Legislative Joint Auditing-Educational Institutions
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kick off let's stand and start the meeting with prayer like we normally do thank you lord for today thank you for uh safe travels into the capital to get to work for the people and for our homes and our communities and uh lord we ask that you just give us your wisdom and guidance as we do this work and do it diligently with excellence and thank you for all our school districts and um our our colleges and universities that uh have a mission of educating well and again through excellence so ask us to do that this job well and in collaboration and partnership in jesus
name pray amen all right members thank you for being here today and i hope you've had a great week so glad to see y'all um we will call this meeting to order um co-chair any comments okay all right we'll kick off uh first on the agenda is on b is adoption of the minutes of the january 8th meeting. I'll take a motion. We've got a motion and a second. Second. All in favor, say aye. Aye. Opposed? Like sign. It is passed. Okay. Members, now we are going to see. We have three reports today, and Mr. Fink, if you'll read through the first one.
Speaker 4
1:11
Thank you, Mr. Chair, and good afternoon. Today, there are 31 education audit reports for the review, three with findings. We will begin with Northwest Arkansas Community College, which was deferred from the January meeting. Instead of reading the findings in full, I'll provide a brief summary. Finding one was a repeat finding related to deficiencies in internal controls over financial reporting, which led to material misstatements in the financial statements.
ALA auditors noted various errors, which are detailed in your synopsis. in the statement of net position, statement of revenues, expenses, and changes in net position, statement of cash flows, and notes to the financial statements. These errors were subsequently corrected by college personnel during the audit. Finding two was related to a loss in tuition revenue totaling almost $144,000 due to an internal control deficiency in a new student information system
that was implemented in April of 2023. Students who registered for classes after the academic period effective date were not charged student tuition, resulting in the loss of revenue. Management has provided a response to both findings, and they are also in attendance to answer any questions the committee may have. Thank you, Mr. Fink. And we will
Catherine Donor
Unverified
2:40
invite Alex and Caitlin to the table. If you will introduce yourself for the record, and we'll welcome you.
Catherine Donner
Unverified
2:49
Hello, my name is Catherine Donor. I am the Interim CFO at NWAC. Thank you.
Speaker 11
3:03
Good afternoon. Alex Voskos, Chief of Staff and Executive Director for Government and Public Relations. Thank you, Catherine. Thank you, Alex.
Catherine Donor
Unverified
3:09
Thanks for being here. Well, I know these are not always fun meetings to be at, but we appreciate your time and
your comments today. You know, i'll just kick it off with a framework it sounds like uh fortunately we have accounted for the
dollars but maybe they've moved to different buckets and um and through the audit reviews it's there's been some best practices and some reviewing of of how to how
to work through that but would love your initial comments of of the findings
Speaker 11
3:39
today and set the set the scene for us yeah yes that's that's well stated uh these are misclassification and process issues so all the money is there in fact I think our net position was better than what initially was reported so that's all good news and so but we are here and Catherine is the expert and knows
all this information and numbers so I'm going to let her address any questions specific about the
audit itself. Catherine would you maybe just give us some comments about the findings and the process
Catherine Donner
Unverified
4:18
of the timeline of how we got here. So timeline in as you stated in April of 23 we instituted a student work day the FY23 audit was completed quite a bit after the time so a lot
of the errors that we found in FY23 were not cleaned up by the time we started the FY24 audit on a separate note the largest item on here was the overstatement of cash and cash equivalents in FY24 for the first time in quite a few years the college invested five and a half million dollars and because those investments were under a year they were placed into cash and cash
equivalents rather than um investments because the um governmental accounting standards are for three months um being the cutoff for cash and cash equivalents rather than investments which so that was a classification error but the money was not missing it was it was simply misclassified and that was corrected um we had um to with the implementation of student work day our scholarship allowance was the large difference, the large difference in revenue and expense overstatements
were due to, we had to find a way to calculate scholarship allowances differently because Workday did not allow us to capture that information in the detail that we had always used in the past and we took, it took us a while to be able to manipulate the data to get that information accurately. Um, those are the biggest things. Um, speaking on the, on the missed revenue that, that happened, there was a workday update in September of,
um, 23 that led to the, um, missed revenue. It was, it was due to the new release update. And And that was something that we identified during that time. But we fixed it after the end of the fiscal year. We had consultants brought in to help us get that fixed. And we also had to do a ticket with Workday for that. Thank you,
Catherine. Members, any questions? All right. Representative Beatty.
