Legislative Joint Auditing-Educational Institutions

I will be patient justice for a couple more minutes we'll see if somebody else is coming. Okay let's get started chair sits quorum. I'll be. Adopt the minutes from the September eighth meeting. Motion and second all those in favor say aye. Follows motion carried. Of. At this time. I would like to go with one of y'all. We're going to be all like to go there on the table in. Would you like to go to the end of the table. Okay. Okay. Okay we. we welcome you here today. And. Of. Mr think would. Will be covering some of the things and some of the items this morning so if you'd like just personally. Thank you Mr chair and good afternoon today we have a educational reports for the fiscal year twenty twenty one to review. Of the eight reports there are four reports the findings. we will begin with the written to reports that had repeat findings the first being northwest Arkansas community college. the first finding is a repeat finding I would note that you'll see at the end of our our finally said a similar finding was noted in the previous audit so is it may not be the exact same error is a is a previous year but it was similar enough for us to included as a repeat. the university's internal control did not detect or prevent material misstatements in the financial statements key errors included on the statement of net position prepaid expense was overstated by ninety six thousand dollars due to calculation errors. Accounts payable was understated by a net amount of almost twenty thousand dollars due to errors in accruals. Capital assets were overstated by forty one thousand dollars and the OPEB liability was misclassified between current and non current by twenty seven thousand on the statement of revenues expenses and changes in that position other operating revenue was overstated by two point eight million and supplies and services were overstated by two point eight million due primarily to an error in recording reimbursable grant revenue and expenses on the statement of cash flows the non contemplations related to a refunding bond issue were not disclosed and on the notes to the financial statements we noticed that there were material errors is where well as incomplete information within the notes and the financial statements for these misstatements was corrected by college personnel during the audit and so they financial statements that were presented in the report were ultimately corrected by the university finding to our examination of bank reconciliations revealed the following the college's Banchory cons were not properly reconciled the June twenty twenty one the June twenty twenty one reconciliation contained in on reconcile variants of a hundred ten thousand dollars reconciliations were not always review by someone other than the preparer in accordance with established internal control and the June twenty one twenty one bank reconciliation contained forty five thousand dollars and reconciling items that cleared the bank prior to June thirty twenty twenty one. And that concludes the findings for northwest Arkansas community college. Before. As for questions we have a representative from the college here today. If you'd like to the. Make a statement If you have some prepared just. Said then it introduce yourself turn your mock owned and introduce yourself to the committee. And proceed. Thank you my name is al Masri I'm the vice president of finance administration at northwest Arkansas community college. Okay I see what happened as the Mr think mention at this is similar finding it's not exact funding and that cause for cause for that unfortunately Northwest Arkansas we are getting a lot of issue with that gratry resignation and we are finding a lot of problem with finding staff so we have in the last year at. I don't want I lost two controller director of accounting and that's what is causing a lot of uh that turn over and this is where is this issue is coming from when you train somebody and to do all everything and then out of the so that they leave and you have to train somebody again and again and we are in the middle of implementation often you are E. R. B. system all soul which is taking more efforts and was a turn over that is causing a little bit of a problem for us but I'm I'm I'm here sure you'll it's all this it's nothing is misuse or anything for public funding it is all and counted for and is available as as to if it is think mention it's miss classification and the biggest one was because this is the first time we had bill Care Act money and this is we calculate that lost revenue as laws and we calculated as income again so what that death and its result is becomes zero but at the same time it's inflated our expense and initiated or income but if you take them both out it's become zero but this is what the control of decision to make sure that we reflect that in our financial statement which was not the best way to do it and we correct that in the end off the other. Sturch just you do you have anything to add to that. Of not really Grant Hodges executive director of community and government relations marketing at the college I think Mr mastery pretty much covered it pretty well as he pointed out all the money is accounted for there's no missing funds I know Senator Elliot I chaired this committee if yours is always my question of the funds accounted for and we're going to do to make sure this doesn't happen again next time my first two questions so that's the biggest thing like L. said mostly do with cares Act of funding and as he pointed out four houses had a very hard time keeping staff in Northwest Arkansas it's not something you need to in whack but he's a lot of turnover and the Department thankfully I think you got a few folks hired he recently so hopefully that'll help. Mr burger do you have a question yes Sir good afternoon thank you Mr chair I just would like to know whether or not you have any type of software accounting system to assist you with this process yes so which what what do you live we do is we would but we are in the middle of twitching from one software to another which added to the law of the employee I do you know when you have a as a software for twenty eight years and then the decision has been made to change it that is another challenge on its own ACT on top of that the turnover employee also that I can relate. Yes yes is my understanding that those software accounting system set up to track and make sure that you come up with your all you have to do is input the information and then print your reports so hopefully your new accounting system will assist in addressing this type of problem in the future thank you Mr chairman that is a plan thank you. Miss Mayberry. Thank you Mr chair this fight be a question I should know but I don't live up in Northwest Arkansas are you all affiliated with the another university or you on your own. No we are independent so we have our own board and we have a oral and at accounting system so we don't have the