Legislative Joint Auditing

Our members if you can start finding your seat we're gonna go ahead and get this meeting started police so you just a minute to to get settled. Our we're gonna call this meeting to order. Of the first order of business is the adoption of minutes of the February twenty eight twenty twenty meeting I think everybody's saying that via email if there's no objections we're going to consider that adopted of any objections or comments. All right seeing none we will consider those adopted next order of business is the adoption of the reports of the executive and standing committees. see one on our agenda today Representative aids you're recognized. Thank you Mr the executive committee met Thursday September tenth staff reported to the committee the audit special investigative and shortage reports scheduled presented to the standing committees and the full legislative joint auditing committee this month the committee discussed and deferred a request on Jacksonville police department committee also discussed approved request for an audit examining secretary Amy ventures March twenty fifth twenty twenty report as required by ACT five sixty five of two thousand nineteen in its attachments audit will review and verify the report and it savings another business to request was discussed in deferred on improvement district in the city of horseshoe bend Mister Norman confirmed an additional meeting to be added to the L.. L. A. C. audit our calendar for December third and fourth twenty twenty with no additional business discuss the meeting was adjourned the next meeting of the committee will be held on Thursday October eighth twenty twenty and I move adoption of this report thank you center we have a second. We have a second all those in favor say aye. All opposed no all right thank you I'll stand adopted next will be the report on the standing committee on counties municipalities Representative Watson you're recognized. Priscilla one. Thank you. Chairman Womack. Standing committee on counties municipalities September tenth two to twenty twenty of the committee adopted the minutes of the February twenty seven twenty twenty meeting the committee discussed the town's having turned back with held per Arkansas code section fourteen fifty nine one seventeen staff reported that the town of all port remains in substantial noncompliance with the municipal accounting a law and this that this has been a non compliance for more than six months staff recommends that the town of all port in the treasurer of state the notified of non compliance for more than six months though the town has not been receiving turnback Arkansas code section fourteen fifty nine one seventeen states that upon notice of non compliance for six months the treasurer of state the notified that the town of all port. Turnback is forfeited and available for distribution to eligible municipalities all port officials were first notified that the records were in noncompliance with the municipal accounting law in November of two thousand seventeen. Since that time they have completed the process for Arkansas code section fourteen fifty nine one seventeen for withholding of turned back for the second time. The standing committee on counties municipalities recommends to the legislative joint auditing committee that the charter revocation provisions of Arkansas code section fourteen sixty two one oh to be initiated the initiated for the town of all port there is a motion at the proper time. Staff reported that the town of Jericho was compliance with the municipal accounting law was substantially improved the standing committee on counties and municipalities recommends to the legislative joint auditing committee that the treasurer of the state and town officials be notified that the town is again eligible to receive turnback. There were seven reports differed from the February twenty seven twenty twenty meeting officials from these entities were not present to address the repeat findings do that to cut due to the cove in nineteen health emergency the committee filed all seven reports the committee reviewed three hundred and fourteen current reports six of these were certified to the bond board one to the Attorney General in forty three will referred to prosecuting attorneys no officials were present to address the repeat findings in their current reports to the cove in nineteen health emergency the committee file all three hundred fourteen reports. Jane Womack moved for adoption of this report. Thank you Representative do I have a second. We have a second all those in favor say aye. I'm sorry Senator Elliot you're recognized for a question yeah. I I just want I want to know I'm not thinking in terms so much of the people who are or elected to be in charge an all port but is is there are not any where the Anyway to intervene on behalf of the people their getting services that they would have gotten from the turned back funds or is it just out automatically cut off because the folks who are in charge didn't do what they're supposed to do. Thank Mister is Megan's with mark from the answer the. Thank you Mr chairman of Frank Gehry legislative audit senator Elliott I'm not sure this answers your question Essentially what will happen is that this land will go back to being county territory in the county will be responsible for services is I get close to answering I'm I'm maybe so go online talk I'm suggesting that the term back funds were paying for some kind of services happening that they were getting in all port I'm assuming and that they're not going to get that funding anymore the turned back funds one I'm asking is if I didn't do my job as the elected official whatever is there any other way of intervention on behalf of the people who may be will not be getting their services that they've been getting is what I'm asking. There there are other grounds for. Revoking a municipal charter do you can always try to remove officials that are not. Performing their job I think the local prosecuting attorney would be responsible for that. Those of course would need to be initiated by other officials or other parties okay and then say in Jericho where they're going to be not notified that they are now very eligible I guess for the time back funds so what did they do what what's what is it that they did they follow some kind of recommendations that were made by the audit senator this turns on with your charter was revoked or not turns on compliance with fourteen fifty nine one one seven which in turn in forces the municipal counting law generally speaking that is a set of record keeping this is how you do checks this is how you keep warrants this is how you this is who needs to sign off on these documents it's on making sure that the municipality performs its basic functions properly and so in the case of an entity that's been