Representative Howard M. Beaty, Jr.
Unverified
6:46
In your response to the findings, you state that finance is going to develop a standard operating procedure for accounts receivable, accounts payable, reconciliation each month. Can you describe
Catherine Donner
Unverified
6:58
that procedure to us? So we have come up with a closing list and dates that are being met each month. There may be some exceptions here and there, but in general we are closing the months. Several of these errors were year-end accrual entries that were overlooked
or made incorrectly the prepaid. There was an invoice that was miscalculated for the prepaid accrual. But we have instituted closing months. We have a checklist. We have processes for approvals on journal entries to make sure that we're getting the correct ones in place, getting the correct numbers in. And just a
Representative Howard M. Beaty, Jr.
Unverified
7:43
quick follow-up. Who actually processes and approves your closing and adjusting entries at the university?
Catherine Donner
Unverified
7:49
All right, the college. That would be me. I am interim CFO, but my position, my formal position is the executive director of accounting slash controller. And so that is myself. For the second time in two and a half years, I am acting as interim because we've lost our VP. Right. So
Representative Howard M. Beaty, Jr.
Unverified
8:12
the errors that were these were reversed twice. Was that a staff member that had made those incorrect entries?
Catherine Donner
Unverified
8:20
It was made by a couple of different staff, not communicating well with each other. So the checklist should prevent that from happening in the future.
Representative Howard M. Beaty, Jr.
Unverified
8:30
That's what I was hoping for, is that there had been procedures in there, who could create the entry, a
secondary review approval, and then a review by you. So we shouldn't see this error again.
Speaker 31
8:40
Yes. Thank you. correct. Thank you. Members, any other questions? Co-Chair
Representative Hope Duke
Unverified
8:51
Duke. Thank you, Mr. Chair. Thank you
all for me and making a long trip down here. Appreciate it. I just have, and Representative Beatty
kind of touched on it a little bit. One of my concerns is just this is, you know, the finding one. We've
had it for previous audits, and so I would just like to hear from you all a little bit more about how you're going to what you've done to implement to make sure that we
Catherine Donner
Unverified
9:18
don't have this finding at a fifth audit so we have um we have made some changes to hopefully
do some things to bring in a vice president that is um that is very qualified and knowledgeable so that we can attract, you know, better talent that hopefully will stay with us. We have, we're in discussion of reopening a position that hasn't been filled since 21, which is an associate vice president of finance. And we have job openings, you know, with our recent compensation adjustments.
We're hoping that those new, more marketable salaries will help us bring in better talent. We have had a lot of turnover, even continue to have turnover, losing people to some of the corporate and other universities in the area. We have trouble retaining our people when we get them, so we continue to have turnover and be short-staffed. But we are widening our searches. We are cross-training so that hopefully when one person does leave,
there's someone else who can pick up and
Speaker 39
10:37
take over, at least for the short term. How long have you all been without that vice president position built? The most previous vice
Catherine Donner
Unverified
10:48
president left in November. 12th was her last day, and so I have been acting as interim. She had worked for the college
Speaker 29
10:55
for a year and a half, and I was interim for several months prior to
Speaker 10
11:02
that. Please, go ahead. I'll go ahead and add, too, that we actually
Speaker 11
11:07
conducted a search in the fall before she departed.
She gave us a good notice, and the college did try to fill that position in the fall. It was an unsuccessful search, unfortunately, but we are reopening that search this spring to replace the vice president. Do you have other positions
Representative Hope Duke
Unverified
11:23
that you're unable to fill in this department? Yes. Yes, I
Catherine Donner
Unverified
11:28
do. Um, I also, um, uh, at the end of the calendar year lost my general ledger manager, um, who was, I had, had been working for me for two years. Uh, she gave notice and went to a corporate position and, um, we have an assistant treasury manager position that, um, is open or
is filled right now, but the, the, uh, incumbent is leaving in a couple of months. So, um, and then And, of course, we have
Speaker 11
11:58
the VP opening. And I'll add, staffing just is a challenge for us. We are really a talent workforce feeder for the region in many ways. Just even outside of finance, when I joined, there were two team members on my team, and within six months had to turn over those positions.
So it's just we get we have great people, some great training and opportunities, and then they find places, other places where they can move. So but we are continuing to work on this succession planning in place, you know, for each of these positions and really working hard to give Catherine and her team the resources that they need for the job. I just applaud Catherine for the work that she does and with a very lean team, really stand on top of what really is a huge operation, you know, there at our college.
