Legislative Joint Auditing-State Agencies

Prepared to send them send him to the the collection for those other three years we just we're making sure the guide in somewhat are an except should be because it was discussed last month whether we should do that or not thank you thank you mister chair. Any other members have any other questions. That are nicky but just just one on there just one to make sure I understand when you're visiting to collection are you saying that you're going to put it on their credit report is as a collection or you actually send in it to a collection agency who then would uh could if they collect it will get part of this part of these phones is there a payment we we have a a third party collection to see that we already utilize for a lot of these loan programs. To be able to to track down when we don't have the contact information be able to mister the monthly payments to pay it back in will be sending to them to reach out and start collecting that thank you serve yourself. Represent relative. The. Thank you miss chairman just a thought I mean could that person still meet that commitment by coming back to arkansas and working for three years. The. It is is possible but we would have him on the we should have him on the loan repayment scheduled to be showing payment until he starts providing that information showing where he's worked for twelve months instead. He should be on the list being requested from that collection department to be paying it back until he's able to provide the documentation but my question is he has another option here that he could come back meet his commitment yes yes sir okay thank you and just follow that up this to them and that three for three years has been absent from the state. Yes sir as it has even making the payments or we just only know and then he he is still at this time still working in texas where he was at the time you send it in we we are just in those prior years we forgave three of his four years of loans without having proper documentation of him working in arkansas so is this an anomaly or what steps you taking to make sure yes it is an only it it happened in a time we had a lot of transition in the office and we've now had a some better training on the step that's there now for the past two years in some some additional steps for a review of any documentation that gets submitted. Okay all right uh senator pinzo recognized thank you. I i'm kind of curious the collection agency was mentioned that you've used in the past what what's the recovery percentage of. Historically that we actually get back by run to a collection agency I know they've get fees. So what what do we actually get it by it's not usually very good it's it's probably around five or ten percent of what we were send out to collect we receive back. From the students and a lot of times it's that we we don't have information good information to who even send it to not good address get contact to get the information to collect from how how many did you have any statistics on how many people. Uh use this program and then. Don't repay versus the ones that do repay and or and or work in the state at don't have that with me I can get that information for you to be curious to miss thank you yep. Just just one more and I understand you got to be you can't throw good money after bad you know in the end you get a letter worry about the bottom line but let me ask you this as your legal department had they looked at other ways possibly through the small claims pursuing a judgement or something that way so that. Cost of that tapilitigation you know matt the minuscule so that we could actually go ahead and get that attached to the m because. You know my experience in the past is always been that you know if you can get a judgment or something like that these individuals whenever they go try to buy a house reception to that nature is the face that title work in you know sometimes you can get it cleaned up. A whole lot easier that way so have you all done that or do you think that prison but you could look at it or we can we can look at it for the outer state since we haven't anything for it for other other loan programs for instance we do have the tax set off that we can submit students for recover their income tax returns. But we can look at that with the legal staff okay you know again I want to be the first to say that you have to have to kind of way everything but you know if they have a if they have a program that simple to do you know with hardly any court cost involved maybe we should look at that yeah so thank you. With that center hickey new one and further you want to take that off liner i'm not a member of the committee sir I can also merge that has come in here thank you. Then it is any other member agree with center hickey. Can emotion file the report without objection by their report. Thank you sir. Our next report is the archaeology educational television commission june thirty two thousand twenty two report. In this report contained two findings this report was deferred from our august meeting as one of the september meeting uh in september it was deferred because there were a lot of members that were here in the and they want to be available to be here to answer questions but we deferred it in august mainly because of finding number one. Which in finding them are one we selected tin vendors that were used by the act with transactions both above and below the twenty thousand our threshold for obtaining bids. And as you can see in the bullets our review revealed several things one that they were that they entered two agreements to procure good to service from two cuttings on by the same person. And if they'd used one vendor it would have exceeded the bid limit. They also regularly informed interest how much they would pay for good to services. They made numerous person numerous persons just below the twenty thousand authorities for painting bids. They regularly paid