Legislative Joint Auditing

Everybody take their safety recalls meeting object of legislative audit's. First order of business we have an adoption of minutes of the October fourteenth meeting. Are we need a motion. We have a motion to adopt those minutes second. Are all those in favor say aye. All opposed. Is made from build up to the first order of business is the executive committee a committee report I will read that. The executive committee met Thursday December first two thousand twenty two staff reported to the committee the audit special investigative and shortage of port scheduled to be presented to the standing committees in the full legislative joint auditing committee this month in New business to committee took no action on the question staff to review certain transactions involving the city of grubs because cities audit report was released in November of two thousand twenty two staff reported that information a member provided in response to requests concerning certain grant programs administered by the department of finance and administration the Committee table the request until it was determined it's requestor needed additional information. Now the business is staffed updated the Committee regarding the status of this review of the waste tire program also the committee approved the two thousand twenty three Legislative Joint audit committee counted and and for staff to conduct the financial audit of the four city school district for the fiscal year ending June thirtieth two thousand twenty two with no additional business to discuss the meeting was adjourned the next meeting of the committee schedule for Thursday April thirteenth two thousand twenty three I'm open adoption of this report. We have a. Arch motion second. Reporter stands that will be adopted. Our next report is standing committee on just a county municipality understand representative variety of that. Thank you Mr chairman of the committee yesterday adopted the minutes of October thirteenth two thousand twenty two mating Committee discusses city of cotton plants substantial noncompliance with municipal accounting law staff reported that the city is made substantial improvements in corrected most of the findings the standing committee on counties and municipalities recommends to the Legislative Joint Arkan Committee that the state treasurer be notified to resume the city of cotton plants turn back payments as well as restoring to the city any term back funds held in escrow the committee approved a request from the town of Twin grows too annually repay five hundred dollars for months of their general revenues rather than ten percent of general revenues as required by Arkansas code annotated twenty seven seventy two oh seven for monies owed from the general fund to the street fund the Committee reviewed nine reports differed from the October thirteenth twenty twenty two meeting officials from three entities or present to address repeat findings from these reports all nine of previously deferred reports were filed the Committee refused seventy three current reports of these two were referred to the governmental bonding board and Nate were. Or other reports referred to prosecuting attorney's official from six entities will present to address repeat findings in our current report. and also there's a cochairs report of the Legislative Joint arching Committee on oh no Sir this is. This is been added the navy this was added. To the report and it actually with for now the committee so that's all we have okay are are we will also have a For the doctor are there any questions concerning this report. Welcome we have a motion from senator garner. I you chairman a. Representative right reddit reported excellent job but you need to be actual motion in there because. We need to recommend to the state treasurer to get that money back to Cotton Plant and so I like to make a proper motion this time that the Legislative Joint parting Committee recommends that the state treasurer be notified to resume that city of Cotton Plant turned back payments as where we're storing to the city any term back funds held in escrow. So we have a motion to return date of the term backgrounds to cotton plant not explain that most if needed Mr thank you want to go in explaining so everybody I understand go ahead sure I part of the process we pass a law forced to hold cities accountable so that audit can go in there look at the records and make sure we can do substantial findings to make sure they're following our various laws on C. Clark plant was out of compliance in the audit committee found that we should hold them to hold back to turn back funds past staff reported Mr Richmond rapport they've made substantial steps to correct those mistakes and staff in our sales the subcommittee felt that they have earned that right to have that term back money put to on this is basically our motion to say you did the right thing return that money back to you by notifying the treasury department and that will move forward as until next audit okay members you've heard the motion is their second. Any discussion. All the favor say aye. All opposed. Our motion cared. Of the next report is the standing committee on Education representative berry. That you. Thank you Mr chairman. Standing committee on Education institutions met yesterday December the first. Two thousand twenty two the Committee reviewed a total of ten audit reports which consist of two higher education report to school district reports and one education cooperative report I have a second. I have a second all of the favor say aye. All opposed. Are the report is adopted the Thank you Mr chair to a reports were on the committee's agenda yesterday five reports with findings were presented the Attorney General pay twenty nine employees in excess of their line item salary appropriation in conflict with the Arkansas constitution the auditor state over paid one deputy prosecuting attorney due to a posting heir to the payroll master file. Department of Health fail to follow procurement guidelines for various transactions involving the office of health equity split P. card purchases in violation of policies could not locate five equipment items and several locations did not submit all monthly revenue reconciliation reports in addition a summary of contact tracing expenditures were presented. The judicial due to the judicial discipline and