Representative Hope Duke
Unverified
12:57
And I was going to echo that sentiment as well. As far as Catherine, it sounds like you have been one of the steady forces there for the university when they've
had so much turmoil, or not turmoil, but changeover. So I do appreciate that. I have one other question, and it's on finding two, and I'm not sure if I'm understanding it correctly or not, so I'm just going to ask it to make sure. So on this, we're not charged student tuition, these kids. So
are you saying these students, there was a number of students who were not charged tuition, they basically went to school to some degree free?
Catherine Donner
Unverified
13:29
Okay, so this error was tuition only. So they did get charged all the appropriate fees, And they did get charged tuition in some of their classes, but if they did a drop add and, like, say, added a class, that would be where the tuition line item didn't get charged. And all of the tuition revenue is posted by class. So, again, it was just the some classes, not all.
And that error was corrected, but it was decided by our student services team that it did not make sense to go back to the student after the end of the semester and rebuild them. So it was decided, and it would have been a financial aid-related administrative problem. So it was decided that we did not go back and try to collect that money. that was decided by the cabinet and student services.
Representative Hope Duke
Unverified
14:35
Okay, thank you. That kind of answered part of my next question. Were the students aware that this happened? Were they made aware that this happened?
Catherine Donner
Unverified
14:44
I do not know that. I know that some of them were, but I do not know in general if it was decided to contact those
Representative Hope Duke
Unverified
14:53
students. Okay, well, just speaking as a mom of a college-age
student who at one point had a fair amount of a scholarship double put into his account, and then we called and said, hey, you've got an error, not at your
university, not your school, but at a different school, and we called and said, hey, listen, this happened, and we want to make sure you know that, and so I would hope that we would have individuals who would pay their bill, but if they're not aware that they owed parts of it as well, they may not be paying, because I would have other kids in my family who may not were paying as close attention to what was going on on their accounts, so I understand that kids may not necessarily catch that but i would hope maybe in the future your cabinet will at least let them know because i think there are people up there who understand you did receive the service so you
still should be obligated to pay for it yes um just as a moral aspect of it so but thank you for clarifying that because that was one of the questions i had was as you know what who determined not to have the students try to try to recover the money yes i do i do know that it was a student
Catherine Donner
Unverified
15:51
who pointed out the problem but i do not think that all of the students as you say many students may not look it's a rather long bill when you get it so they may not look at it line by line well kudos for that kid and if you
Representative Hope Duke
Unverified
16:04
were in my class I probably would have given him the a for telling me that he missed the question so I do appreciate that as well yeah thank you
Representative Wayne Long
Unverified
16:11
representative long recognize thank you mr. chairman um how big is y'all's department that does you know basically takes care
Catherine Donner
Unverified
16:25
of this this portion of your um so we have currently we have six. Um, if, if we were fully staffed, we would have, um, including myself, we would have nine, uh, that, that accounts, uh, includes budget, um, my budget team, which
Representative Wayne Long
Unverified
16:42
is, um, three to four people. Any idea about how, how underpaid they are as far as compared to, you know, other universities?
Catherine Donner
Unverified
16:53
Very rough, because I'm not that familiar with what the universities, but I know that we had an employee who left, and it was more of an entry-level salary position, and he left making 47 to 48, and he went to the university and took a job at 60. At that time, we were just about to implement phase three of our compensation adjustments that we've been working on for the last four years.
