Legislative Joint Auditing-State Agencies

Adoption of the minister motion for documents and second removed. Finisar proved and at this time will read the reports I thank you Mr chair they were presenting to reports with findings and we also have ten report without findings in these are listed in the US army on page one. Members without objection will file those reports. Reporter filed okay our first report with findings is the Department parks heritage tourism June thirty two thousand twenty report and this report contains one finding. review of all employees sick leave payouts made during the fiscal year revealed that one employee received a pay out of over thirty haulers but was only entitled to about twenty hundred. While the AC source documentation reflected the correct calculation of adjusted sick leave hours to pay the total hours sick leave available at retirement were erroneously entered for payment Mr concluded findings for parks heritage and tourism and members were kind of going to read through some of these reports so if you have questions on an you might know those and we'll come back to them correct it wouldn't let without objection will do that. Okay. We have somebody from parks like to come to the table please. If you would please introduce yourselves and you can kind of talk to the point and then we'll have questions Ms. My name is Jonathan I'm the agency CFO. I'm Leslie Fisk and I'm chief of legislative affairs of the agency. If you address so we have German outlined there what the report was can you address those. Yes Sir. The the main issue that we saw in reviewing the finding is that the policies and procedures that place were not fully followed by the employees so since that time we have made some changes in the process and in the main change that we made to help compensate for this loss is that we added it in the other review so the person who is actually auditing the report is not the same person who will be integrated into aces so it goes through another hand before is actually entered into the system so that second person will review it they will confirm and and and compare that the believe ounces in the amounts and the three they will get back with the first person and then the final step that was also change was that we added as a supervisor review so that they have to be signed off by the supervisor showing that both persons that those bounces and make sure that they agreed group members anyone have any questions. Members without objection filed this report thank you thank you. Thank you. Okay our next report is the department of labor license favor licensing report for the two years ended June thirty two thousand twenty. This report contains six findings. The first finding the AC did not report losses incurred regarding the former executive director of the state board of architects who resigned in December two thousand nineteen. These losses included several inventory items totaling over two thousand dollars that had been in the position of the former executive director but cannot be located. And to payroll checks a former executor to receive not entitle totalling almost five thousand dollars. The age you will has accrued annually for a lump sum payout totaling over eleven thousand dollars to recover the value of the payroll over payment any before losses and this finding was referred to prosecutors turning. The second finding our review revealed undocumented and or on authorized by the current and former executive directors board of architects. DFA's financial management guide required a travel expense reconciliation played when a ploy does not pay for all travel expenses also when lodging costs exceed the rates listed in the federal travel directory a letter of authorization and justification by the administrative head of the agency must be on file with the travel payment. The current executive director the state board of architects in Washington DC for a current did not complete the required form a the lodging for the trip exceeded the per diem and a letter of authorization or justification for not provided. During our review of fiscal year two thousand nineteen expansion with a server twelve instance telling over eleven thousand dollars which the former executive director state board of architects made various purchases without maintaining appropriate supporting documentation for authorization approval to enable us to determine the business per the purchases and these are all listed in the bill that you see there. This finding was also referred to the prosecuting attorney. The third finding Arkansas Code establishes guidelines for record retention including permit retention of official agendas and minutes of public meetings. Our review revealed that the record for the state board of architects report on the former executive director computer can produce resignation in December two thousand nineteen he deleted the contents of this computer hard drive which included the files related to the public meeting. And this finding also was referred to prosecutors turned so the first three went to the prosecuting attorney. The fourth finding Arkansas Code prohibits employment of relatives with a state agency when one relative is responsible for supervising the job forms or work activities of another relative. The correct correct current executive director of the state board of architects who was the office manager in July two thousand nineteen. Used a temporary staffing agency to hire son and responsible for supervising his job at his job performante. The fifth finding our review revealed calculation errors regarding payouts for annual leave and sick leave and we also know to comp time was not approved before being earned. For the noted on correct annually passed to employees that workers comp commissioner under paid to employees that the real estate commission were underpaid and at the division of labor there were two employees who were underpaid one who is are paid and everyone except employed there see to pay out when they shouldn't have. All of these areas and annually fascinated to an underpayment of just over twelve hundred dollars. For sick leave we noted one employed workers copied into employees of the division of labor were overpaid and there's a sickly payouts needed to an over payment of just over twenty eight hundred dollars. And as I mentioned before already also that comp time would not be approved by the