Legislative Joint Auditing-State Agencies

You guys Mr ray James who's at the end of the table with UALR Mr James would you go ahead and kind of fill us in on some of the details of your group. Hold on December gonna turn my come for you get a hold of pretty close okay there you go. University of Arkansas little rock interpreter education program was established forty three years ago we provide training and a BA degree in interpretation American Sign Language English and the course I teach Abrines the interpreters in their senior year out into the community to simulate what they will actually do when they are in their profession so public meetings is one of the parts of the course and so I bring them to public meetings that are open so that they can practice the interpreting and we bring in seasoned interpreters to give them feedback on their skills development and that's the purpose of our being here thank you for allowing us to come listen we are very thankful for you to be here because the members of your group please raise their hands another mostly back in the back if you all would raise your hand we can recognize you. Valuable service and a great opportunity for people and and helping people who really have a significant need we appreciate it any closing comments we do bring death members of the community with us so we also have debt members of the community here so they have a live audience to interpret to and it's not just in the air great thank you and you're welcome any time one of our committee meetings and if we have ever have in need of your services will be sure to contact you I now have your phone number thank you very much okay thank you. At this time I'll turn it over to Mr Burlington of I'm sorry called off we have a moved to adopt the minutes the motion. And second okay. At this time we'll review reports. Thank you Mr chair today representing two reports with findings and we also have several reports without findings that are listed on page one of the audit summary Stafford and we just follow seven reports. We need a motion to just without objection filed yet without objection on that will file those reports. Okay sure we got does DHS is our first report with findings we've got six findings I think base are special cover those one finding at a time and then we'll have discussion and go to the next buying so the first finding with DHS during our review of expenditures we noted to duplicate payments in the amount of seventy five hundred and six thousand dollars issue to United family services Inc a vendor providing services within the Division of Youth Services. The original payments were issued during may two thousand twenty one and the duplicate payments were issued during June two thousand twenty one. The AC was unaware of the difficult duplicate payments until we notify them in April this year the H. you're saving deposited recruitment of the duplicate payments in may two thousand twenty two that concludes the first finding. The members have any questions. If not we'll we'll without objection will go ahead file that review. I know we're going to have some questions going down the line so maybe somebody from DHS can come to the table will be ready to go if and when. So it's for defining to okay the second finding the state's financial management guidance states district control need to be maintained in the processing of cash receipts to ensure their probably accounted for the eighties administrative procedures manual also states that receipt books and or cache logs are to be maintained for purposes of audit and internal control and the funds received must be received and deposited timely. Our review of the asus receipt deposit of funds in the various programmers reveal the following that various locations we noted six checks totaling about twenty six hundred dollars that could not be traced to deposit our sample in this area consisted of fifty three items totaling over one hundred five thousand dollars and you can see the detail of those checks in the bill is the finding. We also noted that eight checks totaling over one hundred five thousand dollars were not deposited in a timely manner these checks were held from eighteen to two hundred and one days before being deposited. And last the central office failed to maintain receipt but which contain two hundred seats for funds or say between September and November two thousand twenty also check log was not maintained between August and November two thousand twenty for the Division of provider service and quality assurance that concludes the second finding. Members as you'll see DHS concurred with that finding anyone have any questions of DHS. Seeing no questions we'll see this action as reviewed and. The next one okay the third finding our review the Arkadelphia Arkadelphia human development centers individual personal fund bank account and corresponding receipt if bencher transactions reveal the following issues. For siting of funds in those accounts into that account we noted that receipt books were not properly maintained or used appropriately and finder say we're not always applied to the correct client account you can also see additional details in those bullets and that finding. During our testing of expenditures from the Arkadelphia H. C. personal fund account we noted that proper documentation was not maintained for the purchase of the gift card or for various draws a petty cash. Also documentation expenditure did not always match the funds drawn out of the personal fund account. Begin their additional details in the bill is that finding that concludes finding number three. Hi again members of your I think it's Pitsch for you see the agency's response to concur if that new hires will be required to complete the training anyone have any questions. She no questions will fit this item is reviewed over finding for okay the fourth finding during our review of the eighties Arkansas able investments of foster care trust funds when a