told yeah you get your turn back back they have come back into compliance with the municipal accounting long it that's basically what that signifies or okay for Jericho in this yes yes ma'am okay and well I guess that answers my question there just about all port there's just no recourse if the elected officials will not living up to what they're supposed to is that correct. Yes that's correct short short of somebody running against them but but this is I believe my understanding is the committee thinks this is happened long enough that perhaps it's. Now I shouldn't speak to what the committee thanks okay I understand the committee doing what it what it did I'm not I'm not question that at all I'm just as question with the committee acts it I'm not and I'm really not concerned about the officials who didn't do their job is of the people who live in there and and that's that's all. Okay. Are there any other questions or comments. Okay so we're we've got a motion and second so we're gonna moved for adoption the report of all those in favor say aye all those opposed no all right that report has been adopted and part of that report we're gonna go back to represent Watson you're recognized for a separate motion thank you Mr chairman. I move that the legislative joint auditing committee begin the process to revoke the town of all ports charter under Arkansas code section fourteen sixty two one oh two by notify that notifying the Attorney General and the governor of the committee's actions regarding the title of all port under Arkansas code section fourteen fifty nine one seventy. Thank you Representative or any questions or comments. Senator Elliott your record out once the pride I guess to systems to Erie once the process begins out might there might there does that product is that process required to go through completely I might there be some resolution eat during the process of revocation. Senator. There's there's a lot of shells in the code I it it is envisioned that once the process starts it will be completed okay alright thank you. Senator Johnson you're recognized. I agree one. Truck John I think it's working thank you Mr chairman of. If I could to basically and I'm not all speak for chairman subcommittee Watson he did a great job yesterday and I appreciate everything you did chairman what's up Mister chairman and and and even to Senator Elliot comment What we kind of been having to deal with this issue with all port for some time and you know you have cities that they make mistakes they make honest mistakes that a frankly in many cases don't have the. The expertise in a tiny town to do things and you know we try to work with them and I I believe our staff in a wonderful job working with them and sometimes I go the municipal league get assistance so it those are the ones that are trying but I've I believe our subcommittee get reached a point where who is this is almost if if this were a of alcohol matter this would be there for third or fourth do you and I think we just reached the point where you know sometimes people have to be be punished and it's not the citizens that are because if the citizens are no better served by anyone taking care of their money that comes from the state like this then they're probably not taking care of other money that comes directly from local citizens or from other fees or whatever so of. These these are the really bad actor senator Elliott these are the ones that are not even trying to comply with our accounting laws and be responsible to their citizens so I I I use the analogy of if if this state troopers and Laura city place never wrote tickets on people driving eighty and ninety on on six thirty then people would drive eighty ninety all the time and every now and then you just have to write tickets and and this is sort of what's happened they've they just basically flouted the law and and I don't believe they're just doing it Senator Elliot I think they're doing it to their own citizens so I appreciate your concern for their citizens but you know we are the entity I guess it has to enforce that so that's really all I have to say about it but I I I haven't looked at this one real carefully I actually was shocked at how long they had been out of compliance in their sort of bad attitude about even trying to get in compliance so I appreciate the committee's vote and and I support the the motion by chairman Watson thank you very much Mister thank you other any other questions or comments. Could I consider that a second center thank you for all those in favor say aye all opposed no all right thank you for that committee. next item is will be the reporting standing committee on educational institutions Representative berry you are recognized. Thank you Mr chairman. The the committee reviewed a total of a hundred and forty eight current audit reports and one current internet. Internal control and compliance assessment report for the year ending June thirty twenty nineteen which consist of ten higher educated education reports a hundred and seven school district reports twenty two open enrollment charter school reports and ten educational corporative reports. The audit report of the Ashdown ins and little rock school districts or certified to the government governmental bonding board has will is referred to the upper bowl of prosecuting attorney the audit report of the Arkansas south Arkansas community college all reports of the Arkadelphia of cedar ridge Cleveland county Durham on these Poinsett county Harrisburg Lawrence county mark treat Nettleton pea ridge Star City and what county central school districts all report all of the Boston mountain educational corporative in the audit report to the southeast Arkansas preparatory high school open enrollment charter school who were referred to the up will prosecuting attorney. The committee filed the one hundred and forty eight current audit reports and one current internal control and compliance assess. That were brought before it Mr chairman this time uh. Moved for adoption of the report. Thank you Representative are there any questions or comments. Are seeing none may have a second. Why we have that all those in favor of adoption say aye. All opposed no. I thank you will consider that adopted of. Next up is a report on standing committee on state agencies are Representative speaks you're recognized. Thank you Mr chair we had forty five reports that before the committee agenda yesterday five reports were findings were present presented a private audit report for the central Arkansas planning and development district contained of finding related to the district's failure to properly record accounts payable and related expenses a private audit report for the southeast Arkansas economic development district again contained a finding related to questioned cost in a federal program totaling over two