employee's supervisor prior to being iron at the towing and recovery board. Secretary Bassett of the labor licensing has eliminated of overtime make it only available for certain emergency situations. And the last finding the six finding with during our review of accounts receivable there were several issues that we found. There was no documentation monthly aging reports or the management had reviewed the receivable balances they're also amounts included in the allows for discounts without adequate criteria and there were mouse it probably should have been included the allowance that were not included. Also proper proved if I was not obtain for the abatement of some receivables and there were also other receivables that probably should have been abated since they've been outstanding for awhile there details of all the receiver issues in those various posts that finding researcher that concludes the final for the Department labor last. Thank you we have someone for the Department come to the table please. If you would introduced if you would please introduce yourselves and we're gonna go through these findings one at a time members so what does not work down through them individually I'm sure we'll have some questions on each one of you would introduce yourselves and if you want to have some explanation start out with will accept that thank you Mr chairman madam chairman members of the committee we certainly appreciate the opportunity to appear before this committee today to address these issues with the department of labor licensing I want to certainly thank the audit staff that work with us during this process of the audit to uncover these issues we appreciate their input we appreciate how they were very cooperative throughout the process of a of finding a way to address the issues these are challenging issues they are very serious issues the committee needs to know that we these issues very seriously and we have worked very diligently to address these issues most of one of the most challenging parts of of this department after transformation after we we we completed transformation from its very inception this is an issue that we had to grapple with with regard to our board of architecture as you know the negative director of of architecture resigned in twenty nineteen five months from the effective time of transformation it was at that time and as a matter of. Act that director was to have appeared before this very committee and did not appear it was at that time we began an investigation of that particular department we were quite frankly unfamiliar with that department we just gone through transformation but my staff conducted inventory they found the number of missing ice in that department and we went about our business of trying to ascertain just how many missing items there there were you're legislative audit staff identified twelve questionable experience expenditures rather during that same period. Excuse me I'm sorry. It's not COVID it's just allergies. Okay now let's say that the amount from by the way. If the we learned and it is become an audit issue about the missing documents from the board minutes is that is one of the major findings in this audit we discovered that the hard drives in that executive office had been wiped clean. And so you're unable to present that that data that deleted all of the board record city it deleted the minutes deleted the agendas of all of the public meetings and so we were at that point in a in a quandary. there is another audit finding where clearly it finds me at fault for not notifying the State CFO and I am certainly guilty of that. But at the time that also was going on and we recognize that these files had been deleted. We had a number of items inventory items that were also missing. And the value of those items were escalating by the day I made a decision. it communicated that to my general counsel as we had a request on the table for us to reimburse for all annual leave and sick time I made the decision and relate that to my staff that we were to hold that money. Until I was able to determine exactly the extent of the damage and for that I was in there and and because of that I agree with the findings I was in there I should have at that point notified the state CFO that we uh had an issue and that we were trying to get to the bottom of it in in the haste of everything I did not do that. that was that's certainly one of the issues that we're dealing with here now I won't review all of the internal controls that went into place that I put into place after that I've already placed that into my management's response but we immediately began to put. Internal controls in place for this agency they didn't have them prior. and so that was that the issue. the other issue. Updated or we just are your comments specific to funding one yes Sir okay Sir did when you're ready to move on to regular library to move I'm ready to get beat up okay we'll members again we're. We're going to go binding at a time so to have any questions from the committee. I have one so in this transformation process you mentioned that you weren't aware of of this agency in too much are now aware absolutely Sir okay absolutely send you know with your we've been a lot of talk about the savings garnered through transition do you know what the savings are by transitioning In this division this. Well if you don't that's all right I'm I'm I know if I'm not on the agenda not outlined it specifically for this Division but there are have been significant savings okay that's fine thank you you have a question representative Lundstrum has a question. Thank you for trying to on all these mistakes is not sounds like it sounds like you're executive director of the board of architects owns the vast majority of this what was this person's name and you tell me what the items that were missing. I've got the items Number. Sorry for the interruption there There was a Comcast box there was an absentee S. five hundred wireless scanner purchased with the P. card from office depot. There was a mole in kitchen faucet. a Dremel three thousand tool kit. A twenty fourteen iPad. For items related to a candid camera battery charger Bedford's the U. S. B. plus a hundred and twenty eight again memory card finder a cannon nextra. That. Totals. About two thousand dollars two thousand one hundred dollars okay and what was this directors. Kingsley Glasco Kingsley