Legislative Joint Auditing-Counties and Municipalities
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We are ready to begin, but before we begin, all the committee's been asked to take a 20-minute recess to accommodate Senator Irwin's Christmas gift that she's doing, or event to raise money, or have gifts given to needy children in the state, and we will gavel back in promptly in 20 minutes. So that'll be 10 minutes till 2, but right now we're going
to take a 20 minute recess.
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Speaker 5
26:27
I don't know where they all are, but I've heard of all of them just about.
Members, I believe we are ready to get started. I think our 20 minutes is up and maybe even a couple of minutes past that. But I was going to ask to see if Senator Crowell would open us up in a word of prayer. Dear Lord, thank
Speaker 11
27:15
you so much for today. Thank you so much for
Senator Steve Crowell
Unverified
27:17
safe travels and this season where it all started, where you were born. Lord, we just ask you to watch over us today as we do the people's work and keep our hearts and our minds clear for the right decisions.
In your name, Lord, we all
Speaker 16
27:36
pray. Amen. Amen. Well, I believe we're ready to get started this morning, but before we do, I want to take
just one moment. I was thinking about something when I looked down there, Representative McIlroy, whatever we do in life when we speak, we give off non-verbal communication,
and even when we're just sitting quietly, minding our own business, we
give off non-verbal communication. Representative McIlroy, I just wanted to ask you exactly what is
Speaker 18
28:12
your sweater saying this afternoon? That's good enough.
I guarantee you, you have the Christmas spirit. With that being said, the first item on the agenda will be the approval of the minutes from the motion. Motion. Second. All in favor say aye. Aye. The ayes have it.
Now I want to recognize
Speaker 21
28:35
staff for the following agenda items. Thank you,
Speaker 22
28:38
Mr. Chair. Item number C, update on private reports. Delinquent reports from December 31st, 2022 for water and sewer. Since our October meeting, well, the lift that was
Speaker 23
28:50
emailed to you on Friday, there's been two additions to it. Now we have a total of 12 entities
Speaker 22
28:59
that are in compliance since we started this process in July.
And that's an additional seven more. So we've got 12 out of the 43 that letters have been delivered to the treasurer's office, and their turn back has been reinstated. I reached out to everybody that was lacking the 2024 report in early November. I have made contact with, in some manner, didn't talk to them all right then, but I have made contact with everybody on that list except the city of Carthage. And I believe they're in the audience today.
So we'll check them off the list here in a little bit. So we have reached out to every one of
Speaker 23
29:44
them since November 5th. We're down to, we've got 10 that have additional, that just lack their 24, and three that have filed their 22. So we're down to 31 that are still being escrowed. Mr. Chairman, that concludes my report.
Without objection, we'll file the report.
Speaker 23
30:05
Seeing none. Thank you, Mr. Chair. Item D is the 2023 delinquent water
Speaker 22
30:13
and sewer private report. We started out in July with 64 on this list. Now we're down to seven. So we've got 57 of the 64 have been filed. And these are
Speaker 23
30:26
not currently having their escrow, their turn back escrow. Mr. Chairman, that concludes my report.
Without objection, we will file this report.
Speaker 22
30:49
a roll here next item on the list is the discussion of act 709 of 2021 repayment of street fund uh misused street funds by the city of carthage with the chair's permission i'd like to go ahead and present this report yes go ahead on pages seven through nine
Under reports referred to the Prosecuting Attorney and Attorney General's Office, we have the town of Carthage, 2023, 2022, and 2021. Under the Mayor and Recorder Treasurer, the town paid the Recorder Treasurer position more than the appropriated salary as shown below in non-compliance with Arkansas Code. Over $700 and $174 in 2023 and '22, respectively.
Due to the former Recorder Treasurer training and assisting the new Recorder Treasurer without an amendment to the budget. And almost $700 in 2021 due to apparent budget error and additional payroll check to the Recorder Treasurer. Cash restricted for street purposes totaling $19,306 was transferred in 2016 from the street fund to the general fund without supporting documentation as required by Arkansas Code 277207.
