Legislative Joint Auditing-State Agencies
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Senator Joshua Bryant
Unverified
0:00
if you would members take take your seats i have to call this meeting to order y'all should have received the minutes from leg audits if i can get a motion to adopt got a motion can you get a second see in a second all those in favor say aye all right we'll
Speaker 4
0:25
adopt the minutes mr bullington thank you mr chair today we're presenting one deferred report and four current reports with findings the first report today is a department
Speaker 6
0:34
inspector general june 30 2021 report this report was deferred from the may meeting so that the ac staff could get additional detail on the checks for the fair housing commission that were not deposited timely. This was in regards to finding two in your packet. The AG provided scanned images of 50 checks that were supposedly located in the AG safe. We reviewed the list of checks that were not deposited timely and did not note any particular connection to the AG staff person who was responsible for putting the checks in the safe. And there's AG staff here if the committee has
Senator Jimmy Hickey, Jr
Unverified
1:06
any additional questions any committee have any questions for the ig i i don't i mean i think that was our was our goal from last time is is with the information that we received that uh we just thought that to do our due diligence that we need to go a little bit further appreciate leg audit looking into that to
make sure there was no uh connections or that it didn't appear that there was any connections so thank leg audit for that and thank
Senator Joshua Bryant
Unverified
1:34
the agency thank you senator hickey any other member have any questions all right without objection like to adopt that report
Speaker 5
1:39
seeing none report is adopted okay the next report with findings is the department of finance
Speaker 6
1:50
administration june 30 2021 report and this report contains three findings the first finding dfa notified us of the following shortages at the springdale revenue office deposits of 200 400 and $500 were missing during May, July, and August 2021, respectively. DFA's investigations were inconclusive due to a lack of security camera footage and witnesses to any potential theft.
On July 27, 2021, a $1,000 shortage was discovered during a routine recogitation at the Sheridan Revenue Office. DFA was unable to determine criminal intent by the custodian of the funds. However, this employee was moved to a different work location. and then a shortage of 360 was discovered at the ball knob revenue office on may 6 2022 based on dfa interviews with the employee involved in the transaction and the immediate supervisor criminal intent could not be established both individuals were given
the option to move work locations but instead resigned from employment in addition to the revenue office shortages an employee at the fort smith revenue office issued 160 driver's licenses without the proper documentation required for apparent personal gain. After being questioned by DFA, the employee acknowledged the offense and resigned from employment. DFA canceled the suspected driver's licenses and turned the case over to Fort Smith Homeland Security and the United States Attorney's Office. The former employee has been charged with honest service fraud and bringing in and harboring certain aliens. And this finding was referred to
prosecute an attorney. The second finding, the Racing Commission failed to deposit timely four checks tolling over $196,000, with one check remaining undeposited for over seven months. In addition, approved board meeting minutes were not available for review beyond the March 2020 meeting. And the third finding, according to capital asset guidelines, an agency may use their own system for tracking assets valued under $2,500 instead of using ACES. A review of the Office of Information Systems low-value database revealed that the database is not being maintained or
updated timely. Routine inventories by the agency were not conducted. There were 13 assets that were not properly recorded, and we chose 40 assets for observation, and there were four that could not be located. Mr. Chair, that concludes the findings for the Department of Finance Administration. Thank you. Can I get DF&A to the end of the table? if
Senator Joshua Bryant
Unverified
4:08
you would sir please state your name andy babbitt with dfa
Speaker 25
4:22
brian west with dfa thank you gentlemen members
Senator Joshua Bryant
Unverified
4:32
are there any any questions for dfna senator hickey yeah just
Senator Jimmy Hickey, Jr
Unverified
4:41
just the same i guess on the racing commission i have to ask that because last meeting we deferred for things for well deferred one because of the kind of the same type thing so mr babbitt what did y'all kind of delve into this and figure out why these
were being held uh is there any reason make sure
Speaker 30
5:03
there wasn't any uh unintended type consequences Yes, sir. Senator Hickey, this was
Speaker 32
5:08
during a period of time when we were working from home for COVID, and so these checks were stored in a safe, and when the employee returned, they were deposited then. There was no additional violations that we are aware of where we were not timely with depositing checks after this period, and we have taken action to make sure that that
Senator Jimmy Hickey, Jr
Unverified
5:36
within a day of receipt now okay were the four checks from
Speaker 39
5:54
type of relationships that we did y'all look into
Speaker 41
6:01
that that's a great question let me get smoky campbell with the racing commission okay And so they were all four from Oaklawn.
