Legislative Joint Auditing-State Agencies
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Representative Steve Unger
Unverified
0:00
Ladies and gentlemen, it's 1.30. I call this meeting to order, and in just a second, I'm going to hit this thing one more time, and we are going to adjourn for exactly 15 minutes. At 1.45, we will come back so that we can play Santa's helper up in the old Supreme Court. Witnesses, please bear with us. Apologize for the heat. Some lunatic had cranked it up in the high 70s before we got
here. Can't tell you why. We're adjourned for exactly 15 minutes.
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Representative Steve Unger
Unverified
14:30
we are back in session you should have received a copy of the minute minutes uh does anyone make a move to adopt the minutes is there a motion i hear a motion second all right without objection we approve the minutes i now recognize mr bullington
Speaker 8
15:04
thank you mr chair today we are presenting three
Speaker 9
15:08
reports with findings and one special report we also have 12 reports without findings and these are listed starting on page
Representative Steve Unger
Unverified
15:21
one of the audit summary. Without objection, we will file the
Speaker 9
15:27
reports without findings. Okay, Mr. Chair. The first report with findings is the Department of Commerce FY24 report, and this report contains two findings. The first finding, the Arkansas Securities Department notified us in May of 25
that an employee of the enforcement section used an AC travel card to make $2,900 in unauthorized personal purchases. The employee was authorized to attend a conference in Fort Lauderdale, Florida as part of his continuing education. While at the conference, the employee made unauthorized purchases of airfare for himself and another person to fly from Fort Lauderdale to St. Thomas using the AC travel card. The employee also made additional unauthorized charges on the AC travel card to prepay for lodging in St. Thomas. A police report was filed by the AC and the individual's
employment was terminated. This finding was referred to the prosecuting attorney and the attorney general, and it was also certified to the bond board. The second finding, DFA's financial management guide, states that agencies must properly record amounts due for delivery of goods and services, licenses, unpaid taxes, student loans, special assessments, accounts receivable, notes receivable, and capital leases receivable. It also states that agencies are to develop and follow written criteria for the determination of uncollectible accounts. Our review of the Arkansas Insurance Department's receivables revealed the following. Arkansas Code allows
the Insurance Commissioner to issue assessments on Arkansas insurers to produce the additional funds needed by the Arkansas Property and Casualty Guarantee Fund to cover the claims of insolvent insurers. On June 17, 2024, an assessment was issued, but the agency failed to properly record the almost $20 million receivable during its year-in-closing book process. Also, the agency failed to properly calculate the gross receivable due from insurance companies in receivership, resulting in an understatement of more than $640,000.
Additionally, the agency failed to follow their methodology for calculating the allowance for doubtful accounts for three receiverships, resulting in an understatement of the allowance of almost $195,000. The net effect of these errors is an understatement of the net receivable by about $446,000. Mr. Chair, that concludes the findings for the Department of Commerce.
Representative Steve Unger
Unverified
17:36
If the representatives from the agencies are here, would you please come to the table and identify yourself?
Speaker 14
17:54
Good afternoon. Susanna Marshall, Commissioner of the Arkansas Securities Department and State Bank Department. Good afternoon. Campbell McLaurin,
Speaker 15
18:01
Deputy Commissioner of the Arkansas Securities Department. Thank you. If
Speaker 3
18:08
you have any statements to make, please go ahead. Yes, sir. Happy
Speaker 16
18:12
to. We are deeply concerned about the events that led to this audit finding and the financial harm to the state as a result of the employees' fraudulent actions. As an agency and a department, we strive to execute our duties with the utmost care and integrity.
We have identified the situation as an isolated incident. We have implemented corrective action that will help mitigate the risk of any future losses of state funds. Happy to
Speaker 20
18:38
answer any questions. Members, do you have any questions? Mr.
