Legislative Joint Auditing-Educational Institutions
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We're going to call this meeting to order of the, well, welcome everybody to the Legislative Audit Education Institution Subcommittee. We're going to begin our meeting, as we always do, with an opening prayer. If you all would join me in stand, I've asked Representative Eaton if he would say the prayer
Speaker 5
0:19
for us. Dear Heavenly Father, we're thankful for this day. We're thankful for this group of people. Please be with us, oversee this meeting, and hopefully we
Speaker 6
0:26
do things that are pleasing to you. Please forgive us of our sins.
Thank you, Representative. Members, glad to have all of you all here today. Senator Dees is not able to be here this afternoon, but we're going to go ahead and carry on without him. Before we get started, I just want to remind everybody, as you look over these reports, that if there is a report that you'd like to hold over or defer to the next meeting, Obviously, that's always available to us if we have additional questions. And with that, I will turn it over to staff. Oh, no, we've got to adopt the minutes. So do I have a motion to adopt the minutes from the previous meeting? Second?
All right, there we go. All in favor? Aye. None opposed? Motion
carries, and on we shall go. Mr. Fink, are we
Speaker 11
1:25
ready? Thank you. Thank you, Madam Chair, and good afternoon.
Representative Keith Brooks
Unverified
1:28
Today, there are 57 education audit reports for the committee's review. There were 52 reports with no findings and five reports that contained findings. We will begin with the three audits which were referred to the prosecuting attorney and attorney general, starting with Camden Fairview.
Finding one, the district expended $10,668 from operating funds to host an end-of-year awards banquet for employees in conflict with Arkansas Constitution as interpreted in the AG's opinion. The following is a summary of the expenditures, $7,260 for meals for employees and guests, $2,958 for door prizes, and $450 for facility rental fees.
Finding two, the district discovered and we verified unauthorized credit card charges of $2,140 on the district's credit card between September 9, 2024, and February 27, 2025. As of the report date, the bank reversed charges of $1,878, resulting in a loss of $262. And that concludes the findings for Camden Fairview School District. All right, members, do we have any questions?
Speaker 18
2:48
Representative Mayberry, you're recognized. I was just wondering if we have any members
Representative Julie Mayberry
Unverified
2:54
from the school district to be here to explain anything.
Representative Keith Brooks
Unverified
3:01
So since these were not a repeat finding or a deferred audit report, they were not required to be here, but they were notified of the meeting.
Speaker 22
3:10
Okay. And this has been sent on to the prosecuting attorney? That's correct.
Representative Julie Mayberry
Unverified
3:16
To be looked at. I mean, that's a significant amount.
It's not so much that the school district had an event for the teachers or something. It's that they used the school funds to do it. Like if a private individual, private business, PTO, raised the money to do something like this, it would be okay, correct? I would agree. Okay. That's a significant amount of money. Okay. Thank you.
members are there any other questions all right I had a couple
of questions so I will go ahead and ask them and then we can see if we want to go ahead and compete with this or not all right I'll do the best I can so can you can you explain a little bit more
about the breakdown on this and if the board was aware
Representative Keith Brooks
Unverified
4:20
of what occurred and if so when? So we look to see if if this was brought
before the school board prior to them hosting the banquet and there was nothing documented in the minutes that would suggest the school board was aware or gave prior approval. And so concerning like the the breakdown um i guess are you talking about like how many employees and guests okay so for the meals uh what we looked at we were provided a list by the school district and they had 216 employees that attended as well as 132 guests and so that came out to um about
you know 22 a person on the meals on the door prizes um those some some of the items this is Not all of the items, but there were air pods, there was a misting fan, there was a crockpot, a griddle, a TV, an air fryer, and a ninja slushing machine that we noted. And then the facility fees is exactly what it is, just some off-site facility that they rented for the purpose of the banquet.
