Legislative Joint Auditing-State Agencies
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Representative Steve Unger
Unverified
0:09
in just a second I'm gonna hit this thing one more time and we are going to adjour 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 be bear with us apologize for the heat some lunatic had cranked it up in the high70s before we got here can't tell
you why we're adjourned for exactly 15 minutes.
we're back in session you should have received a copy of the amendment minutes does anyone make a move to adopt the minutes is there a motion I hear a motion need a second Second all right with that objection we approve the minutes.
Speaker 8
15:07
I now recognize MrBullington thank you Mr Chair. today we're
Speaker 9
15:13
presenting three reports with findings and one special report we also have 1el reports without findings and these are listed starting on
Representative Steve Unger
Unverified
15:26
page one of the audit summary Without objection we will file the
Speaker 9
15:32
reports without findings OK 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 ACtra card to make $2900 in unauthorized personal purchases the employer was 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 purchases of airfare for himself and another person to fly from Fort Lauderdale to Saint Thomas using the AC travel card The employee also made additional unauthorized charges on the ACtra card to prepay for lodging in Saint 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, note receable 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
Arkansassurance 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 and receivership resulting in an understatement
of more than640,000 dollars Additionally, the AC 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 about446,000 dollars Mr Chair that concludes the findings for the Department of Commerce. if the representatives from the
Representative Steve Unger
Unverified
17:41
agencies are here would you please come to the table and identify yourself
Speaker 14
18:00
Good afternoon Susannah Marshall, commissioner of the Arkansas Securities Department and state Bank department. good afternoon Campbell
Speaker 15
18:06
Mcaren deputy commissioner of the Arkansas Securities department thank you
Speaker 3
18:13
if if you have any statements to make please go ahead. Yes sir,
Speaker 16
18:17
happy 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 employee's 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
Speaker 20
18:43
funds to answer any questions members do you have
Representative Jimmy Gazaway
Unverified
18:50
any questions thank you on the trip to Saint Thomas did
Speaker 25
18:55
did this fella pay the money back or what happened? So when our review uncovered
Speaker 16
19:02
this situation deputy Commissioner McLaen immediately began work to try to identify the situation the funds the the properties the 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
fare hotel fees we recovered approximately 1 pardon me 1866 dollars42 cents which was the entire hotel fee minus the the booking fees the airfare was charged through a thirdparty travel site travel application and therefore they were we were unable to contact them we were unable to work with them on any type of recovery all right thank you
Representative Steve Unger
Unverified
20:05
I have a question was this gentleman a charged and arrested
Speaker 16
20:09
so a police support has been filed, sir and as Mr.Bullington referenced there have been it's been elevated but we are not aware of the gentleman's whereabouts members do you have any other questions well I'm sorry Mr Gasaway
Representative Jimmy Gazaway
Unverified
20:36
OK so so so you got the hotel money back the flight money did you get that back? No sir because of
Speaker 14
20:43
the the third partyty travel platform they were unwilling to work with us and that was how much money
Speaker 37
20:56
approximately moment do you have the number handy I do so I can step in
Speaker 38
21:00
and say initially the on our unauthorized charges amounted to 2900 dollars4 cents we were able
to recover 1,866 dollars42 cents from the hotel so the total loss was 1,033 dollars62 cents so that's the hotel booking fee plus the airline fees. I I guess in
Representative Jimmy Gazaway
Unverified
21:19
terms of potential criminal charges it would be unauthorized use of a debit or credit card unauthorized use of state funds
Speaker 40
21:25
yes sir and that's a felony be my guess I'm looking into
Speaker 38
21:30
it I believe it was a felony amount and that was the exact charge that we filed the police report under. Yeah.
