Legislative Joint Auditing-State Agencies
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Representative Steve Unger
Unverified
1:38
to order. The first agenda is the adoption of the minutes which you should have received by email. Is there a motion to adopt? I see one. Is there a second? All in favor of? Aye. Any opposed? There we go. we
have adopted the minutes now like to recognize mr. Tom Bullington thank you
Speaker 7
2:06
mr. chair today we're presenting two reports that have findings and we also have three reports without findings that are listed on page
Representative Steve Unger
Unverified
2:17
one of the audit summary without objection
Speaker 7
2:21
we will file these reports okay the first report with findings is a Department of Public Safety FY 24 report which contains two findings. The first finding, using data analytics, we identified a duplicate payment of almost $3,700 issued to a vendor providing toxicology services to the Arkansas State Crime Lab.
The duplicate payment was issued within a day of the original payment in April 2024. After notifying the vendor, the AC received and deposited recoupment of the duplicate payment in June of 2025. And the second finding, State Board of Finance rules state that all cash funds on deposit with a bank or financial institution that exceed FDIC deposit insurance coverage must be collateralized, and the collateral pledge must be held by an unaffiliated third-party custodian in an amount at least equal to 105% of the cash funds on deposit. During our review of
collateral, we noted a deficiency of two and a half million dollars in collateral covering one Bank's account balances of $11.6 million at June 30th, 2024. The cause of the deficit was due to the bank reflecting a securities collateral that was not actually pledged to the Arkansas State Police by the third party custodian. This issue was brought to the attention of the bank in August of 2023. However, the correction was not made until August 27th of 2024. Mr. Chair, that concludes the findings for the Department of Public Safety. Thank
Representative Steve Unger
Unverified
3:46
you. Are any agency representatives here?
Speaker 11
3:48
if you'd please introduce yourselves lieutenant colonel Mike Kennedy deputy director Arkansas
Speaker 13
4:13
State Police Karen Perry chief fiscal officer Department of safety thank
Representative Steve Unger
Unverified
4:16
you members do you have any questions for the state agency oh sorry
Representative Stephen Meeks
Unverified
4:29
mr. Meeks I didn't see you thank you mr. chair and
my questions may be for staff I want to try to see if I understand the second finding with the collateralization so help me think through this here make sure I'm understanding it correctly so if we've got cash deposited in a bank in a normal regular bank account and the amount is in excess of what two hundred fifty thousand dollars is that the standard so if so if the agency has more than two hundred fifty thousand dollars they have to have
that collateralized insurance somehow in case the bank defaults that's what I understand how do they what do they use as collateral so the bank has to provide that collateral that's correct usually the bank
Speaker 7
5:13
provides that but it has to be pledged to the institution in their name otherwise it doesn't qualify under under rule 2012a okay so
Representative Stephen Meeks
Unverified
5:22
for example if they have say half a million dollars in the bank then that bank has to have the equivalent set aside in a private fund of their
own to cover that in case something happens that's correct usually in this case
Speaker 7
5:35
this was 11.6 million dollars in this bank account they have multiple items of security that they provided it's just that they had one item that was I think the item was 2.7 million dollars and it was the collateral was okay but they
Speaker 5
5:47
didn't have it pledged in the name of the state police okay so
Representative Stephen Meeks
Unverified
5:50
that basically just a bookkeeping error sounds like on the bank's part yes sir okay all right I'm good thank you representative Burks
Speaker 30
6:06
the bank was doing the collateralization in-house then they went to a third party and whenever it moved to the third party it just got missed
Representative Steve Unger
Unverified
6:30
members are there any other questions seeing none without objection we will file this report.
Speaker 7
6:45
So my mic's out, excuse the technical difficulties. So the next report we have with findings today is a Department of Transformation and Shared Services FY 24 report and this report contains five findings. The first finding in our review of 35 career service payments we noted one payment made by the Division of information systems for $800, the amount awarded for 10 to 14 years of service to which the employee was not entitled. The employee had a break in service and errors were made when the rehire information was entered into ACES. Therefore, the employee's career service and
annual leave accrual dates were not updated correctly, resulting in one and a half years more career service credit than was due. In the second finding, during current year testing of 15 asset retirements we identified one asset totaling about $30,000 that was sent to M&R on May 24, 2021 but was not deactivated in ACES until December 19, 2023. Also during current year testing of 42 items we discovered two cameras valued at about $8,500 that were still included
on the AC fixed asset listing as of June 30, 2024 even though the AC determined the items were stolen after an internal investigation completed on July
Speaker 6
8:08
10, 2023. Hold tight. Sorry about that. So we're on to finding three.