hundred and eighty seven thousand the department of environmental quality did not properly segregate duties of over cash transactions specifically one individual sign checks and approved the monthly banks reckless wrecked conciliation. The geographic information system office did not properly record accounts receivable and related revenues upon delivery of goods or services Arkansas tobacco control was unable to produce complete aging. Reports of receivables for physical years twenty eighteen and twenty nineteen during the Forty five reports I'm moved to adopt this report thank you Representative are there any questions or comments committee. Are seeing none may I have a second. I have a second all those in favor say aye. All opposed no all right that will be adopted thank you. next we'll move to we have special report it's on the initial review of the Arkansas ready for business grant program Arkansas economic development commission for the period April twenty second twenty twenty through June thirty twenty twenty Mister what you're recognized. Thank you Mr chair. The special report before you today is the initial review of the Arkansas ready for business grant program which is administered by the Arkansas economic development commission. This presentation covers legislative audit's preliminary review of this grant program which was referred to staff by motion of Legislative Council on may fifteenth twenty twenty. The objectives of this initial review where to provide an overview of the grant program and a timeline of the program implementation. Determine whether grant program application requirements were met prior to disbursement of funds. Review information technology controls for the website and FOR the database associated with grandis for applications. And evaluate disbursement controls to determine if grant fund recipients were legitimate businesses. The federal cares act signed in March of this year allocated one point two five billion dollars to the state of Arkansas for addressing the covert nineteen pandemic. A EDC created the grant program and accept applications totaling over one hundred and forty seven million dollars during two application windows one in April and one in may. By June of this year over one hundred and twenty seven million dollars in grant funds have been provided to businesses with employees in Arkansas. Appendix B. of the report provides a detailed timeline of the grant program development and implementation. On page four of the report and presented on this slide is exhibit two which shows the different tiers of grant awards exhibit three on page five of the report shows the geographical distribution of the funds disbursed. As for eligibility FOR grant funds in general any business or nonprofit organization conducting face to face interactions with customers for employees was eligible to apply for the grant program. The maximum grant amount was calculated at one thousand dollars per full time employee in five hundred dollars per part time employee for Arkansas based employees only and the maximum grant amount was one hundred thousand dollars with applications under common ownership being consolidated to calculate the maximum amount. Grant funds may be used for a variety of expenses associated with re opening OR resuming normal operations due to cover nineteen. As shown in appendix a of the report. Eligible expenses must occur between March first and December thirtieth twenty twenty and grant funds were advanced to the grant recipients rather than provided on a reimbursement basis. The grant program close out process is anticipated to occur no later than January thirty first twenty twenty one. The next twelve slides discuss the results of our review. Under Arkansas law A EDC has the authority to administer grants. To assist with economic development the state and to promulgate rules necessary to implement the programs and services offered by the agency. The grant program terms and conditions dated may twentieth twenty twenty were rules and we're subject to review by the General Assembly however a EDC did not obtain rule for review. I review show no instance that specific grant program requirements were provided to select individuals prior to being made publicly available on ABC's website the only exception would so the guidelines were provided to the cares acts during committee the night before they were made available online. Additional staff did not identify instances in which individuals outside state government were informed that grant program funds would be awarded on a first come first serve basis rather both the grant program website and summary indicated that applications would be processed in the order that the applications were received. We learned during this review that the grant application was available online beginning April twenty third twenty twenty. However prior to the first application period individuals seeking to act access the application would have to know the specific unique web address for the application in other words the application could not be located or any search engine or was the application link provided on the ATC website prior to being made public on the evening of April twenty ninth. Based on staff review of information that a E. DC provided one ADC employee used a personal email account to provide this unique web address to to individuals three minutes prior to public notification on the a ET C. website. Out of fifteen IP addresses known as visiting application website prior to the start of the first application window six were associate with ATC staff. Three were associated with applications submitted using the link shared by an ADC employee as previously discussed. One was associated with application submissions only during the second application period. And five could not be identified but per ADC more likely associated with the third party support vendor assisting with the program roll out. Furthermore we reviewed all applications submitted prior to seven PM on April twenty ninth which included the first two thousand two hundred and sixty eight applications submitted. And noted that two thousand two hundred six applications were ninety seven percent visited the website after the first application window began. Three applications were submitted using IP addresses that entered the website the three minutes before the first application went up again. For fifty one application submitted or two percent of the total we could not determine the precise time at these applicants initially via the website and finally web traffic information associated with eight applications resulted in an enclosed close of analysis. Regarding the application submission periods. Staff noted that ADC created I'm provided application links to select businesses when the application window was closed to the general public this