disability commission over paid a record storage vendor various agency staff members were present to report on how the agency intended to address the audit findings and to answer committee questions during the meeting the committee adopted a motion to file eleven of the reports the Attorney General report was deferred to the next meeting we moved to adopt this report. Mark members you've heard of the reporters a motion to adopt its reporting discussion. Is there a second. We have a second all those in favor say aye. All opposed. All right number D. on your agenda. Summary of inter collegiate athletic revenues and expenditures two thousand twenty one twenty two someone from a I guess we have someone from the Arkansas department of education Mr fuller. You come down to densify yourself for the record. You may proceed. You have a hand out in their package everywhere everyone attention okay there's a hand out. In your packet. This report. Good morning I'm not following this is the director for finance for the Division of higher education. I'm here to present to you our report on that to the fiscal year twenty one twenty two intercollegiate athletic expenditures and revenues. For two thousand twenty one and twenty two the total amount of athletic expenditures reported by state supported institution universities was two hundred sixteen million eight hundred ninety four thousand ninety five dollars. For the two year colleges the amount was three million thirty nine thousand one hundred twelve dollars. State wide total of two hundred nineteen million nine hundred thirty three thousand two hundred seven dollars is an increase of forty eight million three hundred thirty seven thousand or twenty eight percent from the amount that was spent in fiscal year twenty twenty one. The the the comparison of twenty one twenty two actual expenditures to budgeted revenue certified to the higher according board in July is also illustrated the bottom of the chart that you have. Total expenditures for twenty one twenty two exceeded this budget amount by eleven point three percent. Actual expenditures varied from certified budgets from a range of eight percent below budget to seventy one percent above the budgeted amounts for each institution. And I am available for any questions you might have a on this requirement would you've heard the report or any questions for Mr for. Of Senator. Garner you you've got a question yes Sir you're recognized thank you chairman so. If I'm reading this right there is a nearly fifty million dollar increase. Thirty percent in one year's time yes Sir the the previous year from twenty twenty one was one of the years that code impacted so sporting events so it's that the increase of everyone coming back into the stadiums okay fans. You might have this information but what is a compatible to pre covid is it a trajectory now we expect thirty percent every year the just return to normal and answer it it should level out more in a single digit growth okay year to year this is just the the big jump coming back from no one being on the campus so make sure because of his thirty percent increase every year S. no Sir. All right thank you. Are any other any other questions from members. We have represented rejection you're recognized thank you Mr chair and I don't know if if you can answer this question or not but I'm curious to know if if dollars are tracked for an ideal. Disbursements disbursement the no Sir because those would not be directly from the the institution. Payments those would be. Name is directly to those athletes it wouldn't be coming from the institution okay this from that the school themselves so net in the school received nothing from that then I think a person okay thank you. Any other questions from members. If not this report will standards adopted thank you for. I'm AT. On your agenda a special report in the Arkansas state government transfer transformation annual cost savings report for the period July first two thousand twenty one through June thirtieth two thousand twenty two. Anyone here to present that report. Aware. You're recognized. Thank you Mr chair. This report is presented in accordance with state law which requires legislative audit to verify the amounts in cost savings reported annually by the fifteen cabinet level departments under the transformation and efficiencies Act of two thousand nineteen. The objectives of this review were to verify cost saving information reported by the department's review supporting information for an undetermined the reasonableness of transformation related cost savings identified by the department. Determine the reasonableness of other cost savings identified by the department but not directly related to transformation. Schedule one on page three summarizes the required information submitted by the department. In total the department's reported decrease expenditures of three hundred twenty five million dollars primarily related to the reduction of Care Act funding at the department of commerce and finance and administration. The department's also reported transformation related cost savings of over ninety three thousand dollars in other cost savings of three hundred seventy million dollars. Legislative audit verified the transformation related cost savings all of which were reported by the department of energy and environment for rants and related operational costs. Legislative audit also verified all other cost savings reported the Department of Health thank you it's a cost savings to a reduction of Care Act funding and a one time Kobe nineteen destination program and that the department of military and public safety the lack of available materials and equipments contributed to cost savings. It should be noted that the department's very and how they reported the required information. Mister chair this concludes my presentation I would be happy to answer any questions from the committee. All right members you've heard the report is are there any questions. A Senator Garner. Thank you chairman so I remember going through this transformation process and. All the rigmarole in hundreds of pages of bills and all the promises made and as I look at this now after all of that and all this talk about how this is going to be some amazing transformation government it looks like to be saved in actual money ninety three thousand dollars if I re not correct. So. I just very