Legislative Joint Auditing-Educational Institutions

An off. The ladies and gentleman. With let's get started we haven't signed in. Remember to do that. Of. Retain a motion to adopt the first of all I'm sorry Mr Pitsch you have in the okay. Of B. had adoption the minutes of September eleventh. Two thousand twenty meeting. Entertain a motion. To heal. Second Spencer thank you. All those in favor of the motion say aye. Oppose. Motion carried. see review Of report Mr date. yes thank you Mr chair today we have fifty seven educational audit reports for the fiscal year nineteen to review with eighteen of those reports with findings. again like we did in September meeting we limited the number of people in the committee room so there's no entity officials invited Our current committee guidelines is to invite an entity officials for deferred audit reports reports with repeat findings and reports of school districts currently classified as physical distress. We didn't have any deferred audit reports force from September our September meeting or have any reports for school districts in physical distress. We do we do have one report with repeat findings however this relates to an open enrollment charter school that two thousand nineteen was actually their last year of operation because there charter was transferred and we will get to that report later. The first audit report that we have is one that was referred to the bond board and to the local prosecuting attorney as well the first finding and I'm going to just summarize the the finding so we can keep on time since we only have an hour and a half before time slot. The first finding had to do with unaccounted for funds of eight hundred forty dollars this related to athletic gate money. Of finding to was in misstatement in the school district's financial statements they didn't record interest earned on a certificate of deposit in their capital projects fund. eight. Are there any questions. If none of their time motion to file report. Mr Hawke's second. Mr page all those in favor of the motion say aye. Opposed. Motion carries. Next wound. The next order report is national park college they had two findings the first finding was a misstatement in their financial statements it did not have an affect on their net position it was a a scholarship allowance calculations that's recorded on their income statement and they left out of financial aid code to grab all those allowances that's post re recorded so it was a net effect on income statements therefore did not have in a an effect on their net position the second finding had to do with a on authorized withdrawals from their bank account they had eleven thousand four hundred ninety three dollars a fraudulent withdrawals they discovered that withdraws a college personnel did and the bank reverse the charges so there was no loss to the college. Are there any questions. If not entertain a motion to file reports. Mr hill second the. Mr hawks. All those in favor of the motion say aye. Opposed motion carries. The next audit is northwest Arkansas community college they had one finding it also was a fraudulent transaction where employees direct deposit payroll direct deposit was diverted to another bank account because of a because of perpetrator hacked into the individual's email account and sent forms to change at bank bank account information. They were not unable to recover the funds there so there was a loss to the College of twenty five a little over twenty five hundred dollars. Are there any questions. If not. The motion to file the report. To heal Mister hall. All those in favor of the motion say aye. Opposed motion carried. Our next order report referred to the PA is cave city school district they had one finding it was an ethics finding dealing with a board member whose wife served as president of the bank they did business with send send the school has responded that they adopted a resolution and sent that department of a for their approved for consideration. Eight questions. If not. There's a motion to. The follower port. Mr Houghton. Need a second. Mr page all those in favor of the motion say aye. Opposed motion carried. I'm sorry he's in school district a Perry County they had one finding it also was an ethics finding they have three district employees that do a lawn care service business. This district had previously got that approved through department of ed but they that expired on one six of thirty June thirtieth two thousand eighteen and I just did not get that a a renewed so since that time the district responded that they have sought approval from the department on that and we'll. In future years as well. Okay are there any questions. See no questions or to a motion to file a report. Mister Smith. Mister fields thank you. All those in favor of the motion say aye. Opposed. Motion carried. Our next next audit is Hector school district of Polk County they have three houses on campus and the layout to employees and a non employee which was there us research. resource officer that work for the town of planes are the town of Hector I'm sorry so They did not issue. The proper are is forms to report that is income and then they also allow these individual they also allows the utilities to stay in a school ninety and still happening individuals transferred into their nine. So that's against public purpose doctor because they're it basically doing an accommodation purchase and ended in the school. And then the school responded that they're making corrective action on that the reissuing working with the CPI to issue the proper forms and getting the utility switched into the proper individuals names. Or the request. So the. Or you know Michelle. It shouldn't take too long yeah I actually we did this I don't have the date here. but I don't think it would take very long so they should have already had that taken care of I can follow up on that if you want me to to see. Right. You're welcome. three questions the more other questions if not entertain a motion to follow report. Mister Dotson. Second. Mr speech all the fiber the motion say aye. Opposed motion carried. Senate yes the next school district is