And so we, his co-worker, in order to prevent losing him, we went, we were able to give him some more money, but we could not convince the other employee to stay. Um, but then a few months later, the worker that we, um, increased his salary also left and went to U of A. So, um, and I do not know what, where, what his salary was, but one of the factors in maintaining these people is the commute. Um, it's, it's very hard for
entry-level people to afford to live in Bentonville or Rogers. And so they commute from Fayetteville or west benton county and um when you can take more money and be closer to home it's they you know they usually make that choice well the reason
Representative Wayne Long
Unverified
18:18
i was asking is like um you mentioned y'all been working on a four-year plan to
increase salaries um i was wondering you know is there any effort to like speed up this plan because these repeat findings you know it's like you can't can't
discontinued with that, and with only six or nine people, I think if you reprioritize some other budget items, maybe you can get the pay,
Catherine Donner
Unverified
18:44
or you won't have that turnover. Yeah, so we, in July of 25, we implemented phase three of a four-phase plan, which phase three concentrated on the higher-level employees, more salaried employees than the earlier phases and brought people up to, um, mid-level in the market. Um, however,
it's some of the other areas continue to, um, raise salary as well. So, um, we can't necessarily match some of the corporate, um, corporate
Speaker 12
19:19
areas and we, we may fall slightly under, uh, the University as well. Thank you ma'am. Mr. Long, uh, Representative
Mayberry, you're recognized. Thank you. Um, Representative
Representative Julie Mayberry
Unverified
19:35
Duke asked quite a few questions that I was going to ask, but
one, one little part of it, um, to the, the students who didn't have the, um, class charged, um, to them. I'm just curious because I know that there are times when there's a student who has received a scholarship and at the end of that semester if not all of that money was needed they get that money back um you know sometimes it can be just a small amount but if they weren't charged for that class did that student then also receive that money back to put in their own pocket
Catherine Donner
Unverified
20:12
um i'm not sure i don't know the answer for a class that they should have been charged for Yeah, I understand. I do not know the answer to that. I do know that we do, as you say, we disperse the financial aid once we have satisfied their bill. And I do not know if we went back and adjusted the
Representative Julie Mayberry
Unverified
20:37
financial aid or the scholarships. I can find out. Okay. And I realize, I mean, that was quite some time
ago. It's probably really hard to go find that poor college student who probably got excited
because they got a few hundred dollars back at the end of the semester to, you know, cover the other life expenses, their car, their transportation, their whatever, you know, to get there. But I just was curious if that was looked at. And, again, kudos to the, because that was going to be a question is, you know, was there not a student somewhere along the way? Because I know my kids, we always look at it, and if something is being charged or overcharged, We look at our bill, and, you know, thank goodness there was a student who spoke up.
And I don't know what you've done for that student, but, you know, tell them thank you because this could have continued on for a pretty
Speaker 64
21:25
good amount of time, yes? Or would it have been caught the next semester? It was probably caught in a workday
Catherine Donner
Unverified
21:32
release. I'm sure we weren't the only school that had the problem. But, you know, yes, if we had waited on external
Representative Julie Mayberry
Unverified
21:39
areas, it could have gone on. So you're saying there's other
Catherine Donner
Unverified
21:43
schools that probably have done this exact? It was a workday issue, and it was a release, you know, a software upgrade.
I'm assuming it didn't just happen to us. That's an assumption. Oh,
Speaker 11
21:56
okay. Yeah, this coincided with the adoption of workday for students, the SIS. Yeah, it was an update. Update to
Speaker 81
22:04
it. Yeah. So it was a system error. Yeah. And, like, yeah, it was an
Catherine Donner
Unverified
22:10
internal bug rather than a configuration error. It was not a, yeah. So sometimes if you don't set things up correctly, you might have a configuration error, but this was an internal workday issue.
Speaker 85
22:22
Okay. Thank you. Representative Brooks. Thank you, Mr. Chair, and this is probably
Speaker 86
22:29
more a question for Mr. Fink. In audit, since this was a software issue which may have impacted other institutions, Have we looked into if this was a larger problem that we need to investigate? I'm
Speaker 4
22:45
not aware of other issues that we've had specifically for this at other higher ed institutions. That's not to say that there haven't been issues noted in response to findings that we've had related to the software that's being discussed.
But I'm not aware of this specific scenario. NWIC was one of
Catherine Donner
Unverified
23:06
the first institutions in the state to convert over to Student Work Day. So that may be why. Well, thank you for being here. I did hear significant
Catherine Donor
Unverified
23:16
work to do your best not to be back, so we appreciate that. Thank you for putting those measures in place with the checklist that you described as well. So thank you for your service to the community and these students. So we know it's important work. without any further questions, and without objection, this will be filed and as reviewed.
Speaker 3
23:40
All right, Mr. Fink, next finding. The next report for review is
Speaker 4
23:44
Cedarville School District, which had one finding that was referred to the bond board, as well as the prosecuting attorney and attorney general. The district discovered and we verified improper credit card charges of $794. An elementary teacher who resigned in June of 2025 stated to district officials that these charges were for personal expenses. The employee reimbursed the district for the $794.
District officials contacted the school resource officer and a police report was filed. Additionally, this matter was submitted to the Professional License or Standards Board. That concludes findings for Cedarville School District. Members, any questions
on this report? Okay. Co-Chair Duke. Thank you,
Representative Hope Duke
Unverified
24:28
Mr. Chair. I have a quick question for staff. So I know it says, additionally, this matter was submitted to the professional licensure board, standards board. Do we or can we get any update? Because we have several school personnel over the time that have some of these similar issues.