Speaker 7
8:13
So during a review of agency cash holdings, we discovered that the agency double counted over $940,000 on its year-end financial records.
The deposits were included on the agency's year in cash and transit report even though the deposits were already fully processed and included in their cash and bank totals. The fourth finding according to DFA's financial management guide if an agency pays an invoice in the fiscal year after goods are received that invoice should have been recorded as a payable. The employee benefits division paid 3.8 million dollars for Arkansas state employee health claims and six and a half million dollars for public school employee health claims in fiscal year 2025 that should have been recorded as a payable in fiscal year 2024.
resulting in the understatement of accounts payable and expenditures at the end of fiscal year 24. And the fifth finding according to the state of Arkansas vehicle use and management guide every vehicle owned by the state must carry a log and drivers of the vehicle must update the log with each use. The information contained in the bullets of the finding must be recorded in the log every time the vehicle is used. During our review of agency vehicle logs we once again noted numerous violations including failure to record date and time of use starting location
or destination beginning and ending mileage and fuel purchase in the vehicle mileage logs agency logs either did not contain the proper fields required by state guidelines or were not properly filled out by agency personnel mr. chair that concludes the findings for transformation
Representative Steve Unger
Unverified
9:40
shared services thank you are the agency representatives here if you please come forward and introduce yourselves.
Speaker 40
9:57
James Caldwell, Chief Fiscal Officer, Shared Administrative Services. Courtney Traylor,
Speaker 42
10:01
Chief of Staff at Shared Administrative Services. Thank you. I
Representative Stephen Meeks
Unverified
10:08
believe Representative Meeks has a question. Yes, sir. I'm always good for a question or two. My first one is directed towards
staff, and I probably should know this. But on that first finding, you reviewed 35 service payments. I understand you can't review every one of them. But when you hit one like that, does that create a red flag that say, hey, we need to look at other ones maybe in similar circumstances?
Or what would prompt you to, hey, we need to review more instead of just stick with maybe that original number? Sure,
Speaker 7
10:41
of course. If we notice errors in our testing, we will expand our testing. And if we stop seeing errors, we will stop. So in this case, we just noted the one error, and it was literally a record-keeping thing as far as putting in date of
Representative Stephen Meeks
Unverified
10:54
hires. So it was kind of an
isolated incident, we thought. Okay, okay. And then my two questions are for agency. The first one, finding number two, looks like there were two cameras that were stolen evidently.
Of course, the finding is that it wasn't reported for almost a year. um any idea what happened to those stolen cameras do we ever find them or are they still lost
Speaker 50
11:16
or so that had been fully adjudicated the person that stole them was a former employee uh he was i think he pled guilty and then paid restitution so we got all of the money back on
Representative Stephen Meeks
Unverified
11:27
those cameras excellent love hearing that and then the last question i have is related to the vehicle usage uh of course the last session we passed the new deal with the electronic tracking
I assume you all are going to implement that, and that will hopefully
take care of this for being an issue in the future? Yes. Okay. Yes, sir. All right. Any idea
Speaker 53
11:48
of timeline on that? We are currently working on how we can roll that out, and we're
Speaker 42
11:54
right now negotiating a contract with a vendor that we can roll out to all the departments statewide that will eliminate those logs for those that implement that. Awesome. All right. Thank you. Thank
Speaker 55
12:05
you for being here today. Representative McElindon.
Representative Mindy McAlindon
Unverified
12:11
Yeah, that actually I had the same question. My question was, what is that oversight for people? But it sounds like if we're implementing the electronic, it should be pretty well settled. And then does that mean that they cannot take out a vehicle to those fields are completed so that you know that those fields are not being
Speaker 50
12:30
completed or how will that work? So we did a short-term fix. We did update our logs and have the same log being used by everybody in the department. When I first got here, they were each using their own version of it.
The transformation, they ended up with their own. But the GPS will provide all of that information directly from the vehicle back to us, so they don't have to actually fill out the log. It will be captured whenever they start and stop the vehicle. And when did you say that would be
Speaker 64
12:59
implemented? We are working on that currently. I would say our department would go first. um so as soon as that contract is finalized we plan on implementing that so i would say hopefully no later than you know the end of july okay very good thank you thank you chairman
Representative Steve Unger
Unverified
13:14
i have a question and this is on finding number two with the with the cameras uh does your agency have something like a set in stone policy that once or twice a year on a certain
date you will compare your inventory against i'm going to use the term property law because that's what i'm used to that you match the serial numbers
Speaker 50
13:40
and verify yes and we're actually working uh because we have thousands of items because of office state technology so we're working to every month go
through and find a portion of it and just keep doing that throughout the year as we go so yes we compare that back to ACES asset records at least once a year.