occurred between the first application period in the second grant application period. One group of emails were sent to three hundred and thirty nine certified businesses on by north minorities disabled veterans and women to encourage them to apply for the grant an outreach effort ADC stated was made under Arkansas law. The second group of the mouse was sent to for businesses that according to a DEC had technical issues when they tried to submit their applications during the first application period. Staff also noted that there is a minimal amount of supporting documentation required to receive a grant funds this documentation included a complete application a copy of a driver's license from anyone associated with the application or the management of the business. A check containing a. An account number and routing number that match the application and a signed IRS W. nine form with information corresponding to the application. Furthermore the applicant's had received clearance from the department of finance and administration concerning their tax status although D. F. and A did not award grant funds it did review application information as provided by a DC to determine whether the grant applicants were registered in its tax system and whether the applicant had tax delinquencies. We noted one instance. In which the F. and A cleared three applicants under the same tax ID number even though these applicants have no identifiable relationship to each other. However these applicants had provided the same tax ID number two ADC on the application. The calls for this was a one factor verification process utilized by DF and I. After ATC provided updated tax ID numbers to the FNA these applicants were deemed still eligible for the grant funds that had already been dispersed. During field work staff reviewed applications for sixty grant recipients to verify that ABC received the required documentation into insurer ADC's controls ramp lamented. Two exceptions were noted where discrepancies between the IRS W. nine form submitted by the applicant any information on the application should have resulted in ADC requiring the applicant to submit a revised dire as W. nine form prior to the disbursement of grant funds. Additionally staff identified two hundred and eighty two applications that were deleted from ATC system and requested that ADC attempt to restore the deleted applications because doing so was cost prohibitive we were unable to review any of the deleted applications. According to the agency the deleted applications were associated with testing or were replacement applications created by the applet by the agency for applications were technical difficulties resulted in documentation not being properly imported into the agency system. Furthermore I review revealed that the agency's controls did not identify and prevent over six hundred and seventy six thousand dollars in excess grant funds from being disbursed to businesses under common ownership. Two entities involuntarily reimburse two hundred thousand dollars to a DC and as of the report date A EDC had recouped over four hundred and twenty seven thousand dollars of the remaining overpaid amounts. According to staff calculations in previously disclosed to Legislative Council during committee hearings ADC had made forty to duplicate grant payments totaling five hundred thirteen thousand dollars. As of the report date the agency had successfully collected nearly five hundred thousand dollars of the duplicate payments. Additionally we identified to applicants that were initially awarded and paid less than the total grant amount for which they were eligible subsequent to further communication and a request by the applicant to receive the total eligible grant amount A EDC dispersed the additional funds to these two. Applicants. Finally staff noted that the only control implemented to ensure that applicants had to declare number of employees was a subject to review by agency personnel A EDC is working to implement additional procedures during the grant calls out process to ensure that grant recipients met this eligibility requirement. In addition there is substantial risk that recipients may use grant funds for an eligible expenditures. Staff plans to address both of these issues when conducting a second review of the grant program after the close out process has been completed. Management's responses provided in appendix C. of the report and eighty C. officials are present to answer committee questions Mr chair this concludes my presentation of the special report thank you Sir thank you Mr what. All right other any We do have. Senate seer so are there any questions or comments. The Senator Stubblefield. Are you who's who's over there get the clover Who are you want to get to the table. Ours is a question for staff. Okay go in. To the. I believe that's a personnel matter for ADC it was one employee one employee of ADC who sent an email you know. Yes Sir to to individuals. Yes one of those one of those individuals submitted at subsequent application FOR grant funds and was awarded the other one forwarded it to to end of vigils who submitted applications. Let's go and have our guests from the. Economic development commission come to the table places. And when you get there if you will remain standing. This is our custom here in audit we will law. I ask you to will start will start on the right of. Please state your name employer imposition. Mike Preston secretary of commerce and executive director of the Arkansas economic development commission thank you Sir please raise your right hand. Do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god I do thank you Sir next to the same please state your name employer position. Twelve o'neill executive vice president global business with the Arkansas economic development commission thank you Sir would you please raise your right hand. Do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god. Thank you Sir. Next Gen that's in general counsel for a DC all right thank you please raise your right hand do you solemnly swear or affirm that the testimony you're about to give will be the truth the whole truth and nothing but the truth so help you god I do thank you Sir if you general take a seat up. Sir Stubblefield would you like to. Re ranger question or just get some comments from the director. Regarding the. At the alternate meal that so I'm for some reason. Thank you Mr chairman. A always one was a sector question if you could elaborate on the disciplinary measures about this individual what what happened what transpired with that person sure. Thank you Mr chairman thank you center for the question and jamming claim can the elaborate further is they've worked them very closely to so he was forthcoming with the information during the auditing brought it to our attention who we merely brought it to