Glasco yes glass Klasko and this is the same director that destroyed files and failed to show up for audit. That's correct okay And. We referred this over to the prosecutor correct yes ma'am it's been referred to Mr Jackley Mr Jackley and when was that referred to Mr Jackley. C.. February the fourth actually from legislation one auditing committee sent a letter and referred that to him on February fourth twenty to twenty twenty okay so we're we don't know if he's gonna prosecute yet it has had time to work through the process or has he responded No may point we are going that the termination okay. Members the other questions. Senator Hammer thank you Mr. It I think you were gonna hit over several of the findings but regarding finding number one you're not taking any. Responsibility for that because I wasn't under your watch that was in the previous. Yes Sir and that was before we had actually transferred them into my department okay yeah I just I just wanna make that distinction what you feel that you know you beat up for isn't funny number one because that's under the previous watch correct yes Sir okay thank you is. Members were gonna approve all these again so we'll just without the need for a move on the number without objection so. Okay I'm sorry represented funds from you want a question on one I'm I'm glad you with help that check that last glad you caught that. Thank you will move on to number two. Two. The okay. Number two was the Expenditures to Washington DC by the then office manager for the former director there was a sum of a hundred ninety two dollars they've been paid out to that individual it was in excess of per diem. that money has been repaid we've made sure that that money was to be paid to the board. So that. Solves that particular issue. I'm sorry if you could just give me a moment Mr. We had several issues on. Also one number number two there were a number of findings Regarding the. Former executive director with or to twelve instances Of. A parent. Miss expenditures totaling about eleven thousand dollars. And the questions about how those expended we're going to be with Hellenic that kind of dove tails back. Into what I had said earlier in my opening remarks our team and they began to inventory and assess what was going on with this entity that we had inherited they were covering these amounts. And that. That informed my decision with regard to withholding. the disbursements of annual leave and sick leave to this employee because these amounts were escalating on a daily basis. The audit on covers that. I have no I have to concur with the audit that transpired and we were making moved to try to mitigate that loss to the people of the State of Arkansas why was not in favor of tendering those dollars to this individual and beyond that Mister chairman I have notified if you're thank you so it members any questions on number two. Seeing no questions on number two will move over to finding three. That is the. Yes Again I hate to be returned again that is a finding surround the lack of minutes there were no because the hard drive had been deleted and so we did not provide those and so and I concur with the audit thank you can you of what they have notes in front of us if you're looking to same ones we are but there's a fairly good explanation that we're looking at so the need to going to a whole lot of detail they'll they'll probably ask questions if they need to Senator Hammer you have a question thank you do you know if the former directors an architect. Yeah. I have no idea I. He is he is not it was not and is not an architect our well my reason for the question is going to be as one wonder if they took action on his license given the findings but it never mind that there is no I thank you to take action against. representative Lundstrum you have a question if you could come back to the Committee and let us know whether or not there this is going to be prosecuted I'd like to have some type of report just in the future if you could check back in with us and let us know if they're gonna be picked this up or not I would welcome the opportunity Adam chairman chair to come back to the Committee and give you a full report on all of these census it is in our best interests as a department to get this cleared up and finally out of the way. Members if you sometimes we get these reports there you have a hundred and twenty page report that was done once a year that goes county bycounty on all the issues referred to the property and the disposition of all of those I pulled my from cricket council today interested to see that so but only comes out once a year but you do have that road that contains a lot of good information if you didn't know. Members any other questions Senator Hickey did you have a question on this one anyone else have to move on to items or finding three are I'm sorry for. members of the committee my name is Denise Oxley I'm general counsel for the department of labor licensing and I'm going to address the one dealing with the payouts it in the employee compensation issues Basically in terms of. The ma'am I think you're on are you a number for five. I'm sorry I'm under five number four is the nepotism one no I need to deal with that okay. I deal with that There was a question of Iggy and with the previous administration the office manager at that time at the behest of the then executive director utilized in out servicing staffing agency and as it turned out one of the people that they hired what a step son of the office manager. and they hire that individual that is the issue. At hand here. Once we got into transformation that was you that came to our attention the auditors again brought it to our attention. and we had no executive director. I made the decision along with the we needed to find a director. We had to first address the appearance of nepotism we address that I think through internal controls and also some procedures that we put in place every year of trial. The board concluded that they wanted the then office manager to become the director of architecture I saw no problem with that because that individual had demonstrated exemplary performance. And we that individual is now the director of architecture but. What I also saw the need to do is to put some policies and procedures in place not just with the architecture but with all the other twenty two entities that we have inherited. To prevent that kind