interesting that from all the promises are made to wriggle say these hundreds of millions of dollars that is going to completely transform state government at the end of the day now we sit here and two thousand twenty two at the end of it we say ninety three thousand dollars. I just want to. Point that out is a very interesting reality of what was promised first with the reality of this is thank you Mr chairman. Thank you senator garner Senator Pitsch. Actually you senator call of sitting Senator Pitsch is the C.. Chairman thank you very much and welcome the I appreciate you sitting in for me today I had a doctor on this morning just got out one other thing on the follow up Senate what senator garner stated is the fact that the transformations spoke to save several thousand jobs in state government that we could eliminate because of shared services and other things but in reality I checked yesterday and we actually have four hundred more state employees today than we did before we had the transformational government into our agree and concur with senator garner that to the in reality transformation flaw. Thank you Mr you don't have to get a total of the number of state employees. Total number center call well we've we've got some updated information since we visited yesterday and and I feel like of Tom can explain that. You senator Caldwell the numbers we gave yesterday we went after further research by my staff there were some things that weren't in one including those numbers I got some new numbers I was gonna give you for bad CDS one so so back in two thousand nineteen the total employee count was just over thirty three thousand employees and as of June thirty twenty two is down to thirty thousand that includes everybody that's everything from aces plus are not in total expenditures however if you look at total payroll costs have gone up over that same time period. Recent pages. Thank thank you for the report and based on that the now apologize for my previous statement because the it was supposed to save for the a couple thousand the jobs and and the number at your state government for free thank you for the correction thank you Mr chairman. Thank you Senator Caldwell any other questions for members. As recently Senator Rapert actually Hammer at Senator Hammer you're recognized. Thank you I was just curious if the. Staff could come in as to when asked the question about why. they included savings that was directly attributed to cares Act funding how that was interpreted as savings. All right it's it's my understanding that the way that the laws written it talks about expenditures and it so it doesn't deviate of so this was the the will the way the law is written it We have to present any the crease in expenditures and so that's that's the primary reason that we're just following the law and the way that this being is being presented. With the Trademark. Question my head with the with the results have been different. If we would have taken a different approach such as instead of looking at it from a cost savings if we were to look at it from a increase. In expenses would the outcome have been different if so how. Hey. I'm not for sure on that do you know as far as if you would look at as far as increases in expenses I mean. I think that generally that there were. Increases in expenses on several of these is that correct yeah we didn't look at it like that that we followed what the law told us to do is look at that. Okay we don't have that information okay thank you. One thing I might point out this is the third report dealing with the transformation is as you all may I don't have those reports with me but as you recall the first report the there were. it was put forth at the transformation was gonna say fifty something million dollars and I think in that report of we basically said that there were no savings and last year the report there were substantially no savings and this is the third report that just shows that there is no savings we're required by law to do this report every year since this is the third year out or the third report on the transformation. The further you get away from that and the more meaningless this report is going to be therefore it would be the staff suggestions that we Try to get the law amended this next session where we don't have to do this report anymore because I think it's becoming more relevant further we get from transformation. All right members any any other questions. Senator Garner you back on. No Senator Clarke he got Hammer let us Senator Hammer. Is this normal emissions question because sponsor the bill so do you think the legislation has proved the point and maybe don't wanna answer this. It would appear then that based on three reports that the point has been proven that when it comes to the matter of transformation having created the savings that was projected that after three reports it would seem like that would be on debatable if the numbers had turned out different well but particularly in the numbers that were being claimed I think because a lot of them had nothing to do with actual savings they were budget reductions and things like that there were some savings as far as combining of the the buildings together moving agencies together reducing the the foot print of state government that those were were the most of the savings or okay not not in salaries or other items all right thank you and I Mr Otis. Put this out there the the legislation having done what was intended to do will Get legislation drafted to of where the legislative bureau audit won't have to of continued to this report thank you all right thank you senator Hammer and any other members have questions. Representive Wardlaw. This is representative wing and representative award laws C. art you're recognized for one thank you Mr just a quick question so if we've got a decrease in nineteen hundred jobs would that not be reflected financially. Well that there was an increase in salaries the the so that the number of personnel decrease but the actual calls increased. So the salaries the salaries went up for the folks to remain employed but we still drop the number of employees yes yes Sir yes Sir even though the number of employees decrease the the payroll expenses increased okay all right well thank you. March any other questions from members. Representative berry thank you thank you Mr so we're talking