Legislative Joint Auditing-State Agencies
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Speaker 1
0:00
If you could all join us, Representative Unger is going to lead us in
Representative Steve Unger
Unverified
0:07
a prayer real quick. Please pray with me. Almighty God, you are the Lord of both justice and mercy. Help us as we administer the taxpayers' money that go to the state agencies, and help us all be honest stewards of the things you've put in front of us. We are very grateful to live in this blessed state and in this blessed nation. Please be with us in these proceedings.
Amen. Thank you, Representative. All right. I need a motion to adopt the minutes from January. Senator Boyd, is there a second? Representative Meeks, any discussion? All those in favor, say aye. Opposed, same sign. Those minutes are adopted. Mr. Bullington, would you please get us going? Yes,
Speaker 5
0:56
thank you, Mr. Chair. Today, we're presenting two deferred reports with findings,
Speaker 6
1:00
two current reports with findings, and one special report.
Speaker 5
1:04
We also have five reports without findings, and these are listed on
page one of the audit summary. Without objection, those reports will
Speaker 6
1:22
be filed. Seeing none. Okay, the first report we have today with findings is the Department of Human Services FY24 report. and this report contains three findings, and it was deferred from the January meeting. The first finding, the agency notified us of the apparent theft of almost $8,000 from the Disaster Supplemental Nutrition Assistance Program.
By providing false or incomplete information to the agency, 13 employees received disaster temporary food assistance benefits related to the March 31, 2023 tornadoes that impacted Pulaski County. The employment of these individuals was terminated, and the EAC referred all cases to the Plastic County Prosecutor's Office. The EAC also notified us of the apparent theft of $5,800 from the Medicaid program. Also, by providing false information to the EAC, one employee received Medicaid benefits to which they were not entitled.
This individual was also terminated and referred the case to the Plastic County Prosecutor's Office. We also referred this to the prosecuting attorney and the attorney general, and it was also certified to the bond board. The second finding, on July 31st, 2024, the AAC received an email notification from the Treasurer of State's office stating that a state warrant issued on behalf of DHS payable to the University of Arkansas at Little Rock had been altered and cashed and that DHS would need to begin the affidavit process to get a new warrant issued to UALR.
However, it was not until August 21st, 2024, 15 business days later, that the AAC notified us of the theft of the almost $610,000 warrant. The payee line on the redeemed warrant was altered and replaced with the name of a private business, but the warrant amount and number remain unaltered. The deputy director and state controller at the Department of Finance Administration became aware of the issue and notified the FBI on August 20, 2024. UALR completed the affidavit of forged warrant form on August 22,
and the bank was notified of the altered warrant on the next day. The state's forgery claim was honored by the bank, and the funds were deposited into the Treasury State's account on November 13, 2024. This finding was referred to the project attorney and the Attorney General. And the third finding, while performing an observation of assets from a current capital asset listing dated April 16, 2025, we noted five of the 50 equipment items sampled with a total purchase cost of almost $59,000 could not be physically located for observation and or properly identified for audit verification as follows.
Three of the items could not be physically located, and none of these had been documented as lost, stolen, or obsolete prior to our testing. One item presented for observation had no identifying tag number and or serial number documented on the ACES fixed-asset listing, and one item was discovered having been transferred to marketing redistribution. However, the item remained on the fixed-asset listing as current. Additionally, 10 of the 50 items tested had documented dates and ACES as being last inventory two or more years ago. During our review of asset acquisitions, deletions, and observation, we also noted the following.
Two items were not capitalized at the correct amount. One item that was still on hand was removed from ACES in error, and one item cited during observation did not match the description that was listed in ACES. Furthermore, we noted that the agency paid over $17,000 in error for sales tax levied on four vehicle purchases that were
Speaker 10
4:43
tax-exempt. Mr. Chair, that concludes the findings. for the
DHS. Members, do you have any questions? Representative Meeks, can we get somebody from
you would introduce yourself for the record, we'll recognize Representative Meeks so he can ask his question. Thank
Speaker 19
5:11
you, Mr. Chairman. So my question... Hold on, Mr.