Representative Jimmy Gazaway
Unverified
18:45
Gasway. Thank you, Mr. Chair. On the trip to St. Thomas, did
Speaker 25
18:50
this fellow pay the money back, or what happened? So when our review uncovered the situation,
Speaker 16
18:57
Deputy Commissioner McLaurin immediately began work to try to identify the situation, the funds, the properties, the specifics, if you will. He worked tirelessly to identify and discuss with management of the property, the hotel property on the island, and he worked diligently to get a good rapport with that gentleman, and ultimately the hotel management worked with us to refund the money of the hotel fees. We recovered approximately $1,866.42, which was the entire hotel fee minus the booking fees.
The airfare was charged through a third-party travel application, and therefore we were unable to contact them or unable to work with them on any type of recovery. All right, thank you.
Representative Steve Unger
Unverified
19:58
I have a question. Was this gentleman charged and arrested?
Speaker 16
20:04
So a police report has been filed, sir. And as Mr. Bullington referenced, it's been elevated, but we are not aware of the gentleman's whereabouts.
Representative Jimmy Gazaway
Unverified
20:16
Members, do you have any other questions? Well, I'm sorry, Mr. Gadsway. Okay, so you got the hotel money back. Yes, sir. The flight money, did you get
Speaker 14
20:38
that back? No, sir, because of the third-party travel platform, they were unwilling to work with us. And that was how much money?
Speaker 37
20:47
Approximately, just a moment. You have the number, Andy? I
Speaker 38
20:55
do, so I can step in and say initially the unauthorized charges amounted to $2,900.04. We were able to recover $1,866.42 from the hotel, so the total loss was $1,033.62. So that's the hotel booking fee plus the airline fees. I guess in
Representative Jimmy Gazaway
Unverified
21:14
terms of potential criminal charges, it would be unauthorized use of a debit or credit card.
Speaker 40
21:20
Unauthorized use of state funds, yes, sir. And I guess that's a felony, would be
Speaker 38
21:25
my guess. Looking into it, I believe it was a felony amount, and that was the exact charge that we filed the police report under. Yeah. And no one knows
Representative Jimmy Gazaway
Unverified
21:33
the whereabouts of this person? No, sir. Any chance he's on the island of St. Thomas? We believe that he still is. Okay. That could be the
Speaker 42
21:40
case, yes, sir. All right. Thanks a lot. Members, are there any other questions?
Representative Steve Unger
Unverified
21:50
Seeing none, without objection, we will file this report and go to the next
Speaker 9
22:00
one. Thank you. The next report with findings is the Commissioner of State Lands FY24 report, and this report contains one finding. The Arkansas Commissioner of State Lands entered into a contract for services related to website hosting, maintenance, and development of various web applications. The contract included established hourly billing rates for services performed by the vendor staff. We identified overpayments totaling over $28,000 and $21,000 to this vendor
for services performed in fiscal years 24 and 25, respectively. The overpayments occurred when the vendor failed to update billing rates in accordance with the updated contract terms, and the agency failed to identify the improper billing rates because the rates were not listed on the invoices that were submitted. Mr. Chair, that concludes this finding for Commissioner
Representative Steve Unger
Unverified
22:44
of State Lands. Thank you. Are there any agency representatives here? If you'd please come to the table and identify yourselves.
Speaker 50
22:59
Peyton Murphy, General Counsel with the Land
Speaker 51
23:03
Commissioner. Sam Sparrow, Fiscal Director, Commissioner's Office.
Speaker 52
23:07
Thank you, gentlemen. If you have any statements,
Speaker 53
23:10
please go ahead. Thank you, sir. The Commissioner of State Lands acknowledges the overpayments for fiscal year 2024 and 2025 related to services billed at outdated rates the commissioner's office has received and recorded reimbursements from the vendor for the full overpaid amount the commissioner is commissioner's office is implementing updated procedures to insert
ensure all invoices are reviewed verify and verified with current contract terms including confirming the hourly billing rates additionally all future invoices from the vendors shall be itemized and include the current billing rate to ensure transparency and accuracy. Thank you. Members, do you have any questions? My
Representative Marcus E. Richmond
Unverified
24:01
question is actually for state audit.