How do we make sure or find out the information that this person doesn't just go to another district
Speaker 4
24:54
and do the same thing? So the only thing I'm aware of on this one is that I believe the school received a letter saying that no further action was taken. It was looked into by the PLSB, but I'm not aware of any additional action that was taken. And I'm not aware of any additional action taken by the police department as well.
Representative Hope Duke
Unverified
25:16
Do you know if in any of these instances, especially when we've had some really significant numbers, if they ever attach to their certificate? Because I know other items attach to their teaching
Speaker 4
25:31
license. So generally, if they take that kind of action, we'll know it. I know we've had some that we presented in the past where we knew that the PLSB actually took action. And if I have that
Speaker 87
25:43
information, I'll typically share it with the committee.
Representative Hope Duke
Unverified
25:47
One more question. Do you know if it goes in a file or in the
personnel file or anything like that? I'm unaware. Okay, thank you. All right, members, without any further questions, this will be, and without
Speaker 4
26:02
objection, will be filed as reviewed. All right, the last report with findings. Last report is West Memphis School District, which had one finding that was a repeat. During our examination of capital assets, the following discrepancies were noted. The district failed to capitalize $851,000 of construction expenditures related to the baseball softball complex.
Eight items with an initial cost of $200,000 were included as capital asset additions, but due to errors, the asset values were not included in the total active assets and the total ending balance. One capital outlay purchase was not properly capitalized, And of the 10 items we selected for observation, four were not available for inspection. And a similar finding was noted in the prior audit. Thank you, Mr. Fink. And I
Catherine Donor
Unverified
26:46
believe we have a representative from West Memphis. Welcome to the table.
Introduce yourself, and we will welcome you. I'm
Speaker 101
26:56
Eric Foyster. I'm the superintendent of West Memphis Schools. Apologies for Dr. Wolf, our school board president. She is out of state today. Otherwise, she would be definitely here. Thank you, Mr.
Catherine Donor
Unverified
27:07
Foyster. thanks for being here and um we'll we'll just open it up like we normally do we heard we heard the report on the findings we'd love some of your commentary and some thoughts and and i believe it's probably relevant information to note i to to say i've got a note you've been there about 13 months
is that correct in your role okay so tell us a little bit about what's
Speaker 101
27:27
going on here so we had our first legislative audit for fy 24 the district had never done a public audit um so there's a lot of processes and procedures that were never put in place. So before this was, I got to give credit to the school board. I wouldn't want to do a public audit, but they had already agreed to do that. So I started in December of 20, whatever fiscal year. So I was on the tail end of that. We just finished up the baseball softball. I was not aware of those findings, to be honest, until after the audit came
through. I was aware of our issues with fixed assets, which is the repeat finding. So what we have done, we now have a process and procedure in place, not only for the fixed assets, but we have a requisition PO process that goes through three levels before it ever gets approved. And when it gets approved, when it comes in, it gets received. So we have the chain of duties, separation of duties is already in place. So now we have a tagging process for all our equipment. The hard
part for us, quite frankly, at this point is we have so many assets that were not, quite frankly, inventoried for years. So we are in the process of trying to retire some assets that should have been retired years ago. We did retire a couple since I've been here. We're in the process of making some significant ones here over the next few months. Our department leads, building principals, they have a process laid out. They have a due date by May 15th to get back with me on where we're at and then go from there.
Thank you for that description. I appreciate it. So will you kind of double-click on what you had mentioned about some of the checks and balances maybe there? And where
Catherine Donor
Unverified
29:12
is your school board involved on some of that? Are they a part of it? Is it brought to them
Speaker 101
29:19
for final approval? What does that look like? So we follow the same guidelines at, you know, ASBA school districts. So anything over the significant dollar amount gets approved by the board. Typically, being new, and I'll just be frank, I'm the sixth superintendent since 2022.
So there's been a lot of turmoil, a lot of – so I'm trying to be transparent. So any large ticket item, I put it in front of the board, whether it needs – whether that's the – I don't want anything that's considered we're trying to do something we're not supposed to be doing. So I have a deputy superintendent. When I started, I don't want to say nobody, I had very limited. The people retired around me. So for about six months, it was just me. So our business manager is very sharp. She's in place now. We have a deputy superintendent. I have two other guys in that lead office.