the salary increases most those salary increases my understanding or at the executive level chiefs of staffs positions and Chief counsels and so forth not necessarily the normal payroll increase is that correct. Well there there have been several increase is part of that is it there have been increases there obviously the transformation created some secretary positions in other positions some of those. Director positions have not been filled however it's my understanding that there still. Listed in the appropriation bills even though their on field so they are positions that could be filled in the future that would in further increase that but overall there have been as you are aware there's been cost of living increases another increases by the executive branch in the past year to sell but I I I'm not sure we can say it's just those high level people at think more than anything it's just that cost living increases merit increases of taking place over the years thank you and of you would you agree with me that the hierarchy did grow as far as pay roll. At the upper level well obviously those secretary positions were created that were no longer there and those the deputy or or the director positions in in most if not all cases are still there some of them are field some of them are not so yes it did create another layer great thank you thank you Mr. Thank you representative bear any other any other questions. Remembers. The representative very. Thank you Mr chairman we talked a lot about a lot of things since the Sabians is ninety three is still ninety three thousand dollars is that figure still good total savings freshman well that that was just for this past year I mean it this is not a cumulative report okay I. Thank you. Or any other questions on transformation. March it's not this report will stand as the standards adopted. Next on the agenda is a. What lands and financial and compliance report to the city of bonanza years ended December thirty first two thousand twenty one two thousand nineteen. Mr Locke are you gonna come up and he's right here. Okay. This. This. Thank you Mr the. This the financial compliance report for the city of an answer for two thousand nineteen three two thousand twenty one and we discovered a shortage while performing these procedures so standing committee on counties and municipalities referred to the full committee it's. Bonanza's located in western Sebastian County and has approximately six hundred residents of the city operates under the mayor council form of government with the six member city council and as with other cities legislative audit does not do the financial audit for their water department instead the city is responsible for hiring is CPA firm to conduct their water department audit. We issue to findings for the mayor the first one was an annual audit or agreed upon procedures report has not been completed and submitted legislative audit for the city's water department for the years two thousand sixteen through two thousand twenty one is required Arkansas Code. And the second one is the minutes did not indicate that the city council reviewed our prior report and accompanying findings as required by Arkansas Code. We issued a several findings for the administrative assistant bank accounts were not properly reconciled the general fund balances and disbursements were overstated due to posting heirs and recorded checks an undocumented adjustments there were numerous pay roll issues noted payroll taxes were not properly filed reported and remitted to the F. may the administrative assistant who also served as the pay roll prepared do not always issue payroll disbursements through the payroll system and she did not properly report payroll disbursements to herself on her debut Teague and several of these payroll issues were noted in the prior report. Is shown on the slide but we had a shortage of finance a several years ago that covered the period January two thousand twelve through January two thousand sixteen and we felt the administrative assistant made thirteen thousand in unauthorized salary payments to yourself these findings were fired the prosecutor and the administrative assistant play guilty to theft by deception and pay restitution in full. And it should be noted that the mayor that was elected in two thousand sixteen CC two thousand sixteen is the father of the administrative assistant and administrative assistant continue to be employed by the city even after the guilty plea. This current report also contains a shortage finding for the administrative assistant who maintained bank accounts the county records and was responsible for receiving and depositing city funds including water department funds. I review the city records including the water department records for the period January two thousand eighteen through May fifth two thousand twenty two revealed a shortage totaling two hundred sixteen thousand nine hundred and sixteen dollars this consisted of a hundred seventy eight thousand eight seventy four in a county for funds and thirty eight thousand forty two dollars in unauthorized disbursements. Ninety county for funds consisted of a hundred seventy three thousand. Four oh four and I deposited water bill payments and five thousand four hundred and seventy dollars in a deposited menu receipts from other city funds. Then I thrust disbursements consisted of. Sixteen thousand seven oh eight in salary overpayments she wrote herself thirty six extrude case which resulted in a salary overpayment sixteen seven oh eight and then there were twenty one thousand three hundred thirty four dollars in gift cards purchased by the administrative assistant. We also discovered that several manual receipts and bank statements were altered in an apparent attempt to conceal the unaccounted for funds and unauthorized disbursements. In this light is an example of a note your bank statement in this example the top image is a bank statement provided by the bank that shows check number fifteen nine ninety four for four forty five thirty cleared on March thirty first two thousand twenty. The bottom image is the outer bank statement that the city provided the auditors and as you can see check number fifteen nine ninety four it's been removed from the list of clear checks and the image of this check it also been removed from the bank statement and that particular check check number fifty