd like to make a motion that if there is an additional finding that the president of south community college south arkansas community college comes in addresses this committee I mean thank you for coming and I appreciate that very much but this is a leadership issue and the president needs to come to this committee because for seven years this has been ongoing and the leadership starts with the president of south arkansas community college so if there is repeat findings I want the I would like for the president to come to this committee so that would be my motion mr chair of my if i'm correct we have the interim president here I am the interim at the moment you're going through a presidential search and we will have a a newly pointed president in may okay well this the information where we are here and that they'll be likely if we have a reoccurrence we wouldn't would like them current president to show up. That good no okay any other questions members seeing no more questions this item is review thank you very much. Senator thank you at the university system the university of arkansas community college at rich mountain. Now I noticed that in many instances we refer these things these fraudulent things for prosecution that you tell me why this was not referred to the prosecuting attorney. It it is referred to just not mentioned in yet so usually when we have an auto report that we certified to the bomboard we save that as the heading but but all of these findings except for that first one for ua system or referred to the pa and to the age okay thank you that clarifies it for me that it's good question that in here so it wasn't so I have to just try to find out why not a hundred thousand bucks we like me in terms of ever once and why can we have one more finding I think. Yes please prefer there were three reports with findings these did not contain rep and they were not referred to the pa or to the AG I will provide just a brief summary of each southern arkansas university and southern arkansas university tech each had a finding related to various errors on the financial statements these areas were brought to management's attention during the audits and the errors were corrected by university personnel at both institutions during our art of their still work martre school district had one finding and it was related to unauthorized withdrawals that totaled almost ninety five hundred dollars this was made from the district's bank account dissert personnel discovered those unauthorized withdrawals and upon reviewing the effect upon reviewing the effective bank account all funds were recovered from the bank and that concludes that reports with findings. Members anyone have any questions further you're recognized thank you on the march. You had to unauthorized withdrawals did this result in the termination of the individuals making the on authorized withdrawals I did they do so not knowing that it was something wrong and done this was a party outside of the score it was not someone within the school district so this when a noon just done members anyone have any other questions. This is add reserve review. I would ask you to look at the all the reports with no findings there are several there we appreciate those districts no entities complying with all the requirements. Anyone have any new business for other business thing man we are journed thank you committee.