support. from other but we are doing good with all that means we have. Any further questions. Is that thank you and grant I I did have two days of those one was a four minute that you've come to be on the committee because we were lacking and I remember the days we sat up there my mind just went in reverse in reverse but with the workforce problem as it is and that I think so many people encountering I'm just wondering if you could tell us anything about why they're turning over what the attraction is someplace else because it this is a problem with so many people maintaining for folks as special in these positions sometimes it's a simple as that but it will pay a whole lot more. This is actually you put your. We are sufficient Northwest Arkansas we are competing with that one of that at twelve one hundred company in U. S. so this is and we we train the employee and we we work with them and then within fuel up months after the training they get a better opportunity unfortunately we are a public institution and we cannot compete with the benefit of the seller would have paid by a private institution like I know what we should call but even though the the BSE companies with Arkansas. This is the big challenge become for other reasons so they pay even more than the maximum the line item I just recently I lost my U. C. I. Ole chief information officer for and you'll and you'll Higher education institution is going to be in Northwest Arkansas recently your term well down I when you as well yeah I I think that's the main thing is salary we we don't compete very well when it comes to celery benefits we do so I think that's number one but also the housing market in Northwest Arkansas obviously it's like that was statewide but the housing costs of really skyrocketed and so what we're saying Alice specially is when we do get to the point were offering people a job then they look at the housing in our area and realize they can't afford to move into the area so those those the biggest challenges in oftentimes you learn something about in this committee other than just the numbers on the page because so many times there are other issues just such as these and it's just something the legislature is going to have to think about But I'm just one quick thing how do you have an anticipated time you might be finished with the change over to the we are we are hopefully we are in the second phase of the implementation of the and you'll E. R. V. system and we are hoping by may of at twenty twenty three the full implementation would be done but it will take another year for training the new staff for to know how to use it and how to make sure they are on top of that as we mentioned sometime when you train somebody of the opposite implementation of the leave that one foot out the door. I understand thank you so much I appreciate and I get it thank you. Mr Mavor. Thank you Mr chair you're saying you have a hard time getting employees what about in student enrollment while I have you at the table if you can tell us so that we hope that there's money coming in to support you in the future. We believe it and during the pandemic we have a little bit of at down in all month but we did not face a lot of what other institution fees we have some of the loss of enrollment of this semester we we're able to go back a little bit I'm not to we will what we will as before the pandemic but we are going a little bit of we've gained a little bit of three percent back on our enrollment this to this semester and we are hoping within you programs and you'll you'll activity what I'm doing for this unit on campus that will increase the number of students enrolled me unless I have two kids and my both kids are gonna want to already graduated from northwest Arkansas community college and the second one is now a student at northwest Arkansas community college. Yeah represent maybe I'll just add to that from follow twenty one to follow twenty two are real that went up almost eleven percent so we saw an eleven percent increase year over year so we're very happy with that. We are the largest two year community colleges state. Mr caged. Thank you Mr chairman my questions are covered just one last question the bank reconciliations so I see there is a pretty large variance so and I guess on one nobody was overlooking It was just. I with the variance was the problem that option was overlooking it but that was it just left there and it looks like to the audit committee to find out Hey ya'll never even found which a variance was two hundred ten thousand what's the status of these two reconciliations with the big variants it's it's not because site so what happened is in the end of that and the end of the year you have some items is cleared from the bank but it's not clear from the system so what happened there when we submit that to the audit committee there was supposed to come to to go and see this checks has been ordered to create the bank so and our financial statement it shall it's not cleared I did but and the and the bank it's already clear so it was timing issue between what the president to that of the two that just after all the terms and what the laws we have was supposed to done and again this is because at my controller has left resignation was all you life is July fifteen which is amended offer the process and what will and the other point is there was no. The other person the director of the GL manager was checking that and the controller was supposed to be the second person doing that but poses a commission of the controller there was only that and as you know the version who is doing that and then I take a look but I don't have a signature on that so it's look like on paper it's like only one person is taking looking at that reconciliation but normally see people that act as G. L. manager and then the controller and then myself we look at the process. Because of that turn over this is what happened but it's again it's just I can secure the bank or not the use of and so it's clear if the the clearing issue between the bank teller books and the bank books. Okay is there any further questions. If not the owner to a motion to file the report. The motion and a second all those in favor say aye. Opposed motion carried thank you for coming today. Okay. Florida school district thank. Fordyce school district had for findings and I will point out the repeat when I get to that finding finding one in our sample of payroll expenditures we identified compensation for personal services totaling eighty thousand dollars paid from federal funds without employment contracts or authorized pay rates and that was S. R. funding specifically finding to a test of disbursements rebuilt fifty laptop computers at a cost greater than a thousand dollars each were not recorded in the district's equipment subsidiary ledger now the total cost of the fifty laptops was just over fifty five thousand dollars and these are also as her funds finding three was the repeat finding the district had uninsured and under collateralized