nine ninety four was a check and that was made payable to and cash by the administrative assistant. Last month the. Mayor was reelected to a four year term man administrative assistant resigned from her position state police are conducting an investigation and to my knowledge the city has still not scheduled an audit for the water department. And that concludes my presentation and the the mayor is here to respond to any questions from the committee. Our mayor if you will just to densify yourself for the record. We swore. Maranzano. The ones you want to if you want to stand up we're going to we're going to go and swear you in. If you state your name your employee and your position. A raise your right hand L. where else. Mayor of the city of an as a. But as Arkansas. Do you solemnly swear to former air or firm that the testimony you're about to give will be the truth the whole truth and nothing but the truth. Our team that tax season. You're recognized to speak. Every saying the everything that was there it all everything about it is true she pleaded to everything. Every every saying Except the money on the water department. To she I was totally unaware of it she took care of all the books and stuff and it hit me like a wedge and the. She was. She was there a year before I got voted in. And The city council of maybe exception that she could stay and work for me sent you is there prior to that. and so she's been here with me for was with me for the duration of time the first time she got in trouble and we came down here. And she made reimbursements and this the city council voted to keeper. So. All right. We're gonna go it will cause a member's with questions Senator Garner Europe first. Thank you over to your left mayor over here to your left a higher okay okay. Yes we get this right the staff said that this woman. Heard there was a mayor before you is that correct. You say that no okay. She worked for different the previous mayor before I took over she is my daughter she's your daughter my daughter yes. She pled guilty. To stealing. Thousands of dollars of taxpayer dollars. And you kept her on your staff after she pled guilty that. Is that correct or or you so which time are you talking about sort of what I mean here I mean the time met before or justice. There the first time that she was played guilty in a criminal proceeding for stealing taxpayer dollars on the city role right yes and you kept her on the staff yes I did set like I said city council she made record of she paid all the money back and the city council workers state. And. I know she's your daughter but unsurprisingly she stole more money is that correct that's correct what kind of dereliction in a common sense in duty did you as a father allowed it to happen to the citizens your CD. I was unaware of it how you aren't aware of it was you played guilty to it and you caporal staff. No Sir I do thank you after the second time no search she's been terminated. Sir we deal with a lot of issues people stealing I understand it can happen to any city or county officials I understand she's your daughter but the fact that she got found guilty amended to that and then you allowed her to stay there you can blame on city council you want you're the mayor of your father. Ellen she defrauded the people of your city again you're responsible for that as much as she is Sir that's unacceptable as an elected official and I I hope that the people of your tail hold you accountable. All right that's all I got all right of center Hammer Europe. Your own syndrome thank you. Could you up when when she took the money the first time that was under the previous mayor I'm right here Sir by the post look a little bit to your left you'll. Here you see Roger good morning. The the first time that she stole the money was under the previous mayors watches that correct. It was correct okay and then she made restitution and the council voted to keep her on under your watch is mayor is that correct yes okay. And then. From that point forward she began to take the money again which was under your watch is that correct is correct okay at what point did you become aware that she was taking money the second time under your watch. Hi I'm only realized it when the auditors came and disclose it to me I had nor free ideas she was taken the money. Okay. Thank you. And and as far as who audit your water department you don't have any one auditing the books we yes we have I came in and they were three years behind when I came in at fifteen and immediately I. Got the German of lives somewhere in this area down here to do the audits signed a three four and you do three audits and he did one for me and I don't believe you're gonna have to check with the auditors but I believe they finally got a second one out of you after they started doing audits. But I have got a person online to do the auto I got a person lined up right now fixtures start getting audits taking care of. And so when it was discovered that she was taking money. That was the result of our auditors coming in an auditing your books or how was it that it got above the radar screen to that that you realize that she was taking the money. When after a day all the time after the announcmenet is when they came back and disclosure. Mr chairman is at our auditors or is that the auditors that they had hired that was that our auditors to discover this. I'm sorry could you repeat the question Mr amor yes Sir. Was it the result of our auditors going in and finding the discrepancy in the funds or was it the result of the auditor or the bookkeeper that the mayor had hired that it was discovered. It was less legislative audit. Okay and. Did legislative audit. I have a reason to believe that the other auditor who had done audits was aware of any of this going on or was there a gap in that time between the last time he did an audit and the time we went in. Of course the the other auditors the CPA firm in the water department is completely separate. You know from our audit so. We would have no communication from him but as far as I know he was not aware of any money being missing all right if I may be mayor when you talk about your book keeper come in and do an audit was out of the water department or was that of other books. It was a the water water auditor Stevens averages nine and what was the last year he did audit of your water bill I paid him for. thirteen