Kirby school district a Pike County they had one finding it was again and on authorized withdrawal of twenty two hundred dollars made from their bank account. the district discovered it when they were doing their normal bank procedures and they recover the money from the bank. The questions. Your data motion to follow report. Mister Schmidt. After all all those in favor of the motion say aye. Close motion carried thank you. The next report mammoth spring school district of Fulton County again we have a fraudulent check that was is actually mail to the internet it was intercepted and they change the name to an individual the name and cash the check for sixty six hundred dollars and the phone but the funds were recover from the bank so there was no loss to the school. Any questions. If not entertain a motion to follow report. Mr hill second Mister Smith. All those in favor of the motion say aye. Opposed. Motion carried. And now we go to mineral springs school district of Howard County they had three findings the first finding had to do with their disaster recovery plan it was not adequate To restore from short term or long term interruptions a computer process processing they responded that they will it here to the information system best practices so we'll look at that again in our next audit the second finding is what was referred to the prosecuting attorney we did a review of credit card charges and it was forty four forty eight hundred dollars worth of improper disbursement and they're listed there In the district policy requires purchase orders and advanced approval of all travel so there was some Some procedures is that was that was not followed in there for that transactions. And finding three we did a sample of a payroll expenditures and the real three employees that were over paid due to clerical errors in calculating their. monthly salary payments. And that's it for mineral springs. Okay entertain a motion to file a report. Mister Smith. Mystery will second all those in favor of the motion say a. Oppose. Motion carried. Well Sir. Yes southside school district independence county. Ski speaks. Of the they had to findings the first binding with an ethics finding again they had previously approved that but it it the one that they have on file had expired on December thirty first two thousand eighteen they responded that they have been in touch with the department of a and and approval has been granted and it's effective until June thirtieth of twenty one for those transactions and finding one. Finding to we have a constitutionally suspect of finding dealing with chamber of commerce dues and to dues to another nonprofit organization Again these are constitutionally suspect so we've referred that to the prosecuting attorney. Southside. Okay here the. Are there any questions. Seeing none earlier to a motion to file a report. Mr Haupt the second please. Mister Smith thank you all those in favor of the motion say aye. All those opposed. Motion carried. And our final audit report that was referred to the prosecutor is Wilbur D. mills cooperative White County there was four five hundred fifty four dollars founder of an allowable expenses related to travel. And additionally we question thirty six hundred dollars will of expenses for conference registration airfare hotels meals mainly because that person failed to follow the vendors requirements to scan the conference badge at the conference so we were unable to verify the if the employee actually attended the conference. included in that and this is what reason we question it because they had a fifty nine dollar transportation fee to a theme park during the conference hours. And that's the funding for Wilbur D. mills okay. Of. Six. She twenty eight is your mock on. That's may. You know in twenty second actually first I have a question on the previous one while ago. Own up going back to two chambers. Yes one of yes I want by the trade would we discussed that last year about school districts nine a table with the chamber of commerce because they're all part of the community what in which they were going check into some type of. Not being reported for doing that. A book out because they are part of the community Mr fish you member that conversation we had last year. It vaguely room or call something but I don't think we ever solved it did we Mr nine. No we did not of the problem is that the there's no direct school benefit sorry direct school benefit so that's why it's constitutionally suspect according to that AG's opinion. I think that's what happened is they went to an eighties opinion is that now that doesn't benefits school so okay thank you. Thanks seeing no. Other questions. entertain a motion to follow report. Mr hill. The second please. Mr speech. All those in favor of the motion say aye. Opposed motion carried. Russian eight and I was the last order Wilbur mills co op our next section E. is report with repeat findings again I mentioned earlier that we had one entity with repeat findings and this is Ozark Montessori academy which was a charter school. Both of their findings are repeats and it was just similar situations in the previous years the first finding was a repeat for the previous three audits and the second finding was read repeat for the previous two audits. On this one day have the charter has been transferred to lease academy so this school is no longer in operations as of July first two thousand nineteen for this current school year they are part Part of Lisa academy. We still the file yes. They're to a motion filed a report. Mr he'll. Second. Mister hall all those in favor of the motion say aye. Oppose motion carries. Our next few pages is our special report that we performed on Henderson state university with the financial aid office. And in your synopsis you'll notice that I summarized included summarization of of. Why we did this and also before each finding because there are fifteen findings. Dealing with federal regulations and university policy I summarized what what that regulation or policy should be in and then the finding indicates what what didn't happen so hopefully that explains everything I don't want to