So the process goes, and we're also a federal program. So the dollar amount, because they have to get checked off by the chief academic officer over that grade level, Goes to the principal, him, then to the deputy superintendent. And if it's anything over a significant amount, then it goes through me. So three steps before it ever gets approved. And then we have separation duties. We have two counts payable. And then we have receiving as well that comes in a different way. So we've really tried to – the operational excellence is something we're striving for.
Chair
Unverified
30:37
Thank you. Senator Love, you're recognized.
Senator Fredrick J. Love
Unverified
30:41
Thank you, Mr. Chair. I'm looking at, I think it's the fourth bullet point, which is of the ten items selected, there was four that observed that were not available. So were those big-ticket items, or were those, I mean, were they old? Were
Speaker 109
30:58
they big-ticket? To my knowledge, they weren't big-ticket, but they were older. Okay, so you're doing a cleanup.
Senator Fredrick J. Love
Unverified
31:07
You're kind of cleaning out your inventory, tagging things. That is correct. Okay. Do you have any items missing? I mean, like, to your knowledge, if, like, are we truly cleaning up, or are you going to come back and say, hey, you know what, we have some tractors that are just missing somebody, you know. Yeah, to my knowledge, nothing
Speaker 109
31:32
big ticket like that. Nothing at all. I
think staff can read a couple of these.
Speaker 87
31:37
That might be helpful, too. Okay. It would be. So for
Speaker 4
31:43
the four items that were unavailable for inspection, the total cost of the four, like all together, is around $6,000. They were purchased anywhere from 2007 to 2019. All items except one were fully depreciated. One was a desktop computer, one was a MacBook, a musical instrument, and a sympodium. Oh, no useful value.
Senator Fredrick J. Love
Unverified
32:09
All right. Other than that, you've cleaned them out of your inventory. We're in the process, yes. Okay, thank
Chair
Unverified
32:18
you. Thank you, Senator Love. Representative Beatty, you're recognized. Oh, you're good now. Thank
Representative Julie Mayberry
Unverified
32:27
you, sir. Representative Mayberry, recognized. Thank you. I'm just asking for some clarifications because maybe I just misunderstood you. Did you say that you've not had a public audit until the last year? That is correct.
Do you mean that you've not had our auditors do it? Or do you mean, like, has there been a private auditor doing it? There has been a private audit, correct. Okay, so there has been an audit. It's just not been our auditors who do this all the time and know it backwards and forwards, right? Okay. I say all the time, if I don't know it's broke,
Speaker 101
33:00
I can't fix it. Right, okay, but there has been an audit
Representative Julie Mayberry
Unverified
33:03
before, just private. Thank you for clarifying. Senator Love, you have a question? I have a question for staff.
Senator Fredrick J. Love
Unverified
33:11
So they said, the superintendent said that West Memphis has never
had an audit. Is there a reason why we have not looked
Speaker 87
33:22
at them at all? So previously, their school board had chosen
Speaker 4
33:26
to use a CPA firm that was not legislative audit to do their audit. So they've had an audit every year. We keep up with that. We track that. Even for the audits that we don't perform, I keep a list of every audit that's done.
So it's not that they haven't had an audit. They chose, their board did, to start using Arkansas legislative audit for their FY24 audit. So now we are the ones doing that. Okay,
Senator Fredrick J. Love
Unverified
33:53
so when they have their private audit, do we review that audit? Are we
looking at things in the audit saying, hey, these may be questions? And so we may want to do our own audit, or are we just fouling it
Speaker 4
34:14
We review it. DESE also receives that audit and looks over it. We look to see if there are any findings. If they are,
Senator Fredrick J. Love
Unverified
34:24
they come before this body. Okay, so tell me this. From last year then, were there any issues on the private
audit that we picked up that were on the public audit? I
mean, like, did the private auditors do exactly what they were supposed to do, or were these issues just looked over? I guess that would be my question, because I don't think with how the superintendent explained it, it seems like this has been going on for years.
Well, if they've been doing a private audit, and the private
audit didn't pick it up, and then all of a sudden we picked it up. I mean, like, I'm just kind of curious to see, like, then what have we been reviewing, number one?
Number two is if these were pervasive issues, then why did we not get involved sooner? I guess that's what I'm like. I mean, do you understand what I'm saying?