Speaker 20
5:14
Representative. Let this fellow introduce himself. Brett Hayes, Chief
Representative Stephen Meeks
Unverified
5:18
Deputy Counsel of DHS. Now you're recognized. Thank you. All right, Mr. Hayes, thank you for being here. My question relates to the $600,000 warrant that was fraudulently cashed, looks like, by a business.
I'm assuming you all know what business that was. Have they been put on a list so that we can make sure we don't do business with them at any point in the future? Have we notified other state agencies to make sure that they don't fall victim to the same or the Office
Speaker 20
5:51
of Procurement? It was an auto body shop out of California. Okay. That was the first red flag right there in California.
Speaker 24
5:59
This was a warrant that was intercepted in the mail. So, I mean, to my knowledge, we wouldn't do any business with, you know, a body shop in California. I doubt anybody else in the state would. I mean, we referred it to the prosecutor and also the FBI was investigating. So, I mean, your answer is no, but I think it's highly unlikely that anybody would do business with it. So since
Representative Stephen Meeks
Unverified
6:27
it was in California, have we notified any state officials over in California?
So just as a, you know, courtesy to let them know, hey, they did this to us, make sure they don't do it to you. To my knowledge, we did not. Okay. All right. Just curious. All right. Thank you. Thank you, Representative
Meeks. Any other questions? Very good. Okay. Without objection, we'll file that report. Thank you, sir.
Speaker 6
7:00
And we'll move on. The next report with findings is the Department of Parks, Heritage, and Tourism FY24 report.
And this report contains two findings, and it was also deferred from the January meeting. The first finding, the Arkansas Department of Parks, Heritage, and Tourism notified us in April 2024 of the loss of receipts totaling almost $3,500 from one of its museums. An employee was terminated, and as of our report date, no criminal charges had been brought against a former employee. This finding was referred to the prosecuting attorney, the attorney general, and was also certified to the bond board. In the second finding, during our review of the agency's various change fund cash accounts,
the following exceptions were noted. At Daisy State Park, the $100 in camping drawer funds could not be located by a park staff at the time of our audit, and at Wormormora Stadium, it was discovered at the time of our audit that the change fund had an $80 overage. Wormormora Stadium's change fund is unique because it has both a cash portion and a balance that's held in a commercial bank account, and this amount can be adjusted throughout the year based on the size of events and the need for additional change funds. The overage had not been previously discovered because the AC did not have procedures in place
Speaker 10
8:07
that would consider both cash and bank balances together when verifying the change fund. I'm going to
make sure that concludes our findings for Park Heritage
and Tourism. Very good. Members, do you have any questions for the department? Representative Bunger, can we get somebody from Park Heritage and Tourism to come forward, please? And if you will all introduce yourselves for the record, we'll let Representative Unger ask his question.
Speaker 33
8:45
Good afternoon. Shea Lewis, Secretary of the Arkansas Department of Parks, Heritage
Speaker 35
8:52
and Tourism. Good afternoon. I'm Ranger Chris Medlin,
Representative Steve Unger
Unverified
8:57
Arkansas State Parks. Thank you, gentlemen. I'm repeating a question that I think Representative Richardson asked a couple months ago. Can you guys go to just be cashless and start using credit and debit cards so we don't have to worry about money floating around in a drawer?
Shea Lewis
Unverified
9:16
It's something that we have looked into specifically. We still have a percentage of customers that do prefer using cash. We have been looking at and considering testing at War Memorial Stadium specifically because other locations such as Reynolds Stadium at the University of Arkansas has recently gone cashless as well, and something we're considering. We do have the infrastructure now within the stadium and the credit card machines as well as the data lines that can manage that volume of credit card transactions now,
So it's under review and consideration. But we still have to be mindful of our guests that want to pay with cash and have taken that into consideration. As we kind of look forward to the future there, giving our guests that have games at War Memorial Stand, putting a notice for that would be a key part of that. Thank you.