fourteen and fifteen and I am not. I only saw one return back. I believe the gentleman here told me that after the heat somebody own pursued it and they got a audit released to them on it okay then Lessing daughters wrong on it but does whatever your daughter is not working for the city any longer correct you know she's been terminated okay thank you Mr. Market turnover of representative love. Thank you Mr. Our mayor I'm I'm pretty sure this has to be a difficult situation in which. Your daughter's actually stealing from me she stole from the previous administration. But I am at a loss in regards to this. Because I heard you say that the city council. Caption daughter on. That's correct okay but she worked under your administration is that correct are you over the water department yes. Okay in so when you want when you want an audit done of the water department who schedule who coordinates that. Supposed to be done on a yearly basis but we were having problems with money wise we were having problems getting the man never did fulfill his obligation to us that we paid to three years for so at his per day at that particular time I started looking for someone else. And it just wrote own for all this time during all that. So mayor you were charged with the with the with procuring someone to do a water on it. Yes that's what the city is referred to have done the on a yearly basis and it did not happen okay in the in your daughter and then and simultaneously started stealing from the water department. Or she will have or we want to put it I don't I understand what you're saying. So. Do you understand how that looks to. Thanks to us. Yes I do. But the. I really have some questions about the the auditing being part of the water department anyway I mean I don't our expenses and. The amount of money that we bring in really doesn't have a. It would be very hard. To see that kind of money disappear and out of it but they stated that it happened. Foreign so ma'am so the position that your daughter Health because I was listening to this on the way and get the position that your daughter Health in the previous administration was what position. Same position administrative assistant. In so that ministry of assistant. He is also the bookkeeper and the water department lady and everything in so how it could only or three four person town Chloe's I actually I'm I'm in I and I get that. The what I don't get is that she moved from of a financial position to a financial position pleading guilty to. She held the same title same title for the previous previous of mayor in so no one so after pleading guilty in the and get in the new job did nobody think of actually overseeing in the work that she was doing. Well this is where I took over in two thousand fifteen the town was a total it was really really messed up they do any accounting pay the bills out of the right department funds so in the first year so that I was there we got everything straightened up and the town was making this bills and pay it on time and I guess we were all to. Happy that we had made such a improvement we didn't what what no one was looking down the road to see. What was really happening I guess what I'm trying to say. Making sense. I'm not gonna say it doesn't make any sense because I understand in small towns you have you know people are doing double duty sometimes triple duty at but what doesn't make sense to me is that we would put someone in a financial position. That has pleaded guilty. Two. Theft of funds from the city and then we put another financial position and I know this is your daughter it is difficult to say but I'm just saying it's it's kind of hard for me to believe that we will move her from a fine in a position of financial overseeing finances. To another position of assent finances regardless in this part of the the fact that the city council said it was okay and I guess it didn't it just doubles down on it when the mayor is now her father and her boss so. May I just hope that this would never happen again and I think that we probably should put some safeguards in place state. You know and that's what I want to ask about what are the safeguards we have in place now to to oversee someone else Well the city council had talked about they've already found another person got her own interviewed and she is now working. No relation to me very Very thorough person for everything that she's doing but we had were that great thing about hunting for a second man that's great but who was going to also oversee that person because that person to come in and do the same thing I understand that the city council and had talked about possibly have in our books have us take a after she does everything she does take on a monthly basis to the CPA and have him look over what she's doing okay. All right ma'am thank you and I wish you the best on this. Trulia. representative back. You're recognized yes over here mehr. On. Okay and I can appreciate the the. Thank you Mr chairman I can appreciate the this is not a couple issue for you to talk about but I would I would take it one step and I. Representative level there have approached what I was going to ask and and but I will take it one step further as opposed to having someone audit what they're doing I would suggest if it all possible to have someone almost a double signature type of thing on some of these activities because auditing something a month later is good the money's yeah it's too light right the Millz already spilled so you you should probably ask the city council two of our inner self to adopt some policy that monitors that position because apparently they have a lot of capabilities of of pulling money out and a double signature or something of that nature that where you have to I was looking at that all of that will signatures on. Every sector when other had double signatures. Who's the other Senator any three different people in the city council and myself. Then maybe you should have somebody else audit thank you. Senator Hammer you're recognized thank you a just wanna pick up on where you just you go Sir. So the checks that went out. All had double signatures on them Mr who were the one who was the one that signed the checks the most other than your daughter. Probably know we're talking back in eight. Eighteen is that correct eighteen nineteen of probably been of a gentleman by the name of Floyd wrote. Okay