Okay, I am inclined, and we have another one if you've all looked on Forest City as well, and that number is a little bit more significant for their end-of-the-year party. And since we've had at least a question or two about this, if there's not an objection of deferring this until the next meeting, which I know is not until June, and asking some representatives from the district to be there, my understanding is the superintendent, for one, is new and was not in charge. Is that correct, with Camden-Fairview?
That's correct. And how about, can we go ahead and do Forest City at the same time, since it's a similar item,
Representative Keith Brooks
Unverified
6:12
or do we need to wait to get to that?
Senator Fredrick J. Love
Unverified
6:18
the finding if you'd like. Yeah, well, I'm sorry. Senator Love, did you have a question? Yeah, well, I know that you stated
that to hold it, but if they have a different superintendent, I'm not sure what we would do in regards to kind of holding this for the current superintendent to answer questions about the previous superintendent.
I guess that would just kind of be my – if it was the current superintendent that was in place, then I would want to talk to him. But I guess kind of – not saying beating up on him, but talking to the new superintendent, I'm not sure. I guess if we just want to reinforce that this shouldn't happen again, I guess that would be fine. but um okay so that's kind of my thought
process not just that but also for the board members because at the end of the day I think the board members are accountable for this as well and
knowing what's going on in your district $33,000 for the next one is a pretty significant number as well we can wait till we get to that finding on that one but I do think it's important especially as we discuss funding for school districts and concern with public schools that they understand the importance of their duty with those public funds and what they're going to spend it with to just kind of reinforce it because I do understand that it's not necessarily the superintendents. And they gave a good response. I think you all saw that as far as they're not going to understand they shouldn't do that again. But I think it also reinforces that to that district and maybe to
other districts, the importance of not using funds in that way when money is tight. So without objection, I'd like to go ahead and defer this
report to the next meeting. Seeing none. And then if
Representative Keith Brooks
Unverified
8:01
you want to go ahead and read Mr. Fink Forest City's report. Yes, Forest City had one finding which was also referred to the prosecuting attorney and attorney general. The district expended $33,436 from operating funds for an end-of-the-year celebration and entertainment
event for staff in conflict with the Arkansas Constitution as well as interpreted in the AG's opinion. The following is a summary of questionable expenditures. $17,390 for decorations, which included a portable dance floor, illuminated trees, drapery, amongst other items. $10,596 for catering and supplies, which included the food, the servers, and the setup fees. $4,235 for entertainment, which included a DJ and live performances. And $1,215 for the facility rental
fee, and that concludes the findings for Forest City
School District. Members, do you have any questions
Speaker 35
9:00
on this? Representative Brooks, you're recognized. I'll defer to an actual member of the committee first, if there are others. Maybe, do you have one? I'll let you. Go ahead. Okay. Much like the Camden Fairview, do you have a breakdown
Representative Keith Brooks
Unverified
9:17
of how many people were served on the party? Yes. So per review, there were two invoices for the catering for just the regular dinner.
There was 350, and then on the dessert, for the dessert vendor, they had marked down as 300. So we're assuming around 350 people attended. Are there other questions?
Representative Beatty, you're recognized. Well, thank you,
Representative Howard M. Beaty, Jr.
Unverified
9:48
late. Um, so I'm assuming we don't have anyone from school district here. That's
Representative Keith Brooks
Unverified
9:56
correct. Since it was not a repeat finding and it was not a deferred report,
they received a notification of the meeting, but they were not required to attend. What, what could we
Speaker 43
10:08
do to require their attendance? Defer the report. Defer the report.
Representative Howard M. Beaty, Jr.
Unverified
10:14
Um, Has anyone entertained a motion to do such? I'd be happy to. You have such a motion, I offer a motion to defer the report and request their attendance. I have a motion. Do I have a second? Second.