Speaker 4
35:25
So, yeah, so first, though, when it comes to the audit, I mean, we don't look at 100%. So I don't, the CPA firm, they could have done all of their work. They could have done it correctly. And in their samples that they pulled for capital assets, they may have pulled other items that the school district had on hand. So I really can't speak to that. We started doing the audit in FY24. We noticed issues. Anytime we notice an issue, we're going to follow up on it in the next year
to see, you know, if that issue is still there. So I really can only speak to the work that our auditors perform. Okay. All
Chair
Unverified
36:08
right. Thank you. Thank you, Senator Love. Representative Beatty,
Representative Howard M. Beaty, Jr.
Unverified
36:13
you recognize. I just want to follow up. You mentioned in the audit, and this is for staff, that a similar finding was reported in the prior audit. Was that prior finding, was it related to misclassification on the capitalization of the assets on construction, or was it more on their fixed asset side?
Is it the entire four points were on there in the previous audit or was it just that they were having trouble with their
Speaker 4
36:38
fixed assets? So we had similar issues on the first, second, and fourth bullet point, first, second, and fourth.
Yes, sir. Thank you. Thank you. Representative Long,
Representative Wayne Long
Unverified
36:48
recognize? Thank you, Mr. Chairman. My question was for staff also. I would assume a legislative audit does not charge the schools to do an audit. Is that correct? That's correct.
Why would a school choose to pay a private firm rather than have it free
by the state? I
can't really answer that question. Can you give me an idea about how many school districts approximately do the CPA-type audit rather
Speaker 4
37:24
than legislative audit? So we do 197 school audits, and there are 38 schools that choose a private auditor.
Representative Wayne Long
Unverified
37:34
Thank you, sir. Maybe that's something we need to look into. Thank you. Okay, so
Senator Fredrick J. Love
Unverified
37:39
I'm back on this, Mr. Fink, because I can't let this go for some reason. So if we look at an audit, if there was a repeat findings that we're saying these were repeat findings, if the school board
did not elect for us to come in, would we have gone down to do an audit?
Senator Fredrick J. Love
Unverified
38:13
issue because if we know from their audits that they were having
an issue and the school board didn't elect for us to come in and we were to continue to let this go on, I guess I'm trying to figure out when is it legislative audit to say, hey, wait a minute, no.
The school board, we see this as a pattern, and we're now stepping in as
Catherine Donor
Unverified
38:49
legislative audit. I'll give my commentary. I believe West Memphis is acting in good faith. No, no, no. I know, but just as an example, they have an independent audit that they go down. they have some findings and they communicate with leg audit as well and i think that's probably the rhythm that's probably a similar rhythm than to what the 38 other school districts go through um that's
Speaker 139
39:12
an assumption that's that's my commentary but yeah
Senator Fredrick J. Love
Unverified
39:15
but well i was just thinking i mean
if they would have elected not to have us come in they would just continue to have the same issues and then they would just continue to go and
i guess that's where i guess my rub is it's like if they didn't invite us in i mean when is it our job to say hey you know what we see this audit we see that these are repeat findings and so now we're going to step in to actually do an audit from legislative audit perspective so maybe
Catherine Donor
Unverified
39:49
maybe this senator love if this could be a question for
staff. So what's in front of you is an audit from the state, but maybe staff can clarify this way for both of us. Um, whether a school district has an independent audit or not, they're always eligible, potentially eligible for an audit from the state. And so
Mr. Fink, could you maybe describe that for all of us? Um, what's the regular rhythm for school districts going through
Speaker 87
40:18
an audit, whether they have independent auditors going on or not? So
Speaker 4
40:23
typically just in terms of If there's a private CPA has done it in the past, there will be, you know, basically brought before the executive committee a request for us to do the audit.
We've seen it where the superintendent and school boards are the ones who do that. We've also seen it where the executive committee learns of certain issues, and they come and they request that from us. We've done that, I think, back in 2022. We did that. But typically we just do whatever the executive committee of LJAC approves. I hope that answers your question. Well, I
Senator Fredrick J. Love
Unverified
41:03
guess this is what I'm saying, though.
When is it, when, I guess, when do we decide that if they've had repeat findings, for instance, The CPA has turned over this. They haven't corrected year one. Then year two, similar findings, repeat findings, year two. Is there
any time that legislative audit is going to step in if they're not invited?