go over every finding on that issue unless you want me to I will just add that this was in addition to the audit reports for two thousand eighteen in two thousand nineteen that we examined in January and February of the full audit committee. In February that was a door that was referred to the joint performance review committee and they had some meetings on that in may and June. A we just received notice that to JT JP our committee has finished their review of that day with a letter dated October first two they are audit chairs. And that in our recommendation is that no further action and need to be taken and to file reports that is going to be taken up at the meeting following this meeting at the executive committee meeting. So I'll be glad to answer any questions on that but hopefully out all the things are explained in the for the fifteen findings and I add to that the did that the university responded and they concurred with all the findings and they've implemented all the corrective that have implemented corrective action to solve the issues. Miss Chesterfield. I think he's basically answered it because of what I'm interested in are they making progress toward getting where they need to be in the opinion of the auditor. Yes we were when we were finishing up they were making changes why we were still doing procedures for the US and then of course we'll go back Henderson is scheduled to have a student financial aid all would AT T. for this as part of the statewide single on it so we'll be looking at this there was items again during that let's. I'm sorry but they have made significant progress with some of the things that some of the banks were in progress so Wilson Wilson we'll check on some of that when we do the twenty review of those transaction alright thank you so much thank you welcome. Represented dozens G.. Thank you Mr chair I just. Saw some folks in the audience Aaron's one to see if they had anything they want to add to this the I know they've had a lot of opportunity to testify over the months but they want to give any update on this if with tears permission I wouldn't mind hearing from. State your name for the record please in. You're free to make a comment thank you Mr chairman Chuck wells present the Arkansas state university system and I have with me today Dr Jim Borsig who is the new interim chancellor of Henderson state university represent does not know whether the thank you or not but I think I will so what I do appreciate the opportunity to speak to that I think that's important so and maybe give you a little bit of background let me let me start by saying that. I want to thank. Patrick and and his team out of this is a long process much of it was because Henderson simply wasn't in a position at some of that time to get on the information that they needed but they did conduct a very thorough review of course this was in FY eighteen and nineteen audit of financial aid and on July twenty ninth two thousand nineteen is when the a issue system officially became a part of working with Henderson two days later we moved financial laid out from under the financial financing administration's about repel who you've heard from before was actually the ultimate supervisor financial aid we moved that to student affairs which is really where it's more commonly situated and we did that because financially was one of the very first things we recognized as a challenge that needed to be addressed and and fixed in fact I think you have heard me say in here before that the first week that we got engaged with Henderson I have over this was the first week of August I'm schools about the start and I had over a thousand financial aid verifications pending our campus to Jones broad fourteen pending at that same time so obviously there were some serious issues there Most of those issues war. Poor staff training. People that work qualified really quite frankly to be doing the job there were some system problems in terms of the of software package that they were using to do it and and then just you know just really competence if we want to be very Frank about that today there's one staff member remaining in financial aid that was there during this time period and that individual had been there about two months so they were really but not even they were brand new so would completely turned over the staff we brought in outside consultants to assist and I don't like to do that but we really don't have a choice at this point we came in and it's a group called pro ed they typically step in and handle the help with these kinds of situations the first individual that came in was a retired financial aid director from Virginia Tech university the next individual came and it helps actually been doing this for about ten years we've hired a new director of financial aid who came from the Arkansas department of higher education is very experienced and we have engaged in significant training for these individuals now I'll be honest with you doctor Borsig and I will we saw all these findings were elated even though there were fifteen findings we related because one there was no for all which obviously we had been so we did not and wanted to make sure up its second because most of it was process and procedure things that as as Mr new said we are have fix the vast majority of and if it's not completely fixed it's definitely in process to do so we brought in our age you jumper financial aid staff to assist and they were very helpful in changing some of the policies and procedures and we're now in the process of moving to an entirely new financially software system that will take away a lot of the manual problems which can also create some of these air so we feel very good about where we are right now we are having timely financial aid processing that's going on we're not seeing the number of heirs we've got competence. After now that's well trained and and I feel much more comfortable that that we're gonna be able to move forward but I appreciate the opportunity that forces you want to add anything to that. I don't I don't think I have very much to add I just would echo from my experience first thank you for