the attention of the the audit team this individual is someone who has actually helped build the form stack application so we spent a lot of time on it and had the link to it at about four fifty seven you know when what is time stamp on his email went out someone had emailed him asking that this saying notifying him that the website was not working they could not get on there is a technical issue and the employee indicated to us he just thought there was something wrong want to make sure they have the link and send it to and then that person turned around and forwarded it to other people so it was three minutes before it went live had been three minutes later it would have been the same as everyone else but he was very forthcoming with that information and we did sit down and and you know have a talk with them we did not fire the individual but certainly put him on notice that that was you know incorrect action that he should not have taken Jim Clint you guys and there's well. If I may Mister chairman it is this is not correct that were sector Preston said as and I interviewed him personally and and took a statement from him he was just not mindful as to what the time was of the individual who was responsible for posting the link on the ADTEC website he literally have the atomic clock on his screen and that was the date that was the time he was synchronizing to in the individual who sent the link out which is not really where what the time was there was no intention his part to create an advantage of for anybody I think ultimately these three businesses at most access the the link eighty seconds prior to the general public did and in to access to the shores forty four seconds before the general public so so there was absolutely no relationship between this individual and the two individuals that got the prior notice my understand he was he knew them there was a friendship there but there was no you know family relationship or no business relationship there. That's all I have Mister chairman. Go ahead. Thank you just a follow up to that it again we don't want to beat a dead horse over speak but it just it does make me wonder you know. This somebody would take that action due this person in knowledge that they normally send out notification on different programs or grant programs or applications for things to ADC. Senator Rapert and have at counter to that no Sir it's certainly unique program to us one of the challenges during this time of covert nineteen as we did have certain individuals from our team working from the office and certain individuals working remotely so as we were gearing towards this five PM launch the individual in question was working remotely so it presented a bit of a challenge as as we were gearing up to launch it at five PM but the individual in question is a highly valued employee to us it was a mistake that that he has admitted to but the but that is not a normal course of action for for that type of carelessness for for that individual or for any member of our team. I may add senators well just. The uniqueness of the circumstances we turn the whole thing into a call center and so every single employee of a U. D. C. was working on this project it was it was a few dozen they became responsible for public facing communications and so every single employees expected to answer the phone call respond to the email help people resolve their issues. Thank you. Senator Hickey you're recognized. Thank you Mr chair might minded to deal with the vendors and I was gonna asset to staff before they came up but possibly you can does this mean that some of our vendors actually sent out the address. Are to the opening of the grant we're it's on page seven. It's the the fourth bullet point is what I'm in reference to. Says an a LA staff did not identified but that you you all indicated they were associated with vendors yes Sir we had to vendors one was called form stack in this vendor form stack actually created the web form or its product is the web form that the applications are submitted on the other one is sales force that is our database that that we use for all lot of things to cure for this particular project because this is such a large project we had to have the support of those vendors to test the system to make sure the application was working to make sure the databases function correctly so they actually paying then access to the system they sent no communications out okay so those didn't go to anybody that it actually initiated and received a grant yes I believe in you know. Let's see if I can respond more particular about blew up or their comment there is that they were looking to see all the I. P. addresses they had access to that application prior to five PM because there had been concern expressed that perhaps people had advance access to it and so we're able to provide to them a complete list of every single IP address that hit that that form prior five PM and that's their list of a few access to those staff that's correct and none of the vendors that were associate in in this it actually sent it out to somebody that receives a grant that you all could to. That's correct thank you Sir thank you president. At the Senator Elliot you're recognized. Thank you Mr chair and I just wanna get a clarification because I think I might have misunderstood the original employee employee that we were talking about where somebody where he sent out Information to how many people he he sent the link to the to the form to one person one person at four fifty seven when it was not so as to go live in until five okay so I ask you to be to be two people I thought I heard that the somebody contacted the employee did somebody contact employee and ask about if the link were ready. Senator Elliot of it as as dimension. This was an afternoon after the governor's press briefing where the program became public and there were several members of our team at the office and sever working remotely both coming in through our front desk which we basically turned into a call center of just every call coming in forwarding to a staff member is everybody had questions about this program and then a lot of us were getting calls on our cell phones in office numbers just from relationships that we have asking about the program so it was it was a call that came in to him personally saying I heard about this program I'm interested in it and I'm not able to access the link carelessly three minutes early he just said will let me just email you the direct link rather than the normal course of action which was there were a lot of people waiting on our website for us to populate that link on our website at five PM so that person that called and then had information that the link would be live at five o'clock and had tried previous to five o'clock so what happens correct correct just so when the general