In the prior engagement, $800 was transferred from the general fund to the street fund, and during '22 and '21, the town transferred $400, or 2% of general fund revenues, and $1,300, or 5% of general fund revenues, respectively, from the general fund to the street fund. As a result of these transfers, The balance due to the street fund is $16,806 at December 31st, 2023. The town has not passed the ordinance or resolution to repay the street fund or
has not obtained authorization from the legislative joint auditing committee for repayment of less than 10% of general fund revenues annually in compliance with Arkansas Code 2770207. This is a repeat finding dating back to 2016. Under the mayor, as of the report date, Leslie of audit, and a law enforcement agency are in the process of investigating certain financial transactions of the city, which will be included in a subsequent report. The government body did not review the prior year report or company comments and recommendations at the first regularly scheduled meeting following the receipt of the report.
Noncompliance to Arkansas Code. This is a repeat finding. The town is non-compliance to Arkansas Code 1458202 and 203 as noted below. Budgets were not adopted by ordinance or resolution. 2023, the general fund expenditures exceeded appropriations by almost $9,500 or 30%. 2021, general and street fund expenditures exceeded appropriations by over $17,000 or 77%
and over 10,000 or 38% respectively. This is a repeat finding. Continuing on page eight, under the record of treasure, a review of disbursements revealed that supporting documentation was not maintained for the following disbursements in noncompliance to the Arkansas Code. Over $1,300, over $2,800, and $542 dispersed in 23, 22, and 21 respectively.
due to the lack of documentation. The validity of these disbursements could not be determined. Over $1,300, over $1,600, and $432 dispersed in '23, '22, and '21, respectively, to vendors that appeared to be for legitimate business purposes. However, supporting documentation was not available. Accounting procedures for municipalities are set forth in Arkansas code annotated 1459-101 through 119.
The town was in non-compliance with these code sections and other proper accounting procedures as noted below. Annual financial statements were not published or posted. This is a repeat finding dating back to 2012. Bank accounts were not reconciled. This is a repeat finding. Pre-numbered receipts were not issued. This is a repeat finding. Cash receipts journals were not properly maintained to include all receipts, and were not reconciled to total deposits per bank. This is a repeat finding.
Cash disbursement journals were not properly maintained to include all disbursements, and were not reconciled to total disbursements per bank. This is a repeat finding. Agreed upon procedure report for the water and sewer system was not obtained, in non-compliance to the Arkansas Code. A similar finding was issued in the prior three reports, dating back to 2016. Continuing on page nine. The following issues were noted during review of payroll records.
IRS quarterly 941 reports were not provided for 2023. Second quarter, third quarter, and fourth quarter, and 2021, first quarter and third quarter. This is a repeat finding. Federal taxes for 2023 third quarter were not remitted to the IRS. The amount could not be determined due to the 941 report not being provided. This is a repeat finding. As a report date, it appears the town owes the IRS for delinquent payroll taxes,
penalties and interest from 2016 to present, totaling $9,358. I believe Mayor Sean Randall is present today to answer questions. If you'll come to the end of the table, please, sir. And the Court of Treasurer Cassie Randall was also invited,
Speaker 33
36:42
but she called and asked could we defer her portion. Mayor Randall, would you state
Speaker 35
36:56
your name and position for the record, please?
Speaker 37
37:00
Mayor Randall, Mayor of Carthage, Arkansas. Do you have
a statement that you would like to make?
I just want to answer some questions. All right, members, does anybody have any questions of Mayor Randall? I'll give everybody
just a minute to digest the report. It was pretty lengthy and they just maybe need a moment to think about it and come up with some questions and see what we can do to get the city of Carthage into compliance.
Well, hearing no questions from the members, I have a question. Just how do you expect or do you have a
plan to pay back the street funds that you're delinquent on or that you have spent erroneously?
Speaker 37
38:09
Yes, sir. I've been mayor since 2019, and when those funds were transferred over to the street department, those funds were earmarked for the general fund. I think that was done, like we said earlier, that was
Speaker 45
38:26
done in 2016, so I didn't have any kind of oversight as far as having that money directed to the correct place. But what we've done, sir, since
Speaker 37
38:40
I've been mayor, you know, we started out real, real strong.