Representative Mindy McAlindon
Unverified
10:14
Representative McClendon. Thank you, Chairman. Did you say, were the funds recovered from the employee that
Shea Lewis
Unverified
10:19
was terminated? So since our last meeting, when we were here last month, we have, I do have an update associated that.
Since that time, a new prosecuting attorney has been assigned to the investigation through the Pulaski County Prosecutor's Office. We were able to confirm that the statute of limitations for any misdemeanor charges has expired since the investigation has taken so long. But since that time, the investigation is continuing, is ongoing. A subpoena has been issued for additional evidence,
and we hope that that will lead to a prosecution. Thank you. Thank you, Chair. Very
good. Any other questions? Hold on. I'm going to go to Senator Boyd next. Thank you, Mr. Can
Senator Justin Boyd
Unverified
11:10
you hear me? Thank you, Mr. Chair. So if you went to a cashless system, is there any way to evade that at all? I mean, would you still potentially have some kind of risk somewhere? I
Shea Lewis
Unverified
11:25
don't know if I have the expertise to know.
I'm sure there are certainly ways that credit cards can be compromised. I know that our system within Arkansas State Parks, currently we have not had many transactions, But even the case that we're mentioning under investigation involved credit cards, but involved personal accounts and use of a credit card in a different way. So I assume that there's always an opportunity for fraud. It would be our place to put controls in place to ensure that we protect the state funds as best as possible.
Senator Justin Boyd
Unverified
12:00
Right. And it sounds to me like you're also keeping in mind that often Arkansas taxpayers are coming to purchase things, and you're keeping them in mind on that front as well and trying to find a right balance between safety and inevitably somebody's going to try to game the system somewhere, right? That's right. Safety and service. That's right. Representative
Representative Steve Unger
Unverified
12:23
Unger. Thank you, Mr. Chair. I believe I asked you last month, have you done any research on can we actually put a lien
on an extra employee's taxes to recoup the stuff they stole? So one
Shea Lewis
Unverified
12:37
of the questions last month was related to even withholding final paychecks. We were able to confirm through the Office of Personnel Management that that is not the case, that due process must continue through that. Perhaps Ranger Medlin could help understand in the event that a court order happens and then, what is it
Speaker 42
13:02
called, when you garnish someone's wages for the collection of a fine
or for um I'll let you
Speaker 52
13:11
yes so if uh there's a judgment made by the court uh for the reparations in that regard for the restitution as it were uh then they can hold against their taxes the courts can as an agency we wouldn't do that the actual Pulaski County Court would make that determination thank
you yes representative Richmond did you have
Representative Marcus E. Richmond
Unverified
13:34
a question I do. Thank you. I think I misunderstood you or misheard you. Did you say that the statute of limitation has run out on the misdemeanor during the investigation?
Shea Lewis
Unverified
13:48
Yes. Yes. The timing for the statute of limitations has expired for that while the investigation was ongoing. But for a felony, that time limit extends further. all right thank you is the is the benchmark there
are five thousand dollars once it gets over five thousand it becomes a felony it'd
Speaker 52
14:11
be one thousand anything over a thousand becomes a felony class d
felony oh okay very good members any other questions seeing none thank you gentlemen
thank you without objection this report will be reviewed the next report
Speaker 6
14:27
we have with findings is the department of corrections fy 24 report and this report contains two findings. The first finding, the EAC reported to us unauthorized purchase on the department's fuel credit card after an employee of the Division of Community Correction was observed purchasing fuel for personal use with a state-issued fuel card. This information was forwarded to the department's internal affairs section, which investigated and identified numerous potentially fraudulent purchases between July 2022 and August 2024,
totaling about $4,500. The employee who made these purchases was terminated in September 24, and the Department's investigation was forwarded to the Arkansas State Police. This finding was referred to the prosecuting attorney and the Attorney General, and it was also certified to the bond board. In the second finding, the ability of the Department of Corrections to provide essential services to Arkansas corrections and law enforcement and criminal justice agencies relies heavily on the availability of an IT system partially supported by the Arkansas Division of Information Systems.