Representative Jimmy Gazaway
Unverified
21:39
and and no one knows the whereabouts of this person? No sir any chance he's on the island of Saint Thomas we believe that
Speaker 42
21:45
he still is that could be the case. yes sir right thanks a lot members are
Representative Steve Unger
Unverified
21:57
there any other questions seeing none without objection we will file this report and go to the next one thank you
Speaker 9
22:05
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 and21,000 to this vendor for services performing in fiscal years 24 and25 respectively the overpayments occurred when the vendor failed to update billing rates in accordance with the updated contract terms and theacC failed to identify the improper billing rates because
the rates were not listed on the invoices that were submitted Mr Chair, that concludes the finding for commissioner of
Representative Steve Unger
Unverified
22:49
state lands you are there any agency representatives here if you please come to the table and identify yourselves Peyton Murphy
Speaker 50
23:05
general counsel with the land commissioner Sam Sparrow fiscal
Speaker 51
23:08
director commissioner's office thank you gentlemen if you have
Speaker 53
23:15
you sir the commissioner of state lands acknowledges the overpayments for fiscal year 2024 and2025 related to services build and 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 and verified with current contract terms including
confirming the hourly billing rates.dditionally, all future invoices from the vendors shall be shall be atomized and include the current billing rate to ensure transparency and accuracy thank you members do you have any questions my question is is actually
Representative Marcus E. Richmond
Unverified
24:06
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 well I
Speaker 56
24:21
can't say that we catch them all because when we do an audit obviously we don't
Speaker 9
24:26
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 so alright thank you yespresentativeburkes thank you so a quick question you mentioned that all future
Speaker 60
24:45
invoices will have applicable billing rates that's not something that had been done in the past is
Speaker 53
24:51
that right well we're we're just going to verify that the billing rate is for it if it's an hourly charge that the hourly billing rate's the same if it's an itemomized like it's xx number of widgets that those item numbers per unit are applicable so the invoice coming in
Speaker 60
25:04
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 correct and that's not a practice that had been done in the past in your agency? In this on these
Speaker 65
25:16
invoices we were just invoiced for hours and that's thank you a quick question
Speaker 60
25:19
for audit is is that a practice that a best practice that should be happening across all state government where we hope that they have that control in place where
Speaker 10
25:27
they're checking those invoices in this case like he's saying the the hourly rates were not on the invoices right so across all of state governments
Speaker 60
25:32
should the hourly rate applicable billing rate be on the invoice think that would be a great best practice but that's not currently the
Speaker 9
25:42
way it works think most of the time if it's if it's an hourly charge like that
Speaker 10
25:47
you'll see the billing rates on there so I I don't I wouldn't say that it's normal for them not to be there. I think we see that
Representative Marcus E. Richmond
Unverified
26:02
a lot of times that it is on the on there as well yespresentative 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 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 have
Speaker 73
26:26
you guys done that? Generally our 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 if you're gone suppose
Speaker 74
26:44
that our administrator real estate real estate ad you see what I'm
Representative Marcus E. Richmond
Unverified
26:49
getting at though I mean if if 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
27:05
do you have any other questions Seeing none without objection we will file this report and
Speaker 9
27:10
go to the next one. OK? the next report with findings is theame 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 20,2024 a2018honda Pioneer UTv with a cost of $14,000 with stalen from an employee's property in Grant County an incident report was filed with the Grant County sheriff's office and on December 18,2024, central office staff were notified of missing funds at Ozark Highlands Nature Center nforcement division completed a preliminary review identifying unaccounted for funds of554 dollars
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 May5,2025 central central office staff were notified of a theft from the Ed Gordon Point Remo Wildlife Management Are 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
Representative Steve Unger
Unverified
28:23
Mr Chair that concludes the findings for game and fish commission. if there are any agency officials here if you'd
Speaker 80
28:36
please come to the table and identify yourselves good afternoonri racy chief of staff Arkansas Game andish Commission. Emilymate Cfo do 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 natureent we as was reported out we've already changed processes and increased and strengthen those controls to ensure that this does not happen again Members