You know, I assessed a lot of the problems that our city was going through, and that was one of the big things that I looked at. We got on board, and I heard you earlier, but just me sitting here thinking, I thought we had done a resolution in order to start paying some of that money back. But we did start paying some of that money back. Then through, you know, some different situations, you know, we kind of fell off from it. But recently, we just started paying some of it back, and that's on record.
So, that's just an issue, and it's been several issues, you know, taking over a city, and I'm not blaming anybody, that's not what I do, I just try to come in and try to take the best approach that I can take, you know, to try to fix the issues. But, sir, sometimes when you come in, it's so, so many things. And it's not that I, you know, went to a certain school or had, you know, formal training on how to, per se, be a mayor.
I came in as just particularly trying to be a community leader. And so, but my thing is to try to correct every issue that the state says that we have to correct. We just have so, so many things that I have to take time out for, you know, to try to make it there. But like I said, recently in the past month, we've made some big transfers from the general fund to the street fund to try to knock down. Because I think we're, since I've been mayor, we're the ones that knocked it down from $19,000 down to $16,000.
That's correct. And so, like I said, in the past month or two being that our funds were taken from the street due to I think it's some, which I know the water department has to do our water audit and we're working on that now. So the general fund has had to help out the street fund the past couple of months. And so that's how I got back on to, okay,
Speaker 45
40:55
the general fund owes the street fund.
And so, we've been paying that back lately, the past couple of months. Okay,
Mayor, I'm going to recognize Senator Hammer. He has a question. Thank you,
Senator Kim Hammer
Unverified
41:07
Mr. Chairman. And, Mayor, thank you for being here. I really want to ask staff to clarify something. Who was it that was
asked to be excused? The recorder treasurer. The recorder treasurer. Yes. And the only reason she's,
Speaker 23
41:20
correct me wrong, Mayor, she's fairly new, right? Yes, sir. She wouldn't have been invited other than for the street fund repayment issue. None of these repeats are under her, but we went ahead and invited her so if she could shed any light on how we could repay this.
But it was the recorder treasurer that has
Senator Kim Hammer
Unverified
41:37
to be to defer. Okay. And can I proceed? Yes. Thank you. Feel
free to. Mayor, in looking at the report, I guess one of the questions I have is
you've been mayor since 2019. The previous recorder treasurer, how long was he
Speaker 37
41:55
or she in their capacity? I think she was with us, sir, I think for about a year. So if I recall correctly, she was with us to about 2020, to about, I would say, about September, October of 2020, somewhere up in there.
Senator Kim Hammer
Unverified
42:13
Okay. And, you know, we all know the buck has to stop somewhere. You're the mayor, so he
gets to stop with you. But I'm wondering how much of the findings in this report are attributed to previous employees because you're looking at
IRS quarterly reports not filed and you're looking at several things. And I'd just like
Speaker 37
42:38
to hear your thoughts on that. Yes, when I became mayor, sir, in 2019, we was behind on taxes then, and not to put all
of the taxes on the prior administration, it's still some taxes that we've accumulated since I've been mayor that we haven't really had a chance to get a hold of because we've been kind of concentrating on the past taxes. Once again, when I first became mayor, that was one of the things that I also looked at and we started out strong, sir. I was real eager, started paying back a little bit to the IRS and then once again, just kind of just got off track on it.
Speaker 45
43:23
There's no excuse. I mean, I have a table full of stuff that
Speaker 37
43:28
I got to decipher to try to get back on track. But, yes, that is definitely one of the things that we need to definitely
Senator Kim Hammer
Unverified
43:39
get on track again and start paying down. What's your total city budget? Do you know right off? No, I don't. Okay. As far as the ability to repay and not fall behind, you have enough income
to be able to meet your obligations, do you think?
Speaker 37
43:57
You know, we could always use, you know, more. I'm not going to say it's an excuse to say that we can't pay anything. But, you know, it would always
Speaker 45
44:08
be a great help if the city was, you know, able to do a little more. You know, we, the salt mill just opened up back down there. So it's been, I think we've
Speaker 37
44:19
been receiving some taxes from the salt mill, which has been awesome to us. So, no sir, we just, you know, whatever funds that the city is getting, we're just going to have to allocate some of it, you know, to try to pay
Speaker 36
44:31
back some of the things, you know, that the city owes.