Any number of events can interrupt the availability of those systems, including equipment failures, unforeseen natural disasters, or malicious cybersecurity attacks. When these events happen, the Department should have reliable backups of its systems and data, as well as a comprehensive plan to recover its most critical systems quickly. The Department conducted a test of its disaster recovery plan in August of 2022 for its offender management software. However, testing scheduled for the fall of 2024 did not occur due to ongoing DIS projects.
Testing the disaster recovery plan is vital to evaluating whether the plan
Speaker 10
16:00
would be effective in an actual disaster. Mr. Chair, that concludes the findings for the Department of
Corrections. Thank you, Mr. Bullington. Members, Representative Meeks, there's some folks from the Department of Corrections here. You guys come to the table, please. Welcome,
if you would introduce yourself for the committee and the record. We'll let Representative Meeks start with his question and then we'll move to Representative
Speaker 60
16:30
McElindon. I'm Wade Hodge, Chief of Staff for
the Department of Corrections and depending on which finding you have, when I ask questions about, we may have different staff that we need to come to the table. All right.
Speaker 61
16:43
Thank you, Gemma. I'm Eddie Powell. I'm the Assistant Director with the Department of
Representative Stephen Meeks
Unverified
16:47
Corrections also. Thank you. There for a second. I thought you said we would have different answers to the question but uh you never know you never know all right exactly uh just this is more of information so on that uh disaster recovery plan i know dis was going through a lot of upgrades at
that uh time and it looks like the the team's on their
way up here we're gonna we're gonna call
in the eight okay with your permission yeah yeah and y'all maybe i might my question was just basically Since those, well, we'll let you guys introduce yourselves.
Speaker 66
17:20
Nicholas Stewart, Deputy Chief of Staff, Department of Corrections. Clay
Speaker 67
17:25
Causey, Chief Information Officer, Department of Corrections. Okay, so Chief Information
Representative Stephen Meeks
Unverified
17:27
Officer, you're probably the guy that I need to direct this at.
DIS, I think, has pretty much concluded a lot of those upgrades that they were going through. And so have you been able to do this backup check since then, or is it something we're just putting off until the next opportunity? What's kind of the status of
Speaker 67
17:47
it? Yeah, right now we've done one for the training environment, just the test out. And all this new equipment they needed was up in Data Center North and Lowell. They've got that now, so we actually have a full production DR scheduled for Saturday after next, the 21st. And we will do our production system on that.
And at that time, we will have a report on how the DR went. Okay, perfect. Representative McClendon.
Representative Mindy McAlindon
Unverified
18:13
Thank you, Chairman. I had a question on finding one. Is
Speaker 73
18:17
that y'all? Is that the credit card? Oh, the credit card. We're going to swap. Sorry about that. And
gentlemen, let's go ahead and introduce yourself again for the record.
Speaker 61
18:35
Wade Hodge, Chief of Staff for the department. Eddie Pam, Assistant Director
Representative Mindy McAlindon
Unverified
18:40
for the department. Thank you. I just had a quick question. and it looked like you had just two or three employees managing over 800 vehicles, and it mentions in here you've got a new system
Speaker 61
18:52
in place that will prevent that. Can you just elaborate on what that is? Yes, ma'am. At the time, we only had two personnel going over the transactions for 839 cards using the WEX system. One of our employees actually stumbled on it about the same time when it all came down,
But we realized we were a little over, we were too understaffed in that situation. So at that time, the secretary allowed for us to move another position into that location, and now we have a person that's dedicated that all they work on is just the WEX cards. Okay, can
Representative Mindy McAlindon
Unverified
19:26
I follow up? In here it mentions a new telematic system. Is that going to change the way that they're managing that? Yes,
Speaker 75
19:34
it's coming through that new I-4 HOMA, is that what it's called? S-4 HANA.