Do you think you catch all of these overcharges when you do your audits at some point, or do you think this is something that probably happens more than what we would like to admit and a lot of times it's not caught? Well, I
Speaker 56
24:16
can't say that we catch them all because when we do an audit,
Speaker 9
24:21
obviously we don't look at 100% of the expenditures. So I would suspect that there are other overpayments out there that we don't catch, but when we catch them, we bring them to y'all, we report them here. All right. Thank you.
Speaker 60
24:35
Yes, Representative Burks. Thank you. So a quick question. You mentioned that all future invoices will have applicable billing rates. That's not something that
Speaker 53
24:46
had been done in the past. Is that right? Well, we're just going to verify that the billing rate is for it. If it's an hourly charge, if the hourly billing rate's the same, if it's an itemized, like it's X number of widgets, that those item numbers per unit are applicable. So
Speaker 60
24:59
the invoice coming in is going to have the current applicable billing rate on it, so somebody on your staff could quickly just see.
That's correct. That's current. Yes. And that's not a practice that had been done in the past in your agency?
Speaker 65
25:10
On these invoices, we were just invoiced four hours. Okay. Thank you. A quick
Speaker 60
25:14
question for audit. Is that a best practice that should be happening across all state government? Well, we hope that they have that control in place where
Speaker 10
25:22
they're checking those invoices. In this case, like he's saying, the hourly rates were not on the invoices. Right. So across all of state
Speaker 60
25:27
government, should the hourly rate, applicable billing rate, be on the invoice? I think that would be a great best practice.
Speaker 9
25:36
Okay, but that's not currently the way it works. Well, I think most of the time if it's an hourly charge like that, you'll see the billing rates on there. Okay.
Speaker 10
25:44
So I wouldn't say that it's normal for them not to be there. I think we see that a lot of times that it is on there as well. Okay,
Representative Marcus E. Richmond
Unverified
25:57
thank you very much. Yes, Representative Richmond. There's supposed to be somebody that checks and looks and sees that the hourly rate is actually included in the bill. Do I understand that correctly?
Yes. Who is that individual within each department? Do you have a specific individual that somebody put a finger on and said, you're going to be the guy that checks this, and if it screws up, you're going to be the guy I'm talking to?
Speaker 73
26:21
Have you guys done that? Generally, any of our bills go, of course, first to our fiscal department. They conduct their own review. Now these bills from this particular vendor and from others are coming to me, and I'm checking them against our contract. rates who's going to check them
Speaker 74
26:39
if you're gone i suppose that our administrator real estate
Representative Marcus E. Richmond
Unverified
26:43
real estate you see what i'm getting at though i mean if you don't put a finger on somebody and give them the responsibility don't expect it to happen thank you members
Representative Steve Unger
Unverified
27:00
do you have any other questions seeing none without objection we will file this report and
Speaker 9
27:05
go to the next one okay the next report with findings is the Game and Fish Commission FY24 report and this report also contains one finding the Arkansas Game and Fish Commission notified us of the following
thefts of state funds and property on September 20th 2024 a 2018 Honda Pioneer UTV with a cost of $14,000 was stolen from an employee's property in Grant County an incident report was filed with Grant County Sheriff's Office. And on December 18, 2024, central office staff were notified of missing funds at Ozark Highlands Nature Center. Enforcement Division completed a preliminary review identifying unaccounted for funds of $554. As of August 15, 2025, the investigation concluded
with no additional losses identified. A part-time employee was terminated and the gift shop has been closed. The facility no longer handles or accepts cash transactions. And then on May 5th, 2025, central office staff were notified of a theft from the Ed Gordon Point Removed Wildlife Management Area facility. Multiple items were stolen with an estimated value of $13,000. An incident report was filed with the Conway County Sheriff's Department. This finding was referred to the respective prosecuting attorneys and the Attorney General. Mr. Chair, that concludes
Representative Steve Unger
Unverified
28:19
of finance for Game and Fish Commission. If there are any agency officials here if you'd
Speaker 80
28:31
please come to the table and identify yourselves. Good afternoon Chris Racey Chief of Staff Arkansas Game and Fish Commission. Emily Schumate CFO. If you have any statements please go ahead. Absolutely so we are absolutely committed to continuing to try and strengthen controls with regard to the two stolen pieces of property of course we're looking at opportunities to reduce those those theft
occurrences for the future with regard to the nature center we as was reported out we've already changed processes and increased and strengthened those controls to ensure that this does not happen again members do you have
Representative Steve Unger
Unverified
29:08
any questions yes representative richmond concerning the uh
Representative Marcus E. Richmond
Unverified
29:14
the Honda Pioneer that was stolen. It was stolen from an employee's property, a game warden, I suspect. And he had it at his home or some place and somebody just came there and drove it off?