total of over nine hundred thousand dollars that was sent to a third party administrator for investment against multiple foster care client investment accounts the contribution were made over three year period. We review twenty five of two hundred and sixty nine Klein investment accounts along with corresponding third party administrator system reports in that one check was applied to the wrong class account one check remains outstanding and not applied to a to any clients accounts and one clients prior activity was not listed on any reports. Additionally we determine the total Arkansas I will investment amount as of June third two thousand twenty one that was posted in aces was under reported by almost nine thousand dollars due to the third party administrators you're in a poor erroneously omitting three active client account balances. And finally it was discovered that the third party administrator notifies the AC routinely of the availability of monthly reports as well as quarterly statements however the AC failed to incorporate a process reviewing these reports and statements to verify that all contributions sent have been applied against intended cloud account. That concludes funding for. Thank you shall I just got a question I I think it's kind of unusual from my perspective that some of our agencies have a trust fund do you know the history of how that trust fund was established. Yes Sir Clark why did for review and services so this is a role for a new effort within DCFS some of you may know that a few years ago Congress created a new type of savings account call the able account is for individuals with disabilities and allows them to get savings that I believe has some tax benefits but also more importantly it allows them to collect savings that do not impact their Medicaid eligibility and the intent was to just provide some additional benefit for those who have no very disabling conditions if they can work they can get some earnings but also they have an access to some of the resources that won't impaired or eligibility and so you all a couple sessions ago adopted legislation recognizing those accounts in Arkansas so what this is is this is for individual for children that we brought into custody who have disabilities if they're receiving outside benefits so for example if they're receiving social security checks then we're pausing the social creatures sicker text into these accounts so that they have those funds and they'll keep those funds when they leave our custody correct I think Senator Hammer has a question. The other third party who's the third party that you are using. Lewis I believe the question from DCFS to Mabel to answer that question. Senator Douglas is looking at you former senator. I apologize we may have to get that information back to say okay I think we may have that and everyone of my record it's a census. Eight eight A. S. C. E. N. S. U. S. A. senses the third party administrator for that okay we as additional information on that it that it is being at that back to the committee okay thank you to get the senator Hammer have a follow up for you if you don't mind covid sure thank you well first of all say thank you for being here because in your new capacity is nice to have the Director DHS so that the in the table and give explanation so want to give you recognition for being here today and say thank you for that the other thing on the on the third party vendor did they did I understand right that they did communicate with you all or how was it that it came about that you found this out yes leader is being good communication between us and the vendor I don't believe there's anything in here in which we say the vendor was at fault I think this was just on on our side and I was a consequence of this been a new thing we've been learning as we've been going and we just we makes mistakes as we set this up and and continue to and then your turnover rate for the people that are working on this are you are you experiencing I know DHS has high turnover rate anyway but in the area where these dollars or any of the other ones are you experience a high turnover rate in those areas we have had some turnover in finance empirically within DCFS finance we underwent one it one long time employee we unfortunately lost she passed away so we have is to turn over in that area thank you thank. Representative Bentley you're recognized. Thank you chairman. Thank you mark for being here today can you tell us how long have these changes in may that we would time period we're looking at since we've made these changes that we're seeing we feel like we're getting a good handle on this at this point. Yes Brett Hayes department Human Services we updated our process for managing these accounts back in August I will add that during the period of time that we were looking at our processes we determined that it was best to discontinue taking any new accounts so we're still evaluating our management of that until we get that in a place where we think we can before with other accounts. Okay thank you chairman I want to get a. Good grasp on that that's a great rate thing for these folks so thank you. Members any other questions. Say no further questions will see this as reviewed. finding five please okay the fifth finding what performing our invasion of assets from a current capital asset listing dated March of this year we noted seven of sixty equipment I don't sample with a total purchase cost of over forty three thousand dollars we could not locate for observation that concludes that finding Mr. Members any questions on this finding. Say no questions this will be lawyers reviewed. X. finding places okay the last finding of the six finding and. Yup try to stay with me here this was a little bit confusing has a Mr Wiesel VOL it be down there so that DHS is first four point seven million dollars in corona virus relief funds for the community outreach program within the Division county operations during the