Senator Jimmy Hickey, Jr
Unverified
6:22
Okay. All right. Well, I'd like to say, fortunately, we've got that, I guess we've got that handled. I mean, because, you know, of course, there was lost interest on that or whatever there could have been for the four months. And those who were allowed to remain in that account were somebody else that may have had to pay the money. They didn't get to keep theirs that long. So anyway, again, I just felt
obligated since the last meeting, the same thing had happened. I think that we at least had to ask that question to get it a record. yes sir thank you senator rice do
Senator Terry Rice
Unverified
6:58
you have a question thank you on 160 driver's license
can you give a little bit
Speaker 46
7:03
more is there anything can be done other than it's just up to human judgment of how they want to do it
Speaker 48
7:15
or is there anything been changed good question there's there's really not any other checks that we can change as far as the documentation that's provided at the revenue office so we we accept the documentation that people bring in as valid and that it is a true legitimate document or a source of origin for
where the person is coming from and in this case it was it's very difficult to spot these and so whenever we see you know a certain number of you know illegal immigrant case the save case that gets executed whenever we see those we we start monitoring those with our dfa police to make sure you know that the surge in volume matches or warrants the requests that are being sent through okay thank you quick question
Senator Joshua Bryant
Unverified
8:04
follow up on that is how long was that employee employed
was that 160 licenses but over like a five-year period over
Speaker 47
8:13
a short time period thank you that's a good question. No, it was a very short term. I
Speaker 50
8:19
think it's about seven months is what the police officers told me the
Representative Marcus E. Richmond
Unverified
8:28
month period. Okay. Thank you. Representative Richmond. Thank you, Mr. Chair. As far as in the office itself where these licenses were issued, was this revealed by another employee or supervisor? What was the role
of whoever's in charge in that particular revenue office when this was going on? How did they discover it? How was it reported? Was it joint audit that found it, or was it somebody in the office
Speaker 48
8:59
said, hey, this doesn't look right? Good question. Thank you. Normally, whenever driver's licenses get requested, if it's a person that has an H-2A or if they're coming into the state of Arkansas just to simply work,
we have to run them through a federal system. And the federal system process, it necessitates the office manager to get in touch with the district manager of that area to account for every request that is sent through the federal system. And for this specific instance, the office manager had noticed an influx or a surge of this one specific employee doing X number of requests per day,
and that tipped our police officers off here in Little Rock, and they began the investigation thereafter. All right,
Senator Joshua Bryant
Unverified
9:57
thank you. Thank you, Mr. Chair. Any other members? I've got a couple questions just to follow up on the revenue offices. Is there a daily reconciliation process at each
Speaker 48
10:10
of the facilities? please yes thank you senator bryant yes sir there is there's a midday reconciliation that's done every day around noon for every person that has an open and active cash drawer and then there's
also one that's done to close out in the evening time before they go home okay
Senator Joshua Bryant
Unverified
10:27
thank you and then going over into and defining two with the racing commission i noticed it said all the agency's response was all previous commission minutes will be reviewed and approved in the october 2022 commission meeting and posted on the commission's website i know so the website's maintained through dfna's main site but i didn't see any link for any meeting minutes is it are those posted and online and available they're all up to date they've been approved by commission they're all
Speaker 32
11:02
um yes as mr campbell was saying they have not been posted yet to my knowledge but they have been all uh transcribed and approved by the board and it's a it's a little bit of a process to get them up on our website but we'll work to get that done is
Senator Joshua Bryant
Unverified
11:19
that a member of your team that reaches out to the racing commission to post those or is
Speaker 32
11:25
that done internally at the racing commission the racing commission has access to um to uh taylor
Speaker 34
11:30
tyler technologies who does that for us okay
Senator Joshua Bryant
Unverified
11:35
okay thank you any other members okay without objection i'll file this
Speaker 5
11:46
report all right seeing none the next report findings is the public employees retirement system june 30 2022 report and this report contains
Speaker 6
11:54
one finding the ac reported us overpayments to retirees and beneficiaries of the public employees plan totaling over four hundred and seventy thousand dollars for the period july