for a portion of good deserts that before they were obtained. And they often execute a internally generate scope of work agreement with vendors instead of a purchase order therefore goods and services may have been prepared before purchased or recreated mister that could finding thank you for your get a atm staff. Or directors up here. If you it's just states your name and your role and I i'll give you a chance to make an opening statement for open up for questions. Yeah. Courtney pledge or director of arkansas PBS. Uhm. Really to say up front that. Compliance is very important to us and. We are. Based on this I mean we we welcome these conversations because you always can learn something there's there's always something to learn and we we are working to roll out a procurement training for every single one of our employees. And strengthen our internal controls. Moving forward for just to reiterate uhm the business of compliances very very important to the same. Thank you for that there's any member of a question. Senator rice. Thank you. Conduct that ahead and II don't know about it. But they haven't followed be. That we talked about one of my questions before is. Why these came in right under the twenty thousand. Ah. I had a report from a call that. Said. Some over more put off to the time it was. Or urgent. That the time had to be met. And there was. An additional forget the term but. Some of the contracts were. Paid at a higher rate. Express anything on. That some of the contracts because the education. Uh link. They ended up may have been twenty five thousand were normally they would have been. Made to be under twenty thous. I think i've got a colleague I don't know that. Representative order. Is there anything anything that. Department can. Comment on that. Karen watkins cfo i'm not sure I understand your question could you repeat. Some what I was told is sometimes vendors possibly were towed. To be at under twenty thousand. Got done because of the term. Critical part of it. It was adjusted up to a higher. Change over yes. Live you've seen anything like that again I know you weren't there then. Well I think the what my observation is that there is a need for some procurement training within their agency so we're working on rolling that out. I'm looking for things beyond procurement training that we people that don't have it needed that people that know it and try to go around it is what i'm asking but. The. Whatever I get you come in on. I mean I cannot be in every single. Room at every moment even though I believe he had asked they would like to be but i'm saying if there's a pattern III do not believe there's a pattern. Representative of order. You recognized. Thank you mister I think my questions more for the audit staff so maybe the auditor that conducted this and. But reading the findings it says on multiple occasions ages the entered in an agreements to procure goods and services from two companies owned by the same person so I think my questions more on the lines with sender rice. It was it was there a pattern here to make sure the business went to that single person and then were there a minutes that he's contracts at later dates that carried them above the twenty thousand threshold and I don't see that here but I think that was a story that. I was told as well. A lot on that first bullet that one for sure was we looked at sector states records on that in it was the same company same owners. And so that one we thought definitely was a violation of state law because it was. Using two can't be done by the same person to do the business. I don't recall that we saw any change orders for those transactions that were like that they were below that the bid threshold but if they had done with one company they would have been above that threshold so so none of these that were looked at other ten vendors amended in over the twenty thousand after the fact as a procurement. We don't recall there being one guy. It can agency answer that or any of these contracts amended at a later time that brought a man above the twenty thousand or three so not to my knowledge. Okay. Can you look at that and report that back to audit before tomorrow. Because he here's what I don't see happen two years ago achieved review and we rewrote all the picture laws of the state um. And. Myself a number of members some of mendous room. We we did we did what we thought we did to make sure that you couldn't escape review by by putting those amendments on it later time and when looking at your report at first glance two months ago. There was a loophole in its being closed I mean we we have language to put on peculiar law in the physical session to close that loophole. But you could escape review had you a new say the contract under twenty and then amended it above at a later time and and I don't want any agency doing that I think that that escape and the public I were the public dollars and now but that that concerned me a lot when I read this two months ago and that was one of the reasons I made the motion to to divert this to we could all be in the room because I want to know if that's what was taken place here. I'll definitely look at that this afternoon and submit that information there were only. Twenty six contracts from fiscal year twenty two that met the fifty thousand dollar review threshold and the majority of them or for the tower expansion project that was managed through division of building authority so they would have had a lot of scrutiny and then there were two tower leases as well that are also managed under the division in building authority so. You know if that happened it could only have happened with um. Twelve contracts. Uhm. Then i'll look at those okay I haven't noticed anything like that going on thank you thank you mister chair he represented gonzalez you recognized. Thing was share the question for a staff brought the two that the two companies that owned by the same person where those two companies