of thing from ever happening again. Including. Any service contracts that any of the entities that are within the department of labor and licensing. Those contracts be approved by the secretary and ultimately go to the governor for proof. No more deciding what you want to do out there they need to have a procedures in place we have a new director who was the former office manager the board is very pleased with their performance as I am as well and I am convinced and I can assure this Committee that we have policies and procedures in place to prevent any such action occurring in the future. Thank you members any questions. Singapore one question representative Richardson you're recognized thank you Mr I just the the new director that was pulled from a office manager is that individual an architect. No she is okay she is she is a and the board that was an issue representative that we discussed with the board. But they were so high on this particular individual because this individual had addressed all their needs had kept them one time had done what they need to do and they were very high on this individual and they persuaded me that that was person that they needed I had to concur because my experiences with that individual had been nothing as I say but in exemplary so if that's the same for that hired the defendant stole all the stuff no no different board we we we had complete replace the force okay the members any other questions all right item five or finding five. I think this is where I'm this is Denise Oxley and I am going to address the employee compensation issues if I may there were two two things that needed to be explained in one was a part of the mess up was on FMLA pay out in our employees were relying on a form that we leave is misleading from DFA instead of actual the definite rule is very clear. But the form is misleading we think we've addressed by staff training and that would happen again with respect to FMLA the two over payments some of the over payments deal with what happens at the end of the end of the fiscal year when Devon I goes into enter a change as a result of if someone's retiring too low one and then they get a pay increase June thirtieth and when all that is entered there there were is mistaken Employee right in a sense we cannot change that but we can't enter that so that that doesn't happen again and we have put in place staff training to make sure that is monitored so we can contact the FNA in the event that that is a problem in the future but it it happens for those individuals we're they're they're retiring or quitting right at the same time a final pay change comes into effect we are a process of getting the if they approval to deal with those under payments to those employees will be compensated as well as to deal with the couple of overpayment. When asked if there's anyone from the FNA wants to defend their clear out there I'll is say that will serve their all you got to work that out well there see we think it's clear the rule was clear with the form itself that are HR staff was utilizing that was unclear the taxpayers would agree with that set. Okay that's not an excuse numbers any questions Senator Hammer you have a question okay anybody else can. Okay let's move on to finding six. Is an issue that we're going to have to grapple with for a little while. it's about accounts receivable. and the abatements of those accounts receivable first of all I want to say that we agree with the finding of the audit could oddity we agree one hundred percent they are exactly on target. Here's the dilemma that we're. It's how we look at the various agencies that we've inherited look at abates. We need to have a procedure and we're working on that I and that's it that's why you probably need to call me back at some point and ask about the process of where we are with regard to. Putting this palm place. Is in the difficulties that were having is that all of these obey proceed we can't we can't find a one size fits all for all of these twenty two different agencies let me be specific. Not all of them are similarly situated. And I hope I'm not going to embarrass anyone certainly I hope that I'm not gonna embarrass anyone at the table. But let me give you an example. A fine levied for contractors. Is completely different. Then a final levy for real estate. Quite frankly the fines that are being levied by contractors many of them. When they levied the fine they know that there's a distinct likelihood that they're not going to recover that five. Contractors come in Arkansas after catastrophe and they do work and they do this and then they are off to Oklahoma or Texas and and they've done something wrong here and we levy a fine. Ten thousand dollars whatever. Finding that individual is extremely difficult. A fine levied on the other hand. By real estate. I know real estate firm in Arkansas the likelihood of recovering that finds pretty good. If we put a fine on a noted real estate company Arkansas chances are we're going to get that money recovered. So we have that multiplied by twenty one twenty two different agencies. What we have to do though is recognized where we have come up short and we have. What we were not doing specific in contract is we're not recognizing that the audit committee was looking at even when a board reduces the fine collectors because a guy is paid back what made restitution is gone back in and done the job that he was supposed to do they've reduce that fine. The audit team looks at that is in the basement. Contractors was not looking at that contracting department division rather was not looking at that is an abatement. But audit looks at it as it in abatement. We're gonna be looking at it as an appeasement. If audit looks at it as an abatement we're going to be looking at that as an abatement we agree. And that we're going to do okay. Members any questions. I think that wraps up the finding. Senator Hammer you have a question. Okay. members any final questions. The thing that I think we're ready to move on and file the report thank you do you have any concluding comments I think you're about all there to cover but yeah I think if you have a concluding comment that be fine issued more than kind before the intelligence of the committee we appreciate it thank you. Members there is no business are in our new business our next meeting will be April seventh of twenty twenty two and with that we are turned.