Okay, thank you. All right, Mayor, I'm sorry, Representative Dauber, go
Representative Carol Dalby
Unverified
44:46
ahead. Thank you, Mr. Chair. I'm just curious. I mean, I quickly added up, and it's rounding. But if you take the turn back and you take the exceeding the appropriation, your expenditures exceeding that, what you owe the IRS and you're up to $100,000 that you owe.
And this is dating back all the way 10 years nearly that you're owing. So I guess really my question is, have you ever considered, the city ever considered just dissolving and letting the county start taking over some of the responsibility, that type of thing? Because we're talking $100,000 in a town that's 222 people, according to our report. So, I mean, and I understand you said there's problems and you've taken over, but you've been there since, what, 2019?
Yes, ma'am. And so, I mean, it just seems to me that this is a mountain almost too high for this town to climb. And at some point in time, these bills, they're due. And so, if you're not raising, are you raising, let me, I'll get to my question. Are you raising taxes? Are you raising water rates? I mean, what are you doing to raise the money to get this all paid back?
Speaker 70
46:20
Yes, ma'am. You're saying $100,000 in taxes? No. When
Representative Carol Dalby
Unverified
46:25
I look at you had, you paid some back on your street fund. That was $19,000, and you paid it down to $16,000, so that's about $3,000. So if you take that, and then you had general fund expenditures that were in excess of the budget, And you add those up, that's roughly $40,000. And then you have the disbursements that were over the amount that was around $10,000.
You haven't paid the Dallas County Treasurer for election costs for the years '23, '22, '21, well, '14 through '22, and then forward. So that's not been paid. And then you had the IRS, just the IRS, not talking about the state, that's right at $30,000. So, I mean, my question is, is that's a lot of money and you don't have a lot of people. What are you doing to raise the money to pay these entities back?
Speaker 37
47:28
Okay. When I first became mayor, one of my things was, you know, just looking through the city of Carthage, we didn't have a tax. And so I worked hard and I got the tax passed, you know, put, you know, got it put on the ballot. I never have been done in the city of Carson's history. So I got that done. And right now that's generating, by the grace of God, anywhere between, I don't know, the checks that the city has received, anywhere between, I guess, 2,600 and 3,200 months.
So that was a real big thing for the city, you know, to try to generate cash, to try to take care of these bills. Some of those numbers, I think it's kind of, you know, I'm not saying, I'm not going against what you're saying, you know, as far as, you know, how the numbers add up. But as far as what I've looked at, you know, for the city of Carthage, is I think the city of Carthage can definitely get back on track.
Speaker 45
48:30
When you come in, you know, one of the biggest things that I thought about, ma'am, and I hate to kind of get off track was one of the things
Speaker 37
48:40
that I saw when I came into it, I didn't realize how much we were behind. So, you know, I did a lot of, you know, it was a lot of miscellaneous stuff, just small stuff, leaving the gas on inside the city hall during the summer, you know. So I cut down on that, and in the city of Carthage, we actually saved up some money.
Then we got, you know, embezzled. One of the clerks that we had there, all that money and all the accounts that we had saved up with the plans that I implemented, first I started inside the city first. Okay, what are we doing here that you guys are not keeping track of that normally adds up at the end of the year? So I cut that down. Okay, we got our bank accounts up and, you know, we was moving real, real good. All of the plans that the tax was passed to generate money because my whole thing was, hey, we got to pay down some of this stuff.
Then we got embezzled for over $50,000. And I hate to rear off here. The bank put the signature card in wrong that gave this clerk the opportunity to go to Little Rock and he drawed out all cash. So we went back and forth with the bank. So that just basically wiped away everything that I worked hard for. Okay, so now after that happened to us, now I've got to go back into this and say, wow, man, you know, Lord, I pressed hard, you know.