Second. All in favor? Aye. Opposed? Motion carries. We will defer this report and ask for their, require their attendance
Representative Keith Brooks
Unverified
10:45
for this as well for the next meeting. Thank you. Mr. Fink. Okay. The last audit that was referred to the prosecuting attorney and attorney general was a finding at Nettleton School District. Between March 18th and April 4th of 2025, the district initiated four transactions totaling $1.9 million to a fraudulent checking account after receiving emails requesting changes to bank account information for two vendors without verifying the authenticity of the change request.
the vendor whose email was compromised, an architect, billed the district on behalf of themselves and a contractor. On April 8th of 2025, the district discovered the error when it was notified by one of the banking institutions that the name on the account and the name on the payment were different. The district recovered one and a half million from the bank and the vendor agreed to reimburse the district $204,890 with monthly installment payments, resulting
in a loss to the district of $204,890. And that concludes the findings for Nettleton School District. Senator Love, do you have
Speaker 33
11:55
Filippo was just messing with me. But I do – I
Senator Fredrick J. Love
Unverified
11:59
guess I was interested in the fact that the vendor – did the vendor receive any of this money, Mr. Fink, at all? Because I'm curious why they would want to repay some money that they didn't receive.
Representative Keith Brooks
Unverified
12:16
So I can't speak to all of their intent. What I can say is that their employee's e-mail was hacked, and so the school, you know, they did not verify the authenticity of that request since it was only via e-mail. And so I guess the vendor and the school worked it out to where they would each split that final loss 50-50.
Senator Fredrick J. Love
Unverified
12:46
So the bank recovered $1.5 million, leaving the $204,000, or I guess that
– but that doesn't even – so $204,000, I guess double that, I guess that would be the $1.9.
That's right. That is interesting that the vendor would choose to split the loss when they didn't receive any of the money. I would be curious to see if the vendor received any of the money or did the bank, is it the bank just recovered it from that vendor? Because I just don't see a business voluntarily saying, I'm going to pay you $204,000 and I did not receive any of this money at all. I would just be very curious about that.
Speaker 3
13:37
Would you like to hold this over as well? Is that what you're... Yeah,
Senator Fredrick J. Love
Unverified
13:43
I mean, unless we could just get an answer without them coming, I mean, I don't
want to – but I'm just curious. I mean, that strikes me odd that somebody would say, I didn't receive any money at all, but, hey, I'm going to repay you $204,000. And unless anybody can shed any light on it, yeah, I guess I would like to question the Nettleton School District. So is that a motion?
Speaker 41
14:09
Motion. Okay. Do I have a second? I've got
a second. All those in favor to hold this over to the June meeting? Aye. Opposed? Motion
carries. So we will hold this over as well to the June meeting and see if we can get some answers to
Representative Keith Brooks
Unverified
14:33
those questions. The next report, and neither of these last two were referred to the prosecutor or the AGE.
These are just, you know, normal findings. Cedar Ridge School District, finding one. During our test of payroll expenditures, we identified $9,200 in salary and fringe benefits that was paid from the Title I program for a non-Title I certified teaching position. The employee was previously in a Title I position. It got reassigned in the 2025 fiscal year, but the district continued to pay the employee from the Title I program. Finding two, the superintendent was overpaid $750 and a certified employee was underpaid $249 due to clerical errors.
And finding three, the district's operating bank account was unreconciled throughout FY25 with an unexplained variance of $12,943 at June 30, 2025. And that concludes the findings for Cedar Ridge School District. Mayor Bruce, do we have any questions for
staff on this finding? see none without
objection will file the report and the
Representative Keith Brooks
Unverified
15:45
last report with findings was a green
county technical school district they had one finding in october 2025 the district discovered that a check for 1400 which had been mailed to a vendor was fraudulently diverted to another bank account after the district contacted the vendor about a balance due the district notified its banking institutions and the funds were recovered and that concludes the findings for green county technical school district members do you have any questions on this report i do
have a i think mr pink it might be nice if you
could update members and just remind them some of the actions that
legislative audit is doing to remind school districts on how to protect themselves on these issues
Representative Keith Brooks
Unverified
16:29
that we continually see yes so we've done a trying to do a few things one anytime i go speak at different events where school officials are we try to talk about the issues on altered checks electronic payments being you know any type of banking information being processed just through
email especially changes that's not acceptable there needs to be some other form of contact with either a vendor or an employee and we think schools should you know try to figure out with their vendors with their employees what that looks like what we're seeing some do is they're requiring people to just come in person to make changes to banking information not to say that's the only way you could do that but that that is a pretty good way of handling those changes and so we're on each
audit now. When we go out, we try to ask questions along these lines to see how they're processing changes to deposit information. We're also trying to see what kind of controls they have with the bank on checks, kind of like positive pay or positive pay plus, or how often they're looking at their bank account online, obviously not just waiting until they do their bank reconciliation to look at those things since this has been such a huge issue over the last few years.