public is notified that afternoon about the program. They were just making phone calls to people they knew it ADC saying you know it's four fifty seven I'm I'm not able to get on your website I can't find the link just kind of in a frantic. Wanting information on how to how to apply stick waited for fifty seven and five o'clock and just trying to get in low it was it was a careless act yes ma'am contact with the person who called and that the who was calling. If I if I sent really okay so. There's the link to the application which was not a public Lincoln till five until. And then there's AT sees website which is where we were going to post the link at five o'clock this particular individual who reached out to this employees understand it was having difficulty accessing the ADC website so I think that individuals concerned five o'clock asking access the website I won't be able to apply can't can you help me enter the tow we had a. Tremendous load on the way there and their wives and there was there were issues access and ADD seeds general website that's been verified because the low the traffic you just took a little bit of time early on for the pages to load because her getting many thousand sitting at all at once okay. My and my other question is just a matter of just trying to figure out how you would handle all of this this was something brand new and So I just how much how much did add to the impossibility I guess of doing things the way you maybe traditionally would have how much of this was just sheer overload if any of it once and and she here um I guess not so much a yup overload and perhaps just not being prepared I don't mean that in a negative way of something that just came in that you're not used to doing hold senator thank you and it certainly was a unique time for for all of us our our thinking at the time was we have to respond we have to respond quickly businesses are hurting businesses are closing businesses are trying to re open we have funds that we can make available to them we want to do is quick as possible looking back now form four months ago Sir we can you know Monday morning quarterback it a lot and say what we would do different it certainly we knew that speed was gonna be of the essence and our team is is client has indicated was kind of split at the time some still working remotely at home some in the office we want to be as responsive as we possibly could to every individual that called or emailed because we didn't want to be in a situation to people to say I just couldn't get through so I think that you know in hindsight going back sure there's things that we could of and and would have done differently but in the and I remain proud of the team at ATC and how quickly they did react and acted up there was over twelve thousand applications that came in in that time frame so when you look at the numbers and we're talking two or three or five out of twelve thousand you know the percentage is very small I think we did very well and getting those funds out in as you can see those funds have been deployed in if you've talked to businesses in your districts you'll see that it's made an impact I know that I've gotten a lot of calls and emails of the your positive nature how much how much it's helped in the little ability of I've been able to. Out in the state last few months and going to communities I'm hearing that same thing so and knowing that that you know about a hundred thirty million dollars it is been pumped into our economy and because we have the requirement has to be spent it's being spent it's being moved through our economy you were seeing our tax or revenue collections been up the first two months of the fiscal year I think because of the funds that are being put into the economy that's a big help and even those a small part of it I'm still proud of it all right thank you. Senator hammer thank you should be on you're recognized thank you Mr chair. The let me start off on the on the positive note for the money that was appropriated you did not spend all the money that was appropriated correct correct all right and so given the so nobody missed out on anything regardless of what may be the idea that some jumped the gun if you got inside information whatever nobody missed out on anything as far as not being able to access money is that correct yes Sir okay and your down to needing to get thirteen thousand five hundred recouped an outstanding is that all that there is to recruit if I may their their two categories one category was the duplicate payments that were just kind of an accounting error we're down to about eleven thousand dollars on that one so with little bit more come in since the report was written the second category was payments with respect to common ownership and this is will boards all the details we want to make sure that the hundred thousand dollar limitation was applicable to owners who had multiple businesses that an owner didn't get around that by submitting multiple applications our internal controls identified a little under ten million dollars in limitations that need to be applied and we took care of that on our own legislative audit was able to identify about a half a million dollars a lesson have been dollars of payments that we had missed using their own search criteria we've recovered of that half million dollars roughly all about four thousand dollars so you were I feel really good shape on on the overpayments okay well they will keep looking chasing the other mounted okay well that that's good legislative audit was able to help out in the process and let me ask you moving forward if the feds should grant more money of coming down is the system in a position to be able to get it out expeditiously but also be able to Correction of the things that you don't have been brought out. The system is all of our psyche can handle. We yes Sir we be prepared okay and then the final Kwan is on page nine of the report down the fourth paragraph. Just a LA cannot determine the amount of an eligible expenses for which grants may have been used would you make comments to that statement please. If I if I may senator I think what the concern that daily was expressing there was because you're not asking for receipts on the front end there is some risk that folks will take the money and spend it for purposes that are outside the program parameters and we acknowledge as a risk we actually having had conversations about that in a LC about whether that we should require you know some level of expense receipts submittal before your lease a portion of the funds and as we heard pretty clearly the the sense of this room was no get the money out because the money is needed and so what we're doing at this stage and we're already asking for receipts even though you're not required to submit them to us until the end of the year we are have