bank deposits totalling one point one million and six hundred forty five thousand dollars at June thirty twenty twenty one and January thirty one twenty twenty one respectively in noncompliance with Arkansas Code. And finding for ad during our examination of twenty five payroll records we noted several discrepancies there listed there we had over payments of almost twelve hundred dollars due to clerical errors we noted that four employees were underpaid underpaid by a total of eight hundred thirty eight dollars to to clear coal errors. No contract was prepared for one of the employees that we tested blended rate was not utilized for employees that worked in excess of forty hours for multiples positions at different pay rates. And personnel policies did not reflect the pay practices of the district in some instances and that concludes the findings for Fordyce school district. Everyone here to represent the for the school. I just have a seat at the end of the table indemnify yourself for the record and. Proceed. I'm Judy Hubbell and I'm the superintendent of the four House school district. Okay. Go ahead with your comments. I certainly want to own my own mistakes and I I I don't mean to put this off on the private auditors but we had been using a private audit company private CPA firm and the last two three years I just have not gotten us our annual audit in a timely fashion and had we received it in a timely fashion we would have had this repeat offense but by the time we got it it was in the new fiscal year but we got in touch with the bank and got that fixed right away when it came to our attention. And I'll have to mirror what the community college said it is very difficult and Fordyce to get good employees and keep them and some of this was kind of do you to A bad employee situation that got corrected she left suddenly and she left things in a state of disarray but I I think we had that straightened out now. We have stopped using the private auditors and we've gone to the legislative audit which I was very happy with this year I couldn't ask for more professional people. To work with us and help us my goal is to get everything cleaned up and keep it cleaned up and I think that. Going to the legislative audit is one the best things that we've done. And I won't you know read you what we've done you have to sign thing in front of you that I have here. But we submitted Our corrections what we were going to do to keep it corrected in the future to I can't think the gentleman's name right now but we submitted it to the correct person and he said that he was good with that. Second call your. Yes are okay we have a couple questions of ms McCann Joe thank you for. Whenever the silence okay just give off the or a. Mr. I'm chasing you I'm. What's your name again I'm so I'm so a couple of Hubbell Hubbell okay ma'am is horrible I when you were you there when the school district decided to go with the private auditor no ma'am I am here to that and this is my fifth year as superintendent for das and couple years ago I started kind of getting the feeling that we needed to go to the Legislative not and I'm I'm glad that we've done that I think that's a good move to because the payment somebody money to do that well right thanks for calling and I will get a much better all around them. You you addressed you know some of the issues here but what I'm wondering is who was responsible for paying somebody with no contracted with out authorization well we've been through three business managers and I think I've finally have one who. We'll do a good job as I said before it's terribly difficult and Fordyce to get good qualified employees are there's virtually no housing there there are many reasons to want to move to Florida and it's just not a real good like proposed but I think I have someone now who is doing a pretty good job with who's responsible though there isn't there should be a contracted somebody's well my who's responsible for that doesn't the school board signed off on that or something else and I do sign off on all the contracts but as far as issuing the contract the district business manager did not issue a contract yes ma'am I I think it was as much oversight as anything else. Okay yes that's going to be fixed and that with the other thing that because we've seen this over and over many years where We know that districts are supposed to get permission from the Department of Elementary secondary education to pay somebody in the manner that was paid here that was cited who's responsible for getting that permission from the department of education I think it would be may ultimately. And what happened with that to to to as I say I wasn't even aware this that happened until we got the report of a woman who did that who who actually did it who actually paid somebody up without getting permission if you want to wear was or somebody else who should have been aware before well I'm gonna play the district business manager should have been aware but I realize it is superintendent I'm responsible for all of it you have I take that responsibility I I'm I'm not I yeah I I agree with that machine got some other set up it's just that we see this time and time again and this seems like one of this is that superintendents job is hard I'm not suggesting is not but we see the simple things like this over and over where somebody just didn't get permission and that's one of those simpler things that yes ma'am he is we're going to strive to do much better on that okay thank you miserable appreciate you yes I have. Are there any other further questions. If not thank you for thank you presentation enter your questions I appreciate it thank you. And I'm here to a motion to file this report. Motion made in second all those in favor say aye. Opposed motion carried. Okay. Brinkley. Yet fate thank you Mr there were two more reports neither these reports had repeat findings nor was any where either the findings submitted to the prosecuting attorney so I'll just go ahead and read both of these for the school district. Wrinkly school district had one finding which it was for title one expenditures for a specific function exceeded the budget announcmenet by sixteen hundred dollars which is more than the ten percent variance allowed it appears this was a miss coding issue when the school district Wrote the check at the at the end of the month and recorded it they just go to that to the wrong function Star City school district had one finding during our examination of forty free and reduced meal applications we noted two applications that were incorrectly classified as free and reduced price respectively the correct classification was reduced price and free respectively and you'll you can see the district's response there for how they plan to fix that and correct that going forward. Those are the findings for Brinkley school district and Star City school district. This was followed. All. For. I. Foes motion here. You pursue the sum of. This. May second all of. I. Close. Both. For.