approval process for granting the awards in the corresponding editions of the grant funds DHS utilize a third party administrator for vetting potential sub grantees. In turn the separate days agree to provide DHS was supporting documentation upon spending the funds they receive. Third party administrator awarded ends first two hundred and sixty two grants to approve sub grantees in the in amounts ranging from one thousand up to four hundred and fifty thousand dollars per grant award. For a review we selected the high surf through the grant award of four hundred fifty thousand dollars to the urban league of state of Arkansas. The urban league's application for funding documented that it would serve forty five counties in need at ten thousand dollars per county. The urban league since it subsequently can contract with performance tax group to distribute the funds to various organizations in anticipated forty five counties the urban league provide a summary listing of seventeen organization to whom performs tax group issue grant funds as well as the amount for administrative costs. We determine that just over four hundred four thousand dollars as well as distribute to the seventeen organizations with the remaining forty five thousand seven hundred taint as allowable administrative cost. Our review of the summer listing in detail for support provided for the seventy organizations expending of the grant funds reveal the following concerns. The summer listing provided by the urban league of how the grant funds were disbursed did not match the bank statement detail of disbursement. All the summarizing totals the original award six of the paid amounts listed on the seventy different from the bank activity detail. The signed a knowledge of forms between the early performs tax group and the organization who ultimately receive the funds did not list the official announcmenet of funding received by the organizations. The former task group may nine cash withdrawals totaling over one hundred sixty five thousand dollars in order to issue thirty six cashier's checks to the seventeen organizations. Supporting documentation for twenty six of these cashiers checks totaling eighty five thousand dollars listed no identifying bank information therefore we question the validity of the cashier's checks. As required by DHS funding received by the sub grantees was to be used for its intended purpose and be adequately tracked and appropriate supported. The majority of the supporting documentation that was provided by the various organizations for expanding the funding was consider inadequate and some of it was even unreadable. And we cannot it cannot be reconciled with the amount notice disbursed we know the following additional details for three of the seventeen organizations. A total of over twenty one thousand dollars in addition to two separate organizations owned by the same individual that are not considered an food mail service type vendor. Supporting documentation suggests that these organizations further sub grant the funds to various charitable groups to provide the meals however the documentation was considered incomplete and they tell you how all the funding was spent. Over one hundred ninety two thousand dollars was distributed to one organization to serve twenty one counties information submitted as support for providing meals consisted of email correspondence among various County organizations and list of people who were provided meals however not all twenty one counties were represented in the information. We could not verify the total amount spent for each county due to poor presentation the information provided. So in summary we question whether all the funds were distributed correctly to the end to the intended seventeen organizations as well as whether the funds were spent to provide meals for all forty five counties as required by the grant award in addition to the DHS office of payment payment integrity an audit also look at this during our work that concludes finding. Thank you and members you might see down there the agency response they concur and this is been referred to the state attorney general's office for the Eastern District so mark would you like to comment before questions start maybe you can connect the dots. Sure Senator I eight one I can only do this when you just kind of a brief history of this program and how what we did but let me preface all that by saying that as you noted in response we have referred a variety of pieces out of this to the US attorney's office they are in the midst of review in this no for potential criminal investigation so I'm we do will be very limited in what we discuss because we don't want to do anything that might jeopardize any criminal investigation social put that on the on the front end as far as just context this was back early on the pandemic torched fall there was a need I think it was was pretty widely recognized for a local organizations wanting to provide help for people in their areas where there's food around housing other things and it was just it was the while we're handing it well what there was cares money going out in large grants to various organizations there is a need to provide some smaller grants for some smaller commuter organizations to help meet some those needs of the communities and so we put out a proposal around this providing support for community outreach went through the Care steering committee of the House prove by at my record my recollection is that also went through peer this is this my memory they went through them as well we administer the grant put in the application process we had it was a total of a hundred and nineteen providers at the end that received grants and a total of two eighty five grants that were made each grant was a maximum of ten thousand dollars but one organization could request multiple grants for multiple areas for multiple purposes and so we went through that process it was very much a front loaded process