a portal set up we have been proactively communicating with all the recipients go ahead get your receipts to us and we're reviewing those receipts and we are finding some you know problematic expenditures were reaching out to those individuals saying this expense does not count you must go find a different expense that fits the correct the category and so we're trying to help them as much as we can okay yeah because my I was in that meeting I remember the statement the discussion that think the general. Summation of service was yeah I get it out but we want to make sure that we get used for what it was accounted for so I guess my question is when will you know that all the money that was sent out is actually been spent the way it was supposed to be sent out will that be the end of January and February what procedures do you have in place to verify that or do we need to have legislative audit help take a look at that is I understand the plans already for legislative audit come back and review that as well internal audit and FOR the expected general's office will also be looking at two and then were beginning to refuse ourselves so what I think we have a lot of help in all the helps welcomed by think before will know when everything's all done it will be the toward the end of the first quarter of you know twenty twenty one are thank you Mr. Represents Sorvillo you're recognized. Thank you. Mister Hudson what will be the recourse as you get those receipts in and they don't match up with the provisions of the money that had come out will there be what will be the recourse to those particular business is. What the first thing we're asking to do is to look at their other expenses and to see if they already have a qualifying expense they could substitute in. Ultimately we will need to know that they had a qualifying expense and if they did not they will have to repay the money because ultimately the state of Arkansas's accountable to the US treasury for properly spending that money and we we wanna make sure we get it back it was not properly sure do you do you feel course for talking about reputable D. businesses that if they did not meet that criteria do not have an alternate category that we're going to see then return that money. Your experience so far has been when a repayment has been required they've been by and large compliant and that and they return money as they needed to no doubt the circumstances are very difficult out there we want to use good judgment and how we have those conversations because we don't want to push any business over the edge and so will want to work with people as long as we long as we can to see if they can't get that problem fixed and then if they can get the problem fixed in the guidelines of the the treasury work out terms and repay it to us and so is there okay there actually be criminal findings in in this case if they didn't send the money back. You know I was gonna be careful about thirty criminal prosecution what really probably is a civil collection matter we have been very clear in the process that if we find evidence of fraud if there is deceit in the application process we will most certainly prosecute that but if if someone just made a mistake and folks under a lot of pressure right now will want to work with them and really get more so collection issue and not a prosecution age so the the money that we're talking about of course went to employers basically make sure that their business was clean and so forth that protected the other money which we've seen we talked I think the governor has talked about the some of the medical devices and so forth that. Obviously we had sufficient inventory. It is that is that like the ventilators and things of that nature had has money been in the PP has it continued to be spent in that direction I guess really what I'm looking at is to force the another event happening that we have the inventory to be able to react quickly. Sure adult dress that so this this is specifically to the business and then the needs that they have and in needed to have during their re opening OR you know it hearing to health department guidelines to be able to operates in a safe manner with regards to your medical supplies and devices I would certainly would want to speak for the department of health and how they've been awarded cares funds and have put as well as our department of emergency management to make sure we have that stockpile for that situation I know there's an additional two hundred fifty million dollars and cares funding that the care steering committee his set aside not to be utilized until October first in the committee will get back together and discuss that and there's multiple different options of of how that could go certainly if there's a resurgence in spiking cases it'll be something that will be need to be addressed by the committee if may add to that for for for the Speaker program where you see equipment being being purchased it be for things like a contactless payment systems and so seven handle Kasher some of them to sign and register other able to use contactless payment that will have a shelf life that goes in the future will benefit that business make that business more efficient and if there is another wave they'll be able to use that to help stay open in those circumstances okay now that the money the governor had told me that the I know that some of the colleges that receive funds the that I think half of it went to the college half that went to the student body but that that money was separate from great that's not part of this yeah okay thank you very much. The river is Smith you're recognized. Thank you Mr chair. With the three on related businesses that had the identical tax ID. That. Someone on your staff kind of work through and discovered that Was that a typographical error on the part of the applicant or was that. Some other issue that you discovered. MI clear yes Sir you are in to be honest in credit goes to a LA for that they're the ones who discovered that error we look at those businesses we make contact with those three businesses we can find no wait any those three business has had any connection to each other at all even knew each other you know what we believe is it was a system error of some sort of some undetermined calls like you because you're just a big crunch of traffic at that point so once we knew that the youth that the three businesses had distinct FBI hands or so street numbers in one case within five of those correct numbers war we provide those to a D. F. and A the F. A. ran them through their database they cleared so there was no issue with that they they were legitimate businesses they are eligible for the money and they got the money just tapping too fast may be or something I ons I don't think it was our fault I think it was a system anomaly of some sort