we'll let me restate the question it is the policy of the city to have to signatures on the cheques and how long has the policy been in place since I've been here so while your daughter was taking this money somebody else was signing the cheque by which she was getting the money or she diverted the money some other way other than writing checks. Yes. And I still haven't figured out exactly how it was done. Still don't know. Can S. the staff questions Mr. Yes go ahead. Did we do we know for the amount that has been embezzled how much of it occurred by checks being written and signed by somebody else or was it through like debit cards and other means where there would not have been two signatures on checks. Of the other unauthorized disbursements to thirty eight thousand dollars Pretty much all of that. Was paid by check now a large part of it the twenty one thousand of it where the gift cards that she purchased from staples. It was a like a created account. And the only documentation issue would provide would be if the monthly statement showing. We staples three hundred dollars you didn't see that that was for a gift card. Bath and body works or whatever. So it is so I'm not sure that they were getting the itemized. The detail of expenditures that they were dating. But they were paid by check. Which would require that somebody else put their signature on the cheque besides her yes Sir that's correct. Okay what's the total amount I'm looking at the report which the total amount that has been an unusual word embezzled. The total amount. Two hundred and sixteen. This section. Two hundred sixteen thousand nine hundred and sixteen dollars. And the daughters talked to the other person is put their name on the check. No Sir we did not okay and I keep I can't find where it has been but has just been turned over to a prosecutor in which prosecutors have been turned over to yesterday but is turned into the prosecutor in Fort Smith dance you. Do we know the status of it is is being actively pursued or are you at liberty to their state police investigation. That I guess he's waiting on the completion of that before filing charges okay and then my last thing is mayor do you have any comment you want to make. Not really. Second person as well right I can tell you. One question to the staff could you do you know if it's the same person that signed that check every time or was it multiple people that were signing that the checker do you have that information readily available. I don't have any information with me yes based on my memory I want to say that it was It changed there was. Two or three different people of when the same people every time but that's just strictly based on my memory. Okay are and that we. The state police would. Be made aware of that right. Yes that's correct okay thank you representative Riley recognized. Thank you Mr chairman Sir right here sure sure you know each year when you actually draw up a budget for the water. You know you're going to have twelve months that you have bills for for twelve partially year. Could you not see anything going on like if you got an average of forty thousand dollars coming in one moment and all of a sudden you have say seventy thousand dollars for the expenditures you know what to whether sanctions balance out. I just wonder if it would help you Sir because what you're looking at is is an overshot probably of the budget for one thing. The projected budget for the previous year was somewhere in there two hundred thousand dollar total income company two thirty coming in. And. The out of that two thirty I think we paid about two to use sixty and over two thirty of it was expenses paid out. So is on twenty thousand twenty thousand dollars profit made in order apartment last year yes and that's why I can't understand how the water department and could as small as it is how it could have that much money taken out of it if any given time throughout and still be alive and and hold himself but right. I I I kept thinking that our water department. Takes money and. And the water sewer. And the garbage is on there and so as as as a months roll over the water department has to pay because of the H. collected on the water department the garbage about twenty three twenty four hundred dollars a month has returned over take it out of there and put in a paid for the garbage every months and I was just thinking maybe there was some kind of a something that they missed when he was doing it the gentleman told me he was he did a soft water on it ward Harmon told me that he had never done it before ever you never ran that program so and I don't know anything about the program either so that's why I couldn't I still K. I just know that was like a hundred and ninety some people. A hot we have a hundred ninety people that has water unsure. There's thirty that live in a twenty three live in a community a gated community owner agent we just sell them water so you've got just a little over two hundred twenty five operating people it town. And the expenses just to pay the bills and the loan payments on that is somewhere between. And by the water and taking the garbage out is somewhere in the neighborhood of fourteen five to seventeen thousand dollars a month just to break even. So that doesn't leave a whole lot of money. for somebody to get into and spent. Follow the latest the other part of it the other part of I'm not just every bit of that other I've got a piece of paper here which she signed it and admitted to it she told the state police that we. It day in day. Audit her and she admitted to taking the money from the staples and taking money from the Of making herself extra check she made all that and then she after that deal is when I found out that it happened they told me the same thing the same well two days later they told me exactly what she had done. Yes. And when I said something about the water department a guy with a state police's I read a word in water department so but I am ward and it bottomed or Department. But I also did not run for reelection this year and. I guess maybe the people that town nobody else ran either so I'm still the mayor but nobody else. What for so. Anyway this. Any any I'm answering so you guys want to know I'll try to. Yes follow up please. Welcome Sir. You know even the person is coming in and that what's taken place. Oh eight the you know I've seen counties do a