created at the same time or did it appear that one had been created later to maybe circumvent the. The. Statutory requirements are based on our procedures one was created very close to when it was the good service were procured one was later than the first one. Okay so to the agency where we're you'd all aware was there any communication there with this company with this business owner that said hey if you do this with the second company we can we can split this up into two different contracts and keep it under the twenty thousand dollars for each. Not to my knowledge and I have talked to education because that's the department that. Probably this. And this seems kind of fishy would you agree that that seemed which you know it's the way that. As far as as we know it's how they have set up their company to do different types of services. There but they just happened to set it up at the time when your request and a contract that would have gone over the twenty thousand dollar limit. Apparently but it's not to our knowledge where there seems to be lots of coincidences here. Yeah. Is any other remember have any questions. Senator doc. Thank you mister chair and i'm not sure if this is for the agency for staff but on on this particular vendor that. Is the same owner of two different things where the service is the same that were precured or were they different services. That were procured at different times. What I was told was that one company rants equipment and the other company provides services to operate the equipment because the operation of that equipment requires certification not just anyone can operate and regarding whether you know the agency was aware of anything beyond their I don't know but it was the same equipment being operated by someone for the same project. It was for a project that required equipment and services to operate the equipment into one and so it should have been on the same procurement. It. It well the threshold should have been applied regardless of whether it was one p o or two thank you. Yeah. Represented you have another question yeah do so you said when you sit down at first that compliances is a big issue you know you want to be be comply so II can assume I say it may say that that we're not going to see any of these same findings coming in on your next audit report. The. Just to remind you we had clean article twenty twenty twenty twenty one there is a bit of overlap. In the timing which may be you can explain that the the dates of the final added some of these the number of under twenty transactions. They. We didn't receive the art at findings until we were so we were continuing on with that project so to be honest there may be some findings that fall under some of these same but they were but that with that but we didn't receive our actual audit until. A pass that time is does that make sense yeah I hear what you're saying so but never went in the future no I mean from the point of which we know this absolutely not you will not see them so how long have this been going on before before you call it or did your catch it. Or did you know what was happening until audit caught called it i'm talking about all these services provided under the twenty thousand dollars limit that it seems like telling these contractors how if you keep it under twenty thousand dollars we can give you the contract without putting up out forbid. I don't believe we were having that conversation with people. It's far as. Prior staff in the physical division we were advised that if if a transaction was under twenty legitimately under twenty that that it was fine to do now that we see the perception is is different we will be very cautious associated the agency regularly informed vendors how much they would pay for goods and services. And that's what i'm talking about how long did that happen before your your card or did audit gets that and make you. Uh. Yeah. I believe audit raised the issue to the agency and then. The. This year when we had additional projects. Come through. There I observed uh an existing agency process whereby there would be a scope of work. And on that scope of work they'd put a budget number. And I think it was really inadvert I don't think the agency was trying to give out. An amount to eventually to say be sure to keep it below this amount I think it was truly ignorance on the part of some of the procurement well not procurement staff there's only one official procurement person at the agency so a lot of employees do procurement work out in the uhm. Functional areas and they have not been well trained so you know we were developed the agency would develop a budget. And for certain services in then on this scope of work for a vendor they would put the budget on there and to me it's just an obviously thing that that you would never include. On a scope of work to even but not everyone is financially minded in an agency um or you know not everyone is good it contract negotiation and they're really focused on creative. Uhm output. And creative processes and so this is one of the areas that we're going to address is just some general financial. Knowledge across the agency so that people do understand rules and regulations procurement law and. Just standard business practices that ensure that the state gets. The most bang for the book. The same like they revere creative and finding ways to get around procurement law we heard about two lawsuits or possible pending lawsuits the last meeting that we had and actually heard this do we know the status of those lawsuits now. Was part of the reason we deferred this to start with. There is a there is a lawsuit still pending in the court the agencies represented by the ages office but there's there's only one not too and it's not related to procurement it's related to a personnel matter. The. Perps aboard law who are connected someone go back to this study limit as we'll make sure that i've got it correct in my head. If you're looking at