and it is the only instance that we could detector that occurred and I think a LA did a terrific job describing already jewelry ninth anomaly I'll let them speak to that if I've misstated anything. Okay thank you Mr chair thank you panel. Thank you A I have a question on page this page eleven the report I don't know if you got it in front of the but up. It it's on the the time line of these notifications that was this is in the middle of that paragraph because one group of the mails that was sent to three hundred and thirty nine businesses owned by minorities disabled veterans and women to encourage them to apply for a grant I'm just curious where like where did that list. Of three hundred thirty nine people come from that I mean I'm sure there's more more minority owned that's a certified minority women on this it's a business list is maintained by our division of minority and women owned businesses okay why were the if I understand that route they were sent out at a time period when. The general public could not apply is that correct it was it was sent out in advance so the this was between the two when we first opened it up and then the second time after we came back to a LC LC appropriated additional funds and we specified the date and I guess was may the fourth or fifth when we open it back up in between that time we sent this communication out to make them aware of the program so based on the guidance from A. L. C. that a certain percentage needed to be for minority and women owned businesses we want to make sure we got that information out to much so as more information about how to apply what is it for okay okay thank you just just clarify on that too they did get a link to apply so that I think the point we did at that at that stage on that Wednesday was the plan was to give them the opportunity to apply we it shut down the system early because the number of applications but we felt like distant in terms of equities we already said we're going to communicate to me to fall through that we sever goes into the application we went ahead and did that knowing that we be able to segregate those applications and if the will the legislature wasn't to provide funding for them we know who we would exclude but what we didn't want to do is fail fall through on something we said we were going to do with okay so the first thing so you sent a link so they're able to apply when the general public was not well or or just the link when out and they could use that at a later date one of the they can apply that that evening there was this there's a different form stacked link that was opened up and and the results overwhelmingly show that a significant number of minority women owned and disabled veteran owned businesses obviously applied at the same time that the general public did starting five PM that evening that that list was just an additional initiative to make sure that we hit the percentages. Of minority women owned and disabled veteran owned businesses so we we maintain that listed sector prestin mentioned in our minority women owned business division of certified businesses that that meet that criteria so it was just an added an additional initiative to give them the opportunity to submit that evening if they had not already Then on the link when the general public had the opportunity to so just I'm sorry I might be going over plug grammar just for my clarity. The link that went out in that group of three hundred thirty nine emails they could apply and somebody was receiving that application ahead of the next round. Yes Sir it was it was the evening of the of April twenty ninth after we had shut down the initial link due to the the volume it was I think the time line indicates a little after six PM that that link was we shared with those three and thirty nine certified businesses okay and and a five again I don't on this trying to be sure that I have that analyst that came about. Because of discussions and I'll see about making sure that what you're test fund. It was I mean that group of emails went out because of discussions and Elsie. sessions and they'll see that occurred the following week as the following okay you know for purposes of us reaching out on April twenty ninth was just part of our mission we have the mission and eighty CD make sure that we're developing minority women owned businesses and so we want to have a target communicate communication effort to that community so that then an after thought I mean I had you that you look at who had applied and receive funds and then vote on a we're not serve in this population just wonder why that wooden that's part of the mission a wooden. Not on the front end I guess specifically targeting those people. Sure no we had not had the opportunity at that point to do the analysis of any percentage breakdown starting you know from five to about five forty five it was I would say if we were able to do this again we would have sent that link uniquely outreach to that group prior to that time so I would say yes Sir it was a bit of an afterthought an initiative to let's make sure that were giving our certified businesses this direct link in an opportunity to to make application if they haven't already okay thank the I just wanna play was after it was after that that we have the discussion Nailsea okay yes thank you that I like set up probably going or cloud plowed ground I just wanna be sure that I had cleared either looks like Senator hammer. You are recognized. Okay. Representative rye. Thank you chairman of Richard guys in the beginning divisional start out at thirty five million dollars. Was there not a figure in the beginning that was lower than one hundred million. Fifteen I think there was one yes Sir okay but basically what the problem was. This link that was established. Just and get it in they couldn't get in some of these folks did not work. They're not right some of these folks were having trouble getting get into the. The the lank with you guys we had some load issues yes Sir there's a lot of load on the website some posters from but after that occurred I think it was a little figure thank start at thirty five million then after Legislative Council may it. Then I figure go to one hundred million and then it was also inclusive of everyone that actually applied also went to a hundred hundred forty seven hundred abortion thank you chairman Richard. Are there any other questions from committee. All right seeing none we will consider this a review thank you gentlemen for being here today I appreciate it Sir. All right next the. That's all of a regular schedule business the next meeting of legislative joint auditing will be held on October eighth and ninth twenty twenty or at the call of the chairs is there any new business for members in these come before the committee. All right seeing none we will consider this journey.