Speaker 61
19:39
Yes, DFA has got a whole new project coming down for all of our vehicles through our fleet management system. That will all be now handled. We're putting electronic monitors on all of our cars, so we'll be able to quickly identify how many miles between fill-ups, when someone uses a card, so that we can see if it's, you know, if you're using too much gas, you can start kind of feeling
Speaker 60
20:02
that they're overusing the card. Yes, ma'am. That'll be a system that'll be in place for all departments, not just the Department of Corrections.
All right, thank you very much. Thank you, Chairman. Members, any other questions for
the Department of Corrections? Seeing none, thank you, gentlemen. Without objection, this report will be reviewed,
Speaker 6
20:25
and we will move on. Okay, the next report we have of findings is the Department of Veterans Affairs FY24 report, and this report contains three findings. The first finding, on June 3, 2025, the agency notified us that in May of 2024, four employees of the Fayetteville Veterans Home were believed to be checked in
but were not actually at work. After an investigation by the agency, it was determined that the individuals were paid a total of $561 for about 26 hours that they were not actually worked. Following the investigation, the four individuals' employment was terminated. As of report date, the improper payments had not been recovered. In addition, we reviewed three pay periods for these individuals and determined that these same individuals received unapproved overtime pay totaling over $6,600 during the pay periods we reviewed. This finding was referred to the Prosecutant Attorney and the Attorney General
and was also certified to the Bond Board. The second finding, during our review of expenditures, we identified a duplicate payment of almost $1,000 to a vendor for temporary employment services. A refund was received from this vendor. And the third finding, our review of 24 instances in which employees at the Fayetteville Veterans Home received overtime pay revealed that 20 instances were not properly approved. Mr. Chair, that concludes the findings for the Department of Veterans Affairs. Thank you. Members,
do you have questions for the department?
Is there anybody from the department here? Thank you. If you all would
introduce yourself for the record, then we'll let Representative Brown ask her question. punch your button there. You're good to
Speaker 79
22:01
go. Oh, wait, after they introduce you.
Speaker 81
22:06
I'm Wayne Ruthven, Chief of Staff, Arkansas Department of Veterans Affairs.
Speaker 82
22:12
Stevie Smith, CFO, Arkansas Department of Veterans Affairs. Thank
you, gentlemen. Ms. Representative Brown, you're recognized.
Representative Matt Brown
Unverified
22:18
Thank you, gentlemen. Excuse
me. My shoulder hurts. So what has happened And what have you been able to do to try to help prevent this
Representative Matt Brown
Unverified
22:37
Brown, which finding are we speaking
Speaker 87
22:41
about? Well, the unauthorized overtime. Okay. We've changed policies department-wide for overtime, whether it's contract agency overtime or state employee overtime,
particularly in our veterans' homes. The administrators have to approve the overtime ahead of time, pre-approval. The request then has to go through the Long-Term Care Division Director to Secretary Aider. Secretary Aider is the only person in ADVA who can pre-approve overtime, and he must do that in writing. And should there be an emergency or an after-hour situation, then the homes or the leadership is required to contact through the chain of command him by phone,
get verbal pre-approval, and follow up the next workday with the documentation to support that. Thank you
Speaker 77
23:35
very much. Let's see. That's all. Thank you.
Okay, members, any other questions? Seeing none, thank you, gentlemen. Without objection, that report will be filed.
Speaker 6
23:54
As mentioned earlier, we also have a special report on today's agenda ready to law enforcement
Speaker 5
23:59
agencies' adoption of racial profiling policies to present.