Representative Steve Unger
Unverified
29:13
do you have any questions Yes Representative Richmond
Representative Marcus E. Richmond
Unverified
29:19
concerning the thehonda Pioneer that was stolen
it was stolen from an employee's property a game warden I suspect and he added that his home or some place and somebody just came
Speaker 80
29:34
there and drove it off that's correct sir. so theutv 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 back in it was duly locked it had two cables around
both the trailer and post on 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 theutV 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 autv on a trailer and instead went over the front and did serious damage to the trailer so we assume also some damage to the Uv as well so they yes
Representative Steve Unger
Unverified
30:26
ok thank you emb ers do you have
Representative Jimmy Gazaway
Unverified
30:35
any yes Mr Gasaway go ahead so on theutv do these uhutTvs have any special markings on them that identify them as game
Speaker 90
30:42
and fish property yes sir they do have property stickers and are marked as game and
Representative Jimmy Gazaway
Unverified
30:47
fish property would think whoever stole it it's kind of an interesting position to be in running around with a gaming fishutv that has
game and fish U TVV markings all over it but anyway very good
Representative Marcus E. Richmond
Unverified
31:10
thank Members do you have any other questions 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 warden 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? I think
Speaker 80
31:40
our our folks have have worked diligently to take extra steps inside their vehicles to ensure those those weapons are secure and then certainly as they're they're carrying those weapons they're also being extremely diligent and taking care of of understanding what that means for us and and again strengthen those those controls based on past experience
Representative Marcus E. Richmond
Unverified
31:59
follow up considering the the stolenutv 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 that's pretty I'll use the word gutsy to come up there and do what they did and and 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
seemed like a lot of this kind of nonsense goes on down around there on this thing but hopefully there's some lessons to learn
Speaker 80
32:38
that you can give to everybody else Representative we'll certainly look at it again with that that lens. I know our folks are pouring over what you can do to to keep these thefts from happening. I think in this case this game warden was extremely diligent and ensuring locks were used, keys were not available it was very difficult to to pull this off and they were dedicated to to getting thatutv 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
Representative Steve Unger
Unverified
33:10
are there any other questions seeing none without objection we will file this report and move to the
Speaker 9
33:19
next one. thank you mission chair and our last item on the on the report today as I mentioned earlier we have a special report related to law enforcement agencies adoption of racial profiling policies should be copies of this in your packet as well and we're going to present that
to community today and I'll now recognize Charlie Camp who's also part
Speaker 98
33:37
of our staff to present that report. thank you Mr Boington This letter
Speaker 101
33:42
is issued to inform the legislative joint auditing committeetee that Arkansas legislative audit has received responses from 182 of384 law enforcement agencies regarding adoption of a written policy prohibiting racial profiling under Arkansas code annotated 12121403. ALA forwarded the attorney general a copy of each law
enforcement agency's response excuse me 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 1212403. 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 this concludes my report Mr Chair. thanks sirembers do you have any questions
Speaker 104
34:33
Mr. Richardson thank you Mr Chair. do you have a list of the people of the agencies who have not responded Yes sir we maintain
Speaker 74
34:43
that list. OK is that available for staff I would assume it would be we need to check with our with the
Speaker 10
34:54
legislative officer to make sure maybe we provided that to the attorney general's office. Charlie, correct me if I'm wrong was provided to the's office which is
Speaker 67
35:01
which is the extent of what we were supposed to do in
Representative Jimmy Gazaway
Unverified
35:04
that in that case thank you re representing Gazaway thank you Mr chairir. 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
Speaker 98
35:35
enforcement agencies to adopt the policy. I'm not sure the answer to that question legislative audits only involvement in this is to collect the reporting form
Speaker 101
35:43
and remit it to the attorney general and then the attorney general determines whether or not that agency is in compliance OK thank you members are there any other questions
Representative Steve Unger
Unverified
35:51
seeing none without objection we will file this report
Speaker 30
36:12
the next meeting will be on the 8th of January2026. 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 104
Speaker 67
Speaker 30