So from an audit standpoint, we're doing, you know, as much as we can to find out information and then to also make recommendations when we see weaknesses in internal controls. Thank you. Members, do you
all have any questions? Representative Beatty, you're recognized. Just
Representative Howard M. Beaty, Jr.
Unverified
18:19
a question. With the first two reports that were presented, Um, did staff reach out to the chairs to see if maybe it would have been a good idea to have these two schools in attendance today?
Was that an option? We did not discuss that. I mean, I just think when you see something as egregious as those first two reports and knowing how this committee goes, even on sometimes significant but minor issues, It probably would have been a good idea to have requested that they be in attendance today just to address and put some of these at rest.
I think that, I'm sorry. So I just wondered, just because they don't have to be here, but maybe it would have been prudent to move forward and request that they be in attendance to address these issues. Well, my understanding that's part of the committee rules, but
is there a reason why we can't, can we go ahead and make that request as chairs? If you ask us to, we will. Okay. Thank you for that, pointing that out, Representative Aiding, and we'll look to do that in the future, because I think that is an important change that we could make.
Representative Keith Brooks
Unverified
19:35
And there are some schools and higher eds that if they see that their finding is going, regardless of whether they have a repeat finding or deferred, they're usually here. And so we do notify, at the very least, that someone with your audit report is going, whether you have findings or not. Members, are there any other questions on this report? I do
think it would be a good reminder for all of us to speak to our schools and remind them of these opportunities that are afforded to them on training from legislative audit
or from their auditors when they're there because we are seeing some of these over and over and over again. So maybe if they hear from us that we'd rather them not have to come down here and sit at the end of the table and get out ahead of this at home. So without objection, we will
Speaker 11
20:27
file that report. Seeing none. Okay. The remaining
Representative Keith Brooks
Unverified
20:29
52 reports listed on the last two pages are audits with no findings and staff recommends these be filed as reviewed. I'd encourage you
to take a minute and look through those when we have these ones that don't have findings that's a really big
deal and we need to celebrate those here so if you have a school that you want to highlight or celebrate them back home but make sure you congratulate your schools I know I have one in my district Bentonville is in a lot of different representatives districts but I'm proud of them for having a clean report and if any of the rest of you all want to recognize your schools now's the time and then please do it again at home because we are very proud of these schools that had no findings all right we just file these all together all right without objection we will file these reports and we have no new business so members thank you for being engaged and
participating in this this stuff matters especially when we're dealing with the people's money and their dollars and making sure they're being used well in our schools especially so without any other business this meeting is adjourned We'll see you next time.
Agenda
A. Call to order by Co-Chairman.
B. Adoption of Minutes of the February 12, 2026 meeting.
C. Review of Reports. Refer to the Synopsis
D. New Business.
E. Adjournment.
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - EDUCATIONAL INSTITUTIONS, Mar 12, 2026 | Agenda | 3 | Official source ↗ |
Speakers
Representative Hope Duke Chair
Unverified
Speaker 5
Speaker 6
Speaker 11
Representative Keith Brooks
Unverified
Speaker 18
Representative Julie Mayberry
Unverified
Speaker 22
Senator Fredrick J. Love
Unverified
Speaker 35
Speaker 41
Representative Howard M. Beaty, Jr.
Unverified
Speaker 43
Speaker 49
Speaker 33
Speaker 3