quarterly. But you know in a situation like your and now it looks like to me that may that may be need to be a monthly a monthly report well as a checks and balances or that's exactly what I mean a you know a lot of it was probably we knew the talk about it We she could have and she did evidently and how it some of it went under all out of our notice was. Should make checks for the week and one of them we come up we were Senator and sign it and really not pay a whole lot of attention to what we were signed if you saw staples bill came through there you signed the staples bill and it might be a month or two. Find it behind and you didn't really paying attention to sample bill you know how I had no idea that people could embezzle stuff off of a sample bill you don't say yes Sir had not be dreamed of anything but it ever it is all my fault because she worked for me hello she was my daughter she works for me but like I said we were of the town was. For she really I mean every every department others has got money in it except the well the water department still has money in it another funny day of makes me question it I guess. Thank you thank you Sir thank you Mister representative came to the. Thank you Mr chair just one last question on your on your on your left on the front row. The questions of announcements that I had with regard to the lack of effective safeguards I think that's a key question key component here's you got have safeguards for the kind of effective my question is I'm I've been curious about the city council that they re hired her and also apparently they had. Check check signing authority was there any relationship we know that there's a father daughter relationship here Mister man was there also relationship with any of the city council members whether family or close relationship no relationship whatsoever and was that was the vote unanimous to retainer yes. Of particular time and date of she had paid all the money back and the. Has a very likable personality and and. She she were actually ran a city they said she rounds a city because she took care of everything if somebody wanted something they they call her and talk to her is to me usually but anyway that of that in a toll was what kept the city of the city council decided even though after she had been caught and we were down here three four years ago or whatever For the. They still continue to voted to keep her. Thank you. One of our members when I take any more questions. We've made this into the ground so we have a motion we have a motion. To doctors report after all this is pending so a motion dot this report a second all those in favor say aye. All opposed. Our motion is adopted. Our special report cybersecurity incidents reported by public entities. The per David Coles. Thank you Mr chair. Legislative audit is required by law to compile and submit to the General Assembly an annual list of all cyber security incidences reported to us by a public entity. Prior to the passage of back to sixty of the twenty twenty one regular session there was no requirement for public entities in Arkansas to report cyber security incidences. The General Assembly recognized the need to collect information and evaluate these incidences so that pro active measures can be taken to prevent disruption of government operations. For the purpose of this report the term public entity refers generically to organizations at all levels of Arkansas government in a cyber security incident is in any event that compromises the security confidentiality or integrity of an entity's information systems applications data or networks. During the review period sixty three cybersecurity incidences were reported to legislative audit by forty eight public entities at all levels of government. As shown on the slide in page two of the report exhibit one provides a summary of incidences by tie in a complete list of these incidences as provided in appendix C.. Fifteen entities responded to legislative audit's follow up survey which is discussed on pages three through five of the report. To remediate security events most entities reported that they received additional help and resources from an established vendor a few reached out to other state agencies for assistance but most incidences were small enough that no further assistance was necessary. However having the appropriate resources available accelerates recovery time allowing entities to resume normal operations more quickly than one otherwise be possible. Additionally most entity survey did not conduct any cybersecurity training or were in the process of developing a training program. Several entities conductor use a vendor to conduct a cyber security risk to set risk assessment all the majeure although the majority do not. While the reported incidences appear less than catastrophic such incidences can negatively affect an entity's financial health and reputation the citizens ability to conduct business with the entity. As public entities in Arkansas become more aware of cyber security and its implications legislative audit expects the number of incidences reported to increase. Mister chair this concludes my presentation we have the Director of the Division of information systems the state chief cybersecurity officer and the Division of information systems chief operating officer available to discuss the state cybersecurity issues. Okay thank you Sir I don't see any questions in the queue this is no sense in bringing these folks forward unless somebody has a question. Not seeing any all right well thank you folks for being here today but I don't register your presence was required turned back over to. No one was right no questions in a motion to adopt this report. Motion the second. All the favor say aye. All opposed. March fourteenth opted. Any other business and miss Mr kind of a form privilege sure Roger I'm just want to of taking this opportunity to recognize our chairs Center call well and and representative Womack and and from staff standpoint and the vice chairs and all the members of the committee thanking you all so much for your service and we certainly do appreciate Shaw thank you. We appreciate Roger in in your staff to you may very good work with very easy to work with. You're always there when needed so thank you. Anybody have anything to say for your. No merry Christmas is. All right with no other business we're Jr earned.