And I'll now recognize another one of our staff,
Speaker 93
24:13
Charlie Camp, to present that report. Thank you, Mr. Billington. This letter is issued to inform the Legislative Joint Auditing Committee that for the 2025 reporting period, with the due date of November 1, 2025, Arkansas Legislative Audit has received responses from 203 of 383 law enforcement agencies regarding adoption of a written policy prohibiting racial profiling under Arkansas Code 1212-1403.
ALA forwarded the Attorney General a copy of each law enforcement agency's response containing an updated policy prohibiting racial profiling. Furthermore, ALA submitted to the Attorney General the names of law enforcement agencies we believe failed to comply with the requirements outlined in Arkansas Code 1212-1403. The Attorney General has indicated that he has notified the 108 law enforcement agencies that failed to respond that they are not in compliance with the
Speaker 94
25:08
law. Mr. Chair, this concludes my report.
Thank you, sir. Representative Meeks, you have a
Representative Stephen Meeks
Unverified
25:17
question? Yes, sir. I just noticed the date on this letter is December 16th. Two months have since passed. Any updates from the Attorney General's office on getting these others into compliance? Nothing other than that they
Speaker 93
25:30
have contacted all those law enforcement agencies. We have had an uptick in response on this report compared to the last, so we hope that trend will continue. Okay. All right. Thank you.
Representative R. Scott Richardson
Unverified
25:44
Representative, if you're recognized. Thank you, Mr. Chair. So what's the plan? Do we know what happens if nobody still responds to
Speaker 93
25:56
that? Legislative audits' only responsibility in this is to collect the policies that are remitted to us and then turn any updated policies over to the AG. We do not solicit any policies, and we do not solicit people that do not turn in policies. Follow-up.
Representative R. Scott Richardson
Unverified
26:14
Yes, sir. Do you have a list of the people who have still not responded or completed that? Yes,
sir, we do. Can we get a copy of that, Mr. Chair? Yes. Thank you. We'll get that to the committee. Any other questions? Seeing none, without objection, we will file this report. Thank you, sir. All right, members, that's everything on the agenda. Is there any new business? Seeing none, our next meeting is scheduled for March 12th.
With the work going on down in the basement, there's a good chance that there will be work going on in this room next month. So currently the meeting is scheduled to be held in MACB on March 12th. So you all get notified up front, but just want to give you a heads up on that.
All right, any other comments from committee? Hearing none, we're adjourned.
Agenda
A. Call to order by Chairman.
B. Adoption of minutes of the January 8, 2026, meeting.
C. Review of reports. (Refer to the Summary)
D. New Business. The next meeting will be held March 12, 2026
E. Adjournment.
500 WOODLANE STREET, SUITE 172 • LITTLE ROCK, ARKANSAS 72201-1099 • PHONE: (501) 683-8600 • FAX: (501) 683-8605 www.arklegaudit.gov
LEGISLATIVE JOINT AUDITING COMMITTEE ARKANSAS LEGISLATIVE AUDIT FEBRUARY 12, 2026 STANDING COMMITTEE ON STATE AGENCIES
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - STATE AGENCIES, Feb 12, 2026 | Agenda | 2 | Official source ↗ |
Speakers
Speaker 1
Representative Steve Unger
Unverified
Senator Matt McKee Chair
Unverified
Speaker 5
Speaker 6
Speaker 10
Speaker 13
Speaker 19
Speaker 20
Representative Stephen Meeks
Unverified
Speaker 24
Speaker 33
Speaker 35
Shea Lewis
Unverified
Representative Mindy McAlindon
Unverified
Senator Justin Boyd
Unverified
Speaker 42
Speaker 52
Representative Marcus E. Richmond
Unverified
Speaker 60
Speaker 61
Speaker 66
Speaker 67
Speaker 73
Speaker 75
Speaker 79
Speaker 81
Speaker 82
Representative Matt Brown
Unverified
Speaker 86
Speaker 87
Speaker 77
Speaker 93
Speaker 94
Representative R. Scott Richardson
Unverified