Speaker 80
29:31
That's correct, sir. So the UTV was on a trailer at a game warden's home. Of course, it's not uncommon for our game wardens to operate out of their homes inside their counties. and that piece of equipment was under a carport backed in. It was duly locked. It had two cables around both the trailer and posts inside the structure itself. The tongue of the trailer also had another lock on it. The individuals, to the best of our understanding, started the UTV without a key.
The game warden still has both sets of keys in his possession. They were unable to back it out the back of a trailer as you normally would when you have a UTV on a trailer and instead went over the front, did serious damage to the trailer, so we assume also some damage to the UTV as well. So they, yes. Okay, thank
Representative Steve Unger
Unverified
30:26
you. Members, do you have any? Yes, Mr.
Representative Jimmy Gazaway
Unverified
30:30
Gadsway, go ahead. So on the UTV, do these UTVs have any special markings on them
Speaker 90
30:34
that identify them as game and fish property? Yes, sir. They do have property stickers and are marked as
Representative Jimmy Gazaway
Unverified
30:42
Game and Fish property. Okay. I would think whoever stole it, I mean, it's kind of an interesting position to be in, running around with a Game and Fish UTV that has Game and Fish UTV markings all over it. But anyway, very good. Thank you. Members, do you have any other questions?
Representative Marcus E. Richmond
Unverified
31:04
Yes, Representative Richmond. More of a statement than a question. When I first come here and started in and was on state agencies, there was a lot of weapons stolen out of game wardens, vehicles, and things like that. I haven't seen that in a while that I'm aware of. What did you guys do to help correct that?
Speaker 80
31:35
I think our folks have worked diligently to take extra steps inside their vehicles to ensure those weapons are secure, and then certainly as they're carrying those weapons, they're also being extremely diligent and taking care of understanding what that means for us and, again, strengthen those controls based on past experience. Okay, follow-up. Considering the stolen
Representative Marcus E. Richmond
Unverified
31:57
UTV on this, is there anything that you can look at and say that you can do additional beyond what this gentleman,
what the game warden tried to do. I mean, I understand, you know, that's pretty, I'll use the word gutsy, to come up there and do what they did and get away with it. And I think Grant County, I don't know who District Grant County is in, but I feel sorry for you, whoever it is, on this, because it seems like a lot of this kind of nonsense goes on down around there on this thing. But hopefully there's some lessons to learn that you
Speaker 80
32:33
can give to everybody else. Representative, we'll certainly look at it again with that lens.
I know our folks are poring over what you can do to keep these thefts from happening. I think in this case, this game warden was extremely diligent in ensuring locks were used, keys were not available. It was very difficult to pull this off, and they were dedicated to getting that UTV. It's hard to stop a thief like that. But we will continue to look for opportunities to make sure we're controlling state property. Members, are there any other questions?