1st 2021 through october 20th 2022 overpayments for one or two months by the ac routinely occur as the plan pays the benefits at the beginning of the month we did note two rather large and unusual overpayments first apris continued to pay benefits to a member for over seven years after the member's death resulting in ineligible payments of over $133,000. APERS has agreed to a payment plan with an individual associated with the deceased member and the terms allowed for
initial payment of $5,000 in monthly payments of $250 at 0% interest. The second overpayment, APERS overpaid a member by almost $73,000 by not appropriately changing the benefit option in accordance with the member's application. This member was receiving benefits from the public employee's plan under the straight life option, which provides a monthly annuity for the member's lifetime with no survivor benefits. After retirement, the member married, and in accordance with Arkansas Code, changed the retirement option to one that provides a reduced annuity to the
member, but allows a spouse to continue receiving benefits as a survivor beneficiary. However, APERS continued to pay monthly benefits at the increased straight life option. As the member continues to receive a monthly annuity, APERS will reduce the amount by $1,350 and fifty dollars through january two thousand twenty seven at which time the amount will be repaid make sure that concludes the findings for apers thank you is there a member from apers available thank you
Senator Joshua Bryant
Unverified
13:26
what states your name amy fetcher with apers thank you there
any committee members that have a question for any of these findings senator
Speaker 38
13:56
ricky yeah okay mr on the on the 133 five so was
Senator Jimmy Hickey, Jr
Unverified
14:01
that was that just being deposited into the deceased member's account it was an electronic as i assume it
Speaker 70
14:07
was and uh there was a it was a joint account with the member's daughter okay who was receiving it okay
Senator Jimmy Hickey, Jr
Unverified
14:15
and the members That was my next question, so the member's
daughter was the one that was actually doing it because of the joint account.
So there wasn't anything as far as somebody endorsing anything that wasn't supposed to be. And you can't get any, there's no way to get a judgment on that, or you all just opted not to?
Speaker 73
14:39
That's what I was asking the staff as well when I came over, and
Speaker 70
14:44
Laura may want to join us up here. my general counsel but we did look at that and you could say there's a case for some impropriety there but there really wasn't enough evidence that we felt like we could go forward with the
Speaker 75
14:58
prosecution we can do a civil suit but we can't prosecute criminally sure i'm just i'm just wondering with
Speaker 76
15:06
that amount if it would be you know i'm okay with like i guess
Senator Jimmy Hickey, Jr
Unverified
15:11
You know, the payment plan, I mean, not really, $250 a month. Let me back up. I don't guess I am really. But, I mean, if there's not any other funds or any other assets that were available, maybe that's one thing. But for that amount, I mean, I just think that we probably need to consider, you know, actually seeing if there was a way that we could get a judgment attached because, you know,
in the end it wasn't supposed to, it was not supposed to happen. Correct. So that would be my hope or suggestion is that we would look at pursuing that unless you all have already done your due diligence and know something I don't know here. But, again, I think that we should at least go a few more steps and see about going forward with getting a judgment on that, especially if there's some type of proof that they know that they weren't supposed to be receiving that, which I can't believe that they wouldn't have known that.
Senator Joshua Bryant
Unverified
16:03
So thank you, Mr. Chair. Thank you, Senator Hickey. Following up
on that, is there a shortfall with
Speaker 80
16:11
the statute that leaves some, open some gray areas
Speaker 70
16:15
with that that should be tightened up i don't think so that there is it was just that you know in this particular situation was very unique um the member died out of state and being able to find out about out of state deaths there's there's no um one system that we get all of the complete deaths from now if it's in state we work with the department of
health and get those but if a member dies out of state it goes to that state so just getting the information on the death was an issue and then um with the joint account and the daughter the daughter did say that she had been told she would receive a benefit for 10 years by her mother was what she was told you know and we can't prove or disprove that but um i don't i
Speaker 75
17:01
don't think if there's anything in the code that needs to be changed at this time.
Senator Joshua Bryant
Unverified
17:07
Okay. Yeah, Senator Rice, go ahead for a question. Of course,
Senator Terry Rice
Unverified
17:13
we hear these ever so often. Is there not something, does the federal government check state records where
they can cut people off federally? They do, but they don't share that information with the states.