page five of the report the first bullet point one I quoted while I go those two companies didn't did not bid for the same contract correct. There were not bids taken for that because they were below the bid threshold thank you so what I thought so i'm going go down to agency response now it looks like in from the information you've given us the possibly the second company was formed to keep it under the twenty thousand is that the thinking from audit when this was written. The regular sector section that company be informed eight days before that procurement thank you. It doesn't look good okay when you've got one guy though I was. And I mean just read the the bottom statement staff but here the agency circumvented and violated aspects of procurement law and partnered indifference to select procurement accounting rules and the need to produce a hundred hours of a new content you know. I will say II like getter done attitudes and you made a comment that you're going to increase training and make sure people understand that you know what the walls are is there any steps you're taking towards discipline to break the habits because obviously if it happened watson it may overlap into the next cycle which means we'll see it again what displanary actually able to take cares and we're just audit you know we could probably recommend it but probably know that's going to happen so what would you do. So we've added one additional. Fiscal staff member to address kind of volume issues that we're having and we've had. We have nine total fiscal and hr staff members five or new. So there's already been turnover. And in the agency initiated. That turnover in the fiscal division to correct these issues. To the other member have any for the questions. Alright see no without objection will file this report. File. The last report we have today with findings of the department of labor and licensing june thirty two thousand twenty two report and this report contains four findings. The first finding during our analysis of miles reimburses we know to one employee with reimbursements towing over fifty seven hundred dollars an increase of over forty six hundred dollars from the prior year. Upon review of that employees t r one force for fiscal year twenty two we discovered that the miles between destinations was calculated incorrectly on server forms resulting in overpayments tolding over four hundred dollars. Additional rear travel forms revealed another employee was out were paid for military embarrassments tolling thirty nine dollars because of former air. The second finding arkansas code requires an academic department director or division director state government a chief of staff or chief deputy of a constitutional officer. And a public appointee to estate border commission to follow a written statement of financial inches with the sector of state by january thirty first of each year. Our review that our review revealed that of one hundred and eighty five individual required to follow statement sixty nine failed to do so. And you can see a summary of those that fail to do so in that table in that fine. The third finding. Seven business series of the department overhead fifty three employees who earned over thirteen hundred hours of of compensatory time for fiscal year two thousand twenty two. As you can see in the table of that finding. Also personal management policy and the exists internal party state that compensatory time may only be earned with prior approval from the employee supervisor for a legitimate business purpose. OPM policy also requires complete knackered records to be maintained for cop time earned and used. Our review real that prior documented approval could not be provided for several employees who were awarded confidence to return. We also noted several small airs in the recording and awarding a company story time further details of these deficiencies are included in those various bullets of that fine. And the last finding finding for opn policy outlines the requirements for leave payouts for state employees at separating employment. Our review payouts revealed. That at the division of labor one employee was overpaid two hundred and ten dollars an annually. At the workers compensation commission one employee submitted paperwork to take two weeks of annually prior to their actual retirement date. Because the action incorrectly enter the retirement date the employer was not paid for the eighty eight hours of annually taken between the last day of work in the actual retirement day. And in addition the same employee was not compensated for an additional thirty nine and a half hours of annually in eight hours of birthday leave. So a toll of almost forty five hundred hours to do that employee. And then annually pay out towing four hundred and thirty five dollars and a hundred and thirty seven dollars respectively we're not paid for two additional employees. Mister chair that concludes the findings thank you for get the department personnel up. Secretary bass it. It's a chairman dare about set secretary labor in a licensing. Okay what what i'd like to do just take these finding by finding starting which is finding one um. And ask me any member has any questions regarding finding number of one. Senator repeating thank you mister chair. I understand how clear coyers happen and you know miscalculate miles or something. I make concern is an adult audit. Would have followed the trail but um. Why did you have a. Third four hundred percent increase in in that travel expense though. I went from forty six hundred and fifty seven hundred yes first of all and I appreciate your indulgence there is no excuse for the mistake that was miscalculated whether it's two thousand dollars or four hundred dollars in this case which is simply made a mistake the line supervisor the initial supervisor simply made a mistake in calculating that that t r one form what we did was we have been and we wouldn't have known that but for legislative