intended to get benefits out so that we could get some help to folks because this where we were in a particular area of lots of struggles in the community a particular on the this from the closures of businesses and other entities to to COVID and all the other affects the. Pandemic so we did that but we built into that proposal a back in monitoring component is that's what our folks have been working through and has as the report notes we've identified issues we've been reaching out providers to get additional documentation to work through that and where necessary to ask for refunded that money in a course there's these additional issues which have been identified by legislative audit so that's just kind of the background there and as I said there is a lease a potential criminal investigation in the offing here we have we know the attorney's office is reviewing that they have not confirmed to us one way or the other what what next if they will take but for that reason we are we will as it will be very limited in what we want to say about any specific pieces of this. Thank you and how you can dodges questions if you want but when you say they closed because of covid they actually closed because of government mandates is that correct yes certainly that's correct so when necessary the code with the economy was a government that caused him to close yes Sir okay members have any questions Senator Hammer I think your first. Thank you Mr are you able to answer who the on A total of twenty one thousand to fifty was issued by electronic transfer to two separate organizations are you able to identify publicly who those two organizations are. I'd be hesitant to do that I think would just what's trending up there okay yes center I think we may have it up here do you have a. Sure I'm comfortable sharing that would be inclusion job LLC and inclusion magazine LLC. Senator Hammer is that. Yes who's the are you able to say who the distribution a hundred ninety thousand five fifty was to the one organization yes that was west ninth. Wes nine yeah. Do we know what those organizations. What their purpose statements are or what their mission statement charge first what they're. I just don't I mean the the twenty one thousand we question that because we didn't see that they were a food type vendor that's why we question that and start with the west ninth when I think they were they actually didn't use my the sales they actually passed it down to other organizations. Can we get that information and get to committee members place on what they're maybe a mission statement. Senator hammer that be satisfactory that's fine I just what what qualified them to be the recipients of the money and how does it fit and. I want to ask them I'll just ask you if you don't mind if you could gather that we can see what we have in our work thank you. Any other questions. Any other members have questions. Again this has been reviewed and the eastern district attorney will be looking into this and we will Mr white if you guys would update the chair kind of on findings I don't see that we necessarily need to come back to this immediately but if we find new evidence we will looks like we got a couple more questions represented Bentley you have a question I just have to you chairman showed maybe just hold us and not review it so we can get another update as time goes on though what I think we're going to be an ongoing I don't know that we I don't know that we need to. Hold it but if that's the wish of the committee we can. Are you making a motion to hold a summit should we have for the updates on the surface fine if you're comfortable moving on it for that day's is fine never really comfortable. But I can live with it and I trusted agency to come back to us if there are additional findings yes ma'am but why Mr road going to offer I certainly be willing to say that we will send the committee monthly updates even if it's that we have not heard anything yet we can send you monthly updates that you know you're getting information back and then as we get additional would bring that back to you okay so that falls under the trust but verify law and if you will give us the chair updates will include that in the minutes yes is there senator Hammer we have a question if I may just want. Was the urban league the only one that made the initial asking I'm trying remembers this going through peer through all the processes but were they the only one that applied for this or was it open for others to be able to apply for this no it was it was open for others and we we have as I said we awarded to a total of a hundred and nineteen providers all together including our family they're one of those one nineteen but they in turn for what they did on they in turn sub granted to certain organizations and that's where these findings come in. Okay for the for the hunter if you can answer it has fine but of the hundred you said there's a hundred nineteen that actually applied nothing that received an award through the urban league order through for us so any of the other hundred and nineteen or eighteen have findings yes yes we have we have we have found issues with others as well and we are seeking reimbursement on those others as well could we include that in the update sure so that we could just get the prize to that too you don't want and we will include that as an agenda item going forward just a slight update on our agenda is going every meeting if we need to to serve by know that the update is okay thank you. Members any other questions. If not this item is review thank you thank you. Okay we'll move on to the next finding. With the Arkansas department of agriculture got some if someone would be willing to come to the chair up to the table then if we have any questions will be able to address some pretty quickly. Are to slash report is a department agriculture June thirty two thousand twenty twenty one report and we've got one finding in this report. The Department