Speaker 70
17:28
Okay, it's a one-way deal. They did until 2012, and they changed that. I thought I'd heard where we
Senator Terry Rice
Unverified
17:34
shared information with them Right, but it's one way
And my colleague sitting by me here said It sounds like we need to get some proof of life Maybe every year, I don't know how hard that would be But we have to prove things
Speaker 70
17:51
in our daily life all the time We have started that We've implemented several different procedures To try to catch anything like this in the future and we're doing a death audit where we will, death verification, and we started with everyone age 80 or over and just sending out something
so they do have to say, yes, we are still alive and this is our address. It's another thing, people move and they don't change their
Speaker 75
18:17
address with APERS, so that makes it more difficult as well. Thank you for the info. Thank you. Is
Senator Joshua Bryant
Unverified
18:26
there any other members with any questions? All right. Seeing none. Thank you, Ms. Fetcher. Without objection, we'll adopt this report.
Speaker 5
18:39
Okay. Okay. The next report is the Department of Public Safety, June 30, 2021 report,
Speaker 6
18:43
and this report contains one findings. As is kind of normal, the AC notified us of the following thefts of state property. In September 2020, a Bushmaster rifle was stolen from a state vehicle parked in an employee's personal residence. The value of the property taken was approximately $1,100. In February 2021, a flashlight and a tactical vest were stolen from another state vehicle parked in an employee's personal residence. The value of the property taken in this case was under $1,000. And then in April 2022, the ACU discovered that catalytic converters were missing
from two Arkansas Crime Information Center vehicles that were parked in ACIC parking. The cost to repair these vehicles was about $500. Incident and police reports were filed for each of these incidents and
Speaker 5
19:27
also each was referred to the respective prosecuting attorney. Make sure that concludes the finding for public safety. Thank you. Does any member
Senator Joshua Bryant
Unverified
19:35
have any questions for the Department of Public Safety? I won't bring them up if we don't have any
questions. Okay, without objection, we'll adopt that report.
Senator Jimmy Hickey, Jr
Unverified
19:47
to apers yes just one more thing i i would like you know senator do you have a question
for yes yes if you'd come back to the yeah i apologize i'm just thinking this through this is just this is somewhat bothersome and i know in this day and age we're not going to be uh having checks issued and then if somebody
you know negotiates it improperly then that would be on them but and now i don't know that we'd want to require just uh an account that wasn't a joint account but could we could could we also possibly do some research to see if some of the other states uh if if we could just make sure that they haven't developed a better mousetrap as far as this is concerned so that we can try to get a hold on this because as senator rice mentioned we see these sometimes and we understand that you know things like this are going to happen but you know with the amount of money that's involved
like i say maybe somebody out there has already thought of something we hadn't so i would appreciate
Speaker 5
21:09
if we'd research that certainly thank you ma'am thank you department of transportation okay thank you mr chair the last report that we have today is the department of transportation june 30 2021 report
Speaker 6
21:16
and this report contains three findings the first finding the ac failed to notify us as required by arkansas code of the apparent unauthorized
disbursement theft or misappropriation of public funds as follows there were two two incidents 23 duplicate payments totaling over seven million dollars were made during the fiscal year with 568 unrecovered as of the end of field work and as of yesterday the ac received the additional 568 000 so all that's been recovered at this point the second one they also failed to notify us of an individual who was suspected of not recording leave time while performing dues related to a personal business and this finding was referred to the prosecuting attorney the second finding
our review of receiving revealed that the ac failed to perform reconciliations of receipts between ACES and the ACES general ledgers to ensure all entries were properly posted in ACES. And on 19 different occasions, the AC failed to make deposits timely once monies reached the physical section from divisions within the agency. In the last finding, the AC had inadequate control over cash transactions specifically, and employee with check signing responsibilities also performed recicliations of the escrow account. Make sure that concludes the findings for the Department of Transportation.