audit or we've done now is created two tier system not just the front line supervisor looks at the t r one but we've also designated travel supervisors who are now reviewing the director's approval of those trips now the second question are is really function of transformation mister paten this individual had a company car. Are as she started off we inherited age back from the health department and so her travel was dominics I mean you know she just wasn't charging that much but then the health department wanted their car back and so we took her car and so then she had to start using her personal car and so then naturally her miles that's why when emphasised the so there was a legitimate change that justified the increase yes sir thank you thank last year and goster company car. Is any other member have any questions for finding one. See none of the board of finding two with the statement financial interests. The new member have a question regarding this finding. I guess question I would have is looking at your response. The. Could you go over how you're gonna manage this II understand that sixty five and sixty nine of these deal with the boards and commissions well we just have to do a better job at orientation we we talked to our new board members as they come in we've got twenty one different new boards under our our department now. And we try to do a very comprehensive job of orienting our boards and new board members obviously we can do as good a job as we thought we had because we had a number of these individuals who just didn't think to do a financial statement. We are. Looking at that we had one hundred percent participation of everyone within the agency but our boards we just have to do a better job of inf. Has anybody heard of any any questions for finding two. Okay moving over to finding three at a question for home representative board ball. It's good to see sector yes looking through our paid eleven and and I don't know if you're hand out the same czars but. More to collections looks like one employee earned forty seven hours of. Of time it but the agency could only prove for five minutes seems like a huge disparency there uhm it looks like that cannot follow suit through the rest the agencies there's not as big a disparacy but there are disperances through the different boards. Can you talk as though in our and a rego agency responds but can you talk as through how. I guess similar to sender brought's question how you going to manage that to make sure that we can account for those hours correctly yes sir and what we're just going to quote frankly clamped down on those divisions they've been accustomed to to just operating independently without much supervision and quite frankly when we went through transformation we were a little too lenient on that on that case that we were concentrating primarily on other financial matters and not necessarily the car time issue it came delight as our origin was talking to me about it quite frankly we had been concentrating on other things we're not doing that anymore since we're past the big financial hurdles in the department and so now we're looking at it uh it come time issues they will not be to our employees will not be taking care of time until they've exhausted all of their personal lead in the past they were basically taking you know it with it will in alley that's not the case anymore and so that's the major way we're going to go on a clamp down on it and then clearly are obviously we need to do a little bit better job of orienting the employees that are outside of the building in these twenty one different entities we can always do a better job but that's how we're going to put a clamp on work on court calm time and if you look at our current figures you'll see department wide we just don't have many people who can time anymore because before they take sick or anything else they're taking their car time. But we wouldn't have known about the severity of their problem but for one of the leg audit auditors bringing it to our attention I think my following question is for the on it team have we seen a history of these type findings with these boards and commissions in the past we did not notice this in the past I can't recall that we had a finding on this in the past we there may be some small issues there with in the past but not big enough that we that we had but felt we need a reportable finding thank you. Question i'd have looking down at like the athletic commission does the asus. The system used a calculator to record time. The other an approval process because it looks like a. Employee locked sixteen hours manually which obviously took eight hours to leave and it kicked eight hours over camp time is this is a supervisor to look at that on a weekly basis for it he is now missed by since the authority brought it to our attention absolutely. Absolutely and I had a private conversation with the chairman of that board as well and that particular instance and so I can assure you that will never happen again. Is it do you know if that time and accounting software does it flag that. Well he is sir it does but we you know we've got to actually it flags it in a way but. We have to be monitoring it. On a monthly basis we just can't just take for granted that is going to get caught we we've got to have someone that's following up on these and following up on these consistently and reporting issues as they discover them are in that particular case we do not we had a director that was operating in a way that wasn't responsible II have every confidence that that particular director understands his responsibility going forward. Alright thank you so many other memories of questions for fighting three. They will move on to finding looks like the last last five finding four. Is anybody every questions for finding number four. All right see none thank you secretary percent thank you sir. That being said if uh without objection we will file this report.