agriculture did not at adequately monitor all separate shipments for the Arkansas meat and poultry processing grant program which is also funded by the federal cares Act it was approved for ninety ten call sure by the Arkansas cares that steering committee. We reviewed expenses totaling seven point eight million dollars for sixteen of the thirty one separate sapiens who received funding under the grant eleven of them did not submit adequate documentation department to prove that the call share had been achieved. In addition to separate segments made payments totaling over three hundred forty three thousand dollars with grant funding to related parties. One paid sixty thousand for a two year lease of land and thirty thousand for consulting services. One year of the land lease was for dates outside the peer to perform to the federal cares act and therefore was not an allowable cost. For the other a payment of over two hundred fifty three thousand dollars made to related party construction coming without an associated itemized invoice. There were two separate statements that purchase real estate totaling over three hundred seventy six thousand dollars all the real estate was not listed as an eligible expense category in the grant guidelines issued by the Department. Additionally based on federal guidance the acquisition of real estate must be necessary and that the need cannot be met in a cost effective manner by leasing property or by improving property already owned. As both separate savings already only in the stated on their grant application that they intended to use that land to build facilities the real estate purchase does not meet the definition of necessary. One separate sippin submitted a ten thousand dollar invoice for equipment that did not contain sufficient detail to verify the eligibility of the expense Mr that close the finding. Yeah members if you'll see their response a agreeing and it seems that they had a short time frame and a lot of work in a short time frame but. Secretary ward would you like to speak to this at all before we go to questions. Yes Sir for the information of it I'll be very short but you're certainly you are a response would just emphasize that that you were we were looking at cares Act funding of that's where the money came through and if you're just kind of back up to the to the start of the corona virus when that happened the recruits oranges or your short is a protein in grocery stores and so that prompted a request from us working with industry farm bureau cattlemen's to request a meat poultry processing grant to help increase the processing capacity in the state of Arkansas going through that process and going through the application process itself you know it was October sixteenth before we have the full approval of that funding that ten point four million dollars we we've that same not sent out all the information to to the applicants and the recipients of the of that funding and basically said you've got until the end of November to spend the money that you receive if you've got a document that you've got to make sure your senate is as best as you can answer it was it was a very condensed time frame we've we've got numerous dot contents of phone calls and emails and your site visits to the document as best as we can but but also recognized here that you hopefully we don't ever have a situation like the coronavirus and trying to your implement cares that funding again but if I if we work with that same position there there are a couple things that we would do a little differently to documented strengthen those controls to make sure that we didn't have any any findings like what's document here okay thank you members you have any questions. Say no questions we'll see this item as reviewed thank you very much. Members anybody have a new business and then talk about if not hold a second by Senator Hammer has a final word well you may I just want to throw this to the chair and may we could have follow up discussion. Do you know if I make direct staff. Do you know how many audit findings are stemming from the handling of the cares Act money or is there a way that you could begin to track the number of audit findings as a result of the cares Act money in the event we want to look futuristic if this happens again. We're what would we learn from what we're going through I think as a result of the audit findings I think the biggest source of that would be our single report that we presented it Friday meeting last month okay so that's going to be the the best reference guide that's the bedrooms because we look at a lot of the money there now some of the smaller grants like we're talking about today didn't get looked at with that are the pieces that the one for DHS that was a piece of a bigger grant that we look at for the same lot so there's several in the singles that's really the best source of it this to my knowledge this is only this one of two today option that came from that and we might have had one or two more but it would but it's not a lot that we've had in this committee but that's saying a lot report and those we have those back we'll have those those will live forever we do that every year so we have those okay could you thank you would you like to. I mean we have that report and you talk about discussing that among the committee. Is there a need for us to go beyond and it's coming discussed any other committee out do you see a need for us to do that here let's just the the report this is hamlet you ever just wanna have a record of those findings to be maintained that what you're wanting Senate yeah and we'll have that we have those reports available at any time for somewhere down the line we're gonna look at this and what we want to learn from this experience that we don't want a repeat got for it it happens again but right does what we need to stand up before just in preparation so riled point K. thank members any other point if not were German thank you.