Senator Joshua Bryant
Unverified
22:25
Thank you, members from RDOT, if you're available.
if you would just state your name
Speaker 101
22:39
and function kevin thornton the chief of administration for
Senator Joshua Bryant
Unverified
22:45
rdott patrick patton cfo rdott thank you gentlemen any members have any questions for rdott on any of findings. I'll kick us off just looking at the the 23 duplicate payments just finding number one
is that is were those payments for jobs still yet to be complete or were these jobs that got completed and reconciled and
Speaker 102
23:10
just missed? They were it was part of a conversion of new system and so as we were going through the first couple of days or week of contractor payments We had some duplicate payments in the coding. And so once we found that, we corrected it. But it was four jobs that had been completed and need to be paid.
Senator Joshua Bryant
Unverified
23:32
Is this something that the agency found, or did the leg audit make you aware of
Speaker 102
23:39
it? The agency found it. My understanding is the finding itself was that we weren't reporting items over $1,000. that appeared to be misappropriations or fraud. And at the time when we were going through the conversion, that was not our definition. But we've since adopted their definition and given monthly reports.
Senator Jimmy Hickey, Jr
Unverified
24:05
Okay. All right. Senator Nuckey. Yes, sir. Okay, so let me ask you this. I heard what you said. The contractor themselves, were they the ones that were submitting, like,
duplicate invoices? Okay. So it was you all, it was one invoice that was coming from the contractor, but y'all were paying it twice? There
Speaker 101
24:27
are two systems that we're talking about here. One of them is the system that we use to document all the work that goes on on our construction projects.
That's our Astroware project system, and it is used by our inspectors to document the activities, to record the quantities, and that's how the payments to the contractors are calculated on a biweekly basis. That system was working properly. It was calculating everything fine. When the transfer started from that existing system in construction into the new financial system that we had, the records were duplicated at that point. And so both systems handled what they got,
but the problem was with the coding between the two systems. And so we have since implemented an external validation process between the system that our construction division uses and our financial system, and we look at information from the construction division system, and we compare it to what's in ACES to ensure that this does not happen again. Okay. Just follow-ups,
Senator Jimmy Hickey, Jr
Unverified
25:35
if you don't mind. So the $6.5 million, was that all one contractor?
There were various contractors involved. Various contractors here? Yes, sir. All
right. And you all have collected it all except the $568,000? At the end of the field work on the report, that was correct.
Speaker 105
25:52
However, yesterday we have received the final check for the $568,000, so all the money has been recovered. Okay. Did you all have to draw
Senator Jimmy Hickey, Jr
Unverified
26:00
it on the performance bond, or did the contractor actually pick it up? for the last time it was the for
Speaker 105
26:06
the that 568 000 it was the performance bond okay thank you sir
Senator Joshua Bryant
Unverified
26:12
and just just to follow up on for my end so when these when these checks are written towards those projects this is a june 30 of 2021 report did those projects already close and then you realize the mistakes then you had to go up get it back through the performance bond or ask the contractor
Speaker 109
26:33
for it back no the the jobs weren't closed they we tried
Speaker 102
26:37
to get them to pay back on their own we gave them you know kind of a payment plan like was mentioned earlier with the apers
and that never came through and so our it led us down the path of going to their performance bond to get our reimbursement okay any other committee member
Senator Joshua Bryant
Unverified
26:57
have any more questions for our dot okay seeing none without objection
i'll follow this report thank you thank you gentlemen okay committee thank you for your time today the next meeting is going to be august 10th
And with that, we will stand adjourned.
Agenda
Call to order by Chairman
Adoption of minutes of the May 11, 2023 meeting
Review of reports (Refer to the Summary)
New Business - The next meeting will be held August 10, 2023
Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - STATE AGENCIES, Jun 1, 2023 | Agenda | 1 | Official source ↗ |
Speakers
Senator Joshua Bryant
Unverified
Speaker 4
Speaker 6
Senator Jimmy Hickey, Jr
Unverified
Speaker 5
Speaker 25
Speaker 30
Speaker 32
Speaker 34
Speaker 39
Speaker 41
Senator Terry Rice
Unverified
Speaker 46
Speaker 48
Speaker 47
Speaker 50
Speaker 51
Representative Marcus E. Richmond
Unverified
Speaker 19
Speaker 38
Speaker 70
Speaker 73
Speaker 75
Speaker 76
Speaker 80
Speaker 101
Speaker 102
Speaker 105
Speaker 109