letting me be here my first day on the job was July twenty seventh and so I'm not quite at the three month mark but when I saw these findings and this is one of the first things I got involved with once I arrived in Arkadelphia it's clearly about training it's clearly about improving the software and I've got confidence because we talk about these issues weekly and and I've got confidence in the staff and I've got confidence in the leadership the doctor Patterson has brought to addressing these issues and so that's really all that I have to add we're taking it we're we're taking this very seriously and we're gonna get work what's not fix is going to be fixed and once we have the new banner software a lot of things will be automated that will prevent us from from entering into some of the possibilities were human error can enter into it so with that I'll be quiet but I'm glad to be here thank you. Stop. Thank you Mr chair and thank you for giving us that update I know I know I've I've the. Been a source of pain in in the past and I just want to take the opportunity to commend you for the hard work you've put into trying to bring this back and I know you still got a long road ahead and I imagine that will be having other meetings and opportunities but at this moment time I just want to say thank you for the diligence and hard working commend you for a job well done at least to this point so thank you thank you and and I really do appreciate represent us you allow us to to speak to it because I do think it's important that this body has a renewed sense of confidence and what's going on at the institution the things that are are being changed because we certainly are are working very hard to do that and and doctor Borsig although he's a Mississippian we won't hold that against him too long it has a extraordinary track record and quickly working with institutions that have faced similar challenges so I'm very pleased to have him and I think you'll you'll be pleased at what you see moving forward as well thank you. Okay thank you for your comments thank you One more. Drill. Well I know you're looking for the future with this past behind you poured with that being said I make a motion thank you. Thank you all right of the motion to thank you for your comments we appreciate you being here. Of your motion to the of follow report. Abbas Mister Dotson second all those in favor of the motion say aye. Opposed motion carries thank you. Yesterday. Okay our next section and is report with findings they're not repaid save more referred to the PA and we have five audit reports in that section been school district It has to do with time certifications there for other finding and that's a federal regulation although they fill out time sheets they also have to certify that they work that percentage of time in a federal program or or other multiple over other programs excuse me. And that's been school district. A motion to file the written report. Mister hall. Second Mister hill all those in favor of the motion say I'll. Pose. Motion carried. The the next school district has fired bill school district they had two findings and both of them had to do with time certifications the first one where they work completed or rear income incorrectly completed and finding two was just that the director of the title one and the school the school lunch program school breakfast program. The director field apt filled out of time certification but she also approved or he or she approve that as well so that's just A control issue there that they will they day said they will correct. Negative for failed bill okay. With hello CD questions is there a. Motion to file the report. Mr he'll second Mister Pitsch thank you all those in favor of the motion say aye. Close motion carried. Of the next report is kept delta public school Phillips county they had two findings the first finding Date incorrectly calculated their indirect cost. Amount that we should have been transferred to the operating fund they were using budgeted expenditures which we see common sometimes I just forget that use the actual expenditures when calculating that and the second finding had to do with the legal balance wall they were twenty two percent which I should be twenty percent of the legal balance so according to all they have to there's there's options that jobs probably know to transfer to that to the building fund to be used for specific projects for reduce that over a five year period. And that's the findings forget delta. So you know questions entertain a motion filed a report. Mr page. Second second Mister Dotson all those in favor of the motion say aye. Oppose motion carried. The next report is main a school district they had one finding it had to do with an allowable costs paid from the title one program these costs deal with safety and security systems for the campus wide and we confirm with eighty that that would be on an allowable calls for the title one program. Say no questions entertain a motion Mister Dotson follow report. Mr he'll second all those in favor of the motion say aye. Opposed motion carried. And then the last report with findings is C. O. a school district. they had a finding recruit re regarding their disaster recovery plan for computer operations in this case they just didn't test there sit tester plan to make sure he would adequately work during a disaster. So you know question dear Jane motion to follow report Mister hill. Second Mister Smith all those in favor of the. Ocean say aye. Opposed motion carried. And then our last section which is on the last page is audit reports with no findings there's some higher it's charter schools and school districts in Natalie est there's thirty nine total and they had no findings for the fiscal year two thousand nineteen. And we can re approve those in mass but these than Prue mall there's no questions on any of them motion by Mister hill to the. Follows these reporters. The ministers of second all those in favor of the motion say aye. Opposed motion carried. Of Is there any new business but members. These to be brought up. If not of. This is the meeting is adjourned thank you for coming.