Speaker 70
14:09
Thank you. Representative Brown. I'm sorry Representative Burks first. Thank you regarding finding five when you implement the electronic GPS system will that be a uniform system across all agencies statewide and who would be
responsible for monitoring that to ensure that an employee doesn't take the car home overnight if they're not supposed to or
Speaker 53
14:30
those kind of things yes so we are recommending one vendor which would be rolled out statewide for
Speaker 64
14:36
all departments and that would allow I think it was in the last session the vehicle all that was transferred over to shared administrative services so we would have the administrative oversight of that program but each department would also have access
it would have to be we have very stringent guidelines on who would have access so that you know we're not violating any privacy issues SAS would not have the employee name we would just we're tracking the vehicle only but the departments would have they would be able to have their administrator would be able to have a little bit more detail about who would have that vehicle and yes they would be responsible for monitoring you can set alerts in the system they're very um customized for depending on what alerts you'd like to track and and so SAS we could
do that as well and so we would get I know we did a pilot project a few months ago and we were able to do that on some dashboard indicators so like if a tire was low or an engine light came on we would have that information and we could alert the department to make sure they were aware of that as well and so we can set parameters you're allowed to do geo fencing so we could make sure that for example all
Speaker 53
16:01
vehicles are returned by 5 3 by 5 30 p.m. at night and if they're not we could get a alert for that okay
Speaker 70
16:08
so and are we also exploring the possibility of being able to share vehicles I know that yes budget standpoint but between agencies so that so that an agency that doesn't need them that often could borrow from another and would they be able to use this system for that check-in check-out process
Speaker 64
16:25
we wouldn't be able to use it for the check it's it's not a reservation system at this time we did look at a reservation system it was more expensive than what we could justify at this point but we are looking at there's a lot of restrictions on how you can share vehicles across departments and across
programs and the way that we're looking at doing that is shared administrative services would purchase those vehicles and then we could assign them and charge a rate to departments maybe on a weekly or monthly basis and as long as their utilization warrants that vehicle being there then they can keep that vehicle and pay for it but if their utilization goes below a break-even cost then we could reassign it
Speaker 53
17:09
to where there's a need for a vehicle. So we're looking at that currently.
Speaker 70
17:14
Okay, great. I do know that in the past there have been a lot of barriers preventing agencies from sharing. So if there's anything we can do legislatively, don't hesitate
Representative Matt Brown
Unverified
17:29
to let us know. Thank you. I appreciate that. You bet. Representative Brown. Thank you, Mr. Chair. Just curious, how do you, I mean, like would an employee use their employee badge to log into the car to identify who is driving the car?
How do you know if they've bought gas and all those kinds of things? I mean, just how do you just really nail this down so nobody messes with the system?
Speaker 64
17:57
So right now there's not a badge. we did and part of the pilot was that automated check-in or you know getting access to the vehicle it just wasn't viewed as being successful at this time it didn't have great adoption so we will continue to have departments responsible like they do today for loaning out the keys of those vehicles and you sign you know departments would have to maintain
how they want to operationalize that but they would check in and check out those vehicles
Representative Matt Brown
Unverified
18:27
with the department okay and how
Speaker 64
18:29
about the gasoline purchases so how do you know the way those gasoline purchases work is that each vehicle is assigned a wex card wex is the the credit card that they can go and charge gas for that vehicle and you enter your employee id when you do that and so that would help us or the departments track who is using and who is purchasing the vehicle
or the gasoline there are alerts in the telematic software which and I still get the alerts from the pilot where if the vehicle isn't at the assigned spot from through the telematics where wex is saying the transaction occurred it will send you a notice so we are alerted if the the locations don't match up and then we're also alerted if they purchase more fuel
than what the vehicle has capacity for okay
Representative Steve Unger
Unverified
19:32
thank you very much sure are there any
other questions seeing none without objection we will file this report committee for new business our next meeting get my eye on it will be held on the
4th of June. We are adjourned. Thank you.
Agenda
A. Call to order by Chairman.
B. Adoption of minutes of the February 12, 2026, meeting.
C. Review of reports. (Refer to the Summary)
D. New Business.
E. Adjournment.
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - STATE AGENCIES, Mar 12, 2026 | Agenda | 2 | Official source ↗ |
Speakers
Speaker 2
Representative Steve Unger
Unverified
Speaker 7
Speaker 11
Speaker 13
Representative Stephen Meeks
Unverified
Speaker 5
Speaker 30
Speaker 6
Speaker 40
Speaker 42
Speaker 50
Speaker 53
Speaker 55
Representative Mindy McAlindon
Unverified
Speaker 64
Speaker 70
Representative Matt Brown
Unverified