Representative Steve Unger
Unverified
33:08
Seeing none, without objection, we will file this report and move to
Speaker 9
33:14
the next one. Thank you, Mr. Chair. In our last item on the report today, as I mentioned earlier, we have a special report related to law enforcement agencies' adoption of racial profiling policies. There should be copies of this in your packet as well. And we're going to present that to committee today. And I'll now recognize
Speaker 98
33:32
Charlie Camp, who's also part of our staff, to present that report. Thank you, Mr. Bullington. This
Speaker 101
33:37
letter is issued to inform the Legislative Joint Auditing Committee that Arkansas Legislative Audit has received responses from 182 of 384 law enforcement agencies
regarding adoption of a written policy prohibiting racial profiling under Arkansas Code Inditated 1212-1403. ALA forwarded the Attorney General a copy of each law enforcement agency's response. Furthermore, ALA submitted to the Attorney General the names of law enforcement agencies we believe failed to comply with the requirements outlined in Arkansas Code 1212-1403. The Attorney General has indicated that he has notified the 202 law enforcement agencies that failed to respond that are not in compliance with the law.
Speaker 76
34:20
This concludes my report, Mr. Chair. Thanks, sir. Members, do
Speaker 104
34:31
you have any questions? Mr. Richardson. Thank you, Mr. Chair. Do you have a list of the agencies who have not
Speaker 74
34:38
responded? Yes, sir. We maintain that list. Okay. Is that available for staff? I would assume it would be
Speaker 10
34:49
we need to check with the legislative office to make sure.
Maybe we provided that to the Attorney General's office? Charlie, correct me
Speaker 67
34:56
if I'm wrong? It was provided to the AG's office, yes. Which is the
Representative Jimmy Gazaway
Unverified
35:05
extent of what we were supposed to do in that case. Thank you. Representative Gasway. Thank you, Mr. Chair. So what exactly is required of the law enforcement agency to adopt the policy? Is this something that they do internally and send proof to you that they've added it to their policy book? Does this require, if it's, say, a municipality or a county sheriff's office,
that the quorum court or the city council pass an ordinance or resolution adopting the policy? What is required for law enforcement agencies to adopt the policy? I'm not sure the answer to
Speaker 98
35:33
that question. Legislative Audit's only involvement in this is to collect the reporting form and remit it to the Attorney
Speaker 101
35:38
General, and then the Attorney General determines whether or not that agency is in compliance. Okay, thank you. Members, are there any other questions?
Representative Steve Unger
Unverified
35:56
Seeing none, without objection, we will file this report.
Speaker 30
36:06
The next meeting will be on the 8th of January, 2026, and we are adjourned.
Agenda
B. Adoption of Minutes of the October 9, 2025, meeting
C. Update on Private Reports – Delinquent December 31, 2022, Water and Sewer Reports
D. Update on Private Reports – Delinquent December 31, 2023, Water and sewer Reports
E. Discussion of Act 709 od 2021, Repayment of street Turnback - Carthage
F. Discussion of Noncompliance with Municipal Accounting Law - Adona
G. Review of Reports (Refer to the Synopsis)
H. The next meeting of the Legislative Joint Auditing Committee will be held on January 8, 2026.
I. Adjournment
500 WOODLANE STREET, SUITE 172 • LITTLE ROCK, ARKANSAS 72201-1099 • PHONE: (501) 683-8600 • FAX: (501) 683-8605 www.arklegaudit.gov
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - STATE AGENCIES, Dec 11, 2025 | Agenda | 2 | Official source ↗ |
Speakers
Representative Steve Unger
Unverified
Speaker 8
Speaker 9
Speaker 14
Speaker 15
Speaker 3
Speaker 16
Speaker 20
Representative Jimmy Gazaway
Unverified
Speaker 25
Speaker 37
Speaker 38
Speaker 40
Speaker 42
Speaker 50
Speaker 51
Speaker 52
Speaker 53
Representative Marcus E. Richmond
Unverified
Speaker 56
Speaker 60
Speaker 65
Speaker 10
Speaker 73
Speaker 74
Speaker 80
Speaker 90
Speaker 98
Speaker 101
Speaker 76
Speaker 104
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Speaker 30