Speaker 4
41:37
Again, staff serves at the will of the committee, so we're going to do what the executive committee and what the full joint audit committee requires us
Senator Fredrick J. Love
Unverified
41:48
to do. Regardless of if you see this, if you see, you know,
hey, West Memphis has had repeat findings two, three years in a row after you all reviewed it, you all would not go in unless the school board requests or unless it just gets so –
Speaker 129
42:07
I mean, are you missing what I'm saying? I guess I'm – I don't think I'm
Speaker 125
42:15
going to, so we did the audits for FY 24 and 25 for West Memphis. But I'm talking
Speaker 4
42:20
about the years before because it seems like this has been a pervasive issue. We wouldn't have known about any issue unless it was in the audit report. If it is in the audit report and it's
Senator Fredrick J. Love
Unverified
42:30
a repeat finding, it's going to come before this committee. Whether
it's a private, whether it's a private, okay, all right. Yes, sir. That's what I was missing is like, okay, all right.
Speaker 87
42:38
Any audit that a CPA firm does that involves a public open enrollment charter school or public school district comes before this body.
Speaker 91
42:45
Gotcha. Okay, that's what I was missing. I was like, all right, we're not
Senator Fredrick J. Love
Unverified
42:50
going to look at it. Okay. Thank you. Representative Duke, you're recognized. Just a quick question,
Representative Hope Duke
Unverified
42:57
and going along with the Senator's question. So it all comes before
us. I guess I think kind of what the gist of what he is saying here is what's the protection?
It comes before us. We hear the reports, but we can do a little bit of a dig or dive. So would that be at the executive committee that would say? Do they have the ability to come in and say, okay, we're getting some private reports here that are concerning to us. Now we want to know more information. Or if the school district says, no hands off, we're doing a private audit. how do we make, where's the accountability? Is there additional accountability as a resource or
the ability of legislators, whether legislative audit with executive committee or this committee that can, and this has nothing really, he's just kind of taking us down a direction, but I do understand it because as a private audit, if you don't have that type of accountability, then why would you why would you not just do it so I'm assuming there has to be a layer in there that that allows the legislature to ensure everything's on the
Speaker 4
44:07
up and up yes so the executive committee
if the executive committee makes a decision that Arkansas legislative audit is going to do the audit of the school then we're going
Representative Howard M. Beaty, Jr.
Unverified
44:21
to do the audit of the school thank you uh representative Betty I'm glad we finally got that cleared up that regardless of private or if it's something that's performed by the state if it still comes to this committee with the findings and and even on the private side there's even a secondary review layer that all of those private audits go through where someone pulls the audits and reduce the working papers to make certain that findings and
and procedure I think that's done by the CPAs and within the the Arkansas certified public accounting association they do peer review and look at those things so I mean regardless of what the fighting is or who found it or who performed the audit those things still come to this committee and and then this body has the authority to take action on those so I guess the main thing is that that the findings are there and that we've got good auditors working
both in-leg audit and the private audit that are taking care of these. But I'm glad that we finally got around to the point that private or leg audit, that those reports do make their way to this committee and then on to leg audit on the full committee. Absolutely. Thank you. Members, any
Catherine Donor
Unverified
45:30
other questions for West Memphis besides our own rules? Okay. Thank you for being here. I appreciate it. Without objection, this will be filed as reviewed. Thank you. All right, members, that takes us through the reports with findings. We do have 28 school districts with no findings,
whether private or leg audit. And you'll see them listed on the back page of your deck. If you've got a school district that you represent there, shoot them a note, would be my recommendation. It sounds like Representative Beatty's got some school districts that are passing flying colors. Give them the kudos they deserve. And so that is a big deal. We appreciate that. Members, any other business? Seeing none, we are adjourned.
Agenda
A. Call to order by Co-Chairman.
B. Adoption of Minutes of the January 8, 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, Feb 12, 2026 | Agenda | 2 | Official source ↗ |
Speakers
Senator Tyler Dees Chair
Unverified
Speaker 4
Catherine Donor
Unverified
Catherine Donner
Unverified
Speaker 11
Representative Howard M. Beaty, Jr.
Unverified
Speaker 31
Representative Hope Duke
Unverified
Speaker 39
Speaker 29
Speaker 10
Representative Wayne Long
Unverified
Speaker 12
Representative Julie Mayberry
Unverified
Speaker 64
Speaker 81
Speaker 85
Speaker 86
Speaker 89
Speaker 3
Speaker 87
Speaker 101
Chair
Unverified
Senator Fredrick J. Love
Unverified
Speaker 109
Speaker 136
Speaker 139
Speaker 129
Speaker 125
Speaker 91