And it is one of them things where I know what the city needs to do. I believe in my city, and I believe that we're going to get on track. So back to your question, ma'am, as far as that, you know, the tax was passed, which is a great, great thing. And we're going through other little things that we have talked about as a community to try
Speaker 45
50:31
to get some extra funds in there to definitely knock down on the debt that the City of Carthage
Representative Carol Dalby
Unverified
50:38
holds. All right. Thank you. I appreciate that. My suggestion is you might consider dissolving as a city. That might be the
Speaker 76
50:50
most helpful thing. Thank you. Appreciate it. Thank
Representative Johnny Rye
Unverified
50:54
you, ma'am. I believe Representative Rye has a question. Yes, sir. I do, and thank you, Mr. Chairman. Sir, on page 7, about halfway down through paragraph number 2, it says, in prior engagement, $800 was transferred from the general fund to the street fund in 2022 and 21.
The town transferred $400, which is 2% of the general fund revenues, And then it went on to do 5%, which is $1,300. Sir, it sounds like the budget's only about $20,000 a year for the general funds. Is that possible? Because that $400 represents 2%, and if you add that up, it's $20,000. That's correct. Gosh, I just don't understand how you can operate.
Speaker 36
51:49
I think it's a little more than that with, you know, some
Speaker 45
51:54
of the monies that the city gets. But if that's the numbers that you have, I'm not quite sure an exact number at the moment. But, you know, the city
Speaker 37
52:08
can operate. I don't really think it's an issue of can we sustain.
Speaker 45
52:14
Through the plan that was implemented, like I said earlier, it was funds that was generated.
Like I said, when I go back to the tax with the history of that city, and I'm not bragging on anything, it was just something that I believe that
Speaker 37
52:31
the Lord gave me to come up with some ideas. And when I assessed it, it says, hey, the city has never had a city tax. And so as I assessed it, I said, well, if we get this city tax passed and everything, that would be more fun. So as far as,
Speaker 45
52:46
you know, the city just shut down, no, no, no. don't I don't think it's that serious I just think it's more of getting
Speaker 37
52:54
everything back on track you know we operate in a small city like that just like you you guys know you know for these positions that you need help with sometimes you don't keep people on and most of the time they're not really you know per call per per se trained so it's no excuse but it is just one of them things that sometimes the mayor winds up doing a lot and I work a full-time job
you know it's no excuse but you know I think that you know once we get back on on track when the $50,000 was stolen from us, that we got not a penny of that back. Well, excuse me, sorry about that. I think they gave us back the ACH debits because he took our debit card and tried to do some purchases and those were the only funds that they gave us back. So the funds that we had saved to try to handle some of the business and move forward as a
city, those were snatched from us. And so when those were snatched from us, it's like, boom, wow, why did this happen? But it happened. Yes, sir.
All right. Yeah. Go ahead. I'm sorry, I want to recognize Senator Hammer. I believe he has another
Senator Kim Hammer
Unverified
54:19
question. And Mayor, you may have just been talking about, what funds were you talking about being snatched away from you? General funds and street funds. Okay. Yes, sir. Is that attributed to, if I'm looking at my information right, you're also on
the water audit report, correct?
Yes, sir. And so you're having your funds withheld now? No, just on the
Speaker 37
54:41
I think right now it's just the street side fund, which is the
Senator Kim Hammer
Unverified
54:47
turn back funds. Those are being, yes. How much is that? Is that that $19,000 or part of that? No. How much are you
Speaker 71
54:57
having withheld? It's different amounts,
Speaker 45
55:00
some months it can be, you know, $1,500 turn back check,
some months it can be an $800 or $900 turn back check, but those, you know, you never know what the state is going to send you, you know, as far as
Speaker 37
55:17
those amounts go. But yes, those are being held back, sir, until we get the water audit done. Right now, we're working on the water audit. We're in the process of doing it now. And so we had to get a loan. We used to have a guy that was local that did our water taxes for years.
Speaker 45
55:36
Actually, he was doing the taxes before I became mayor. And I'm not quite sure what qualifications that the guy had. I'm not saying, but somehow they wasn't done like they're supposed to have been done. And so we kind of fell behind there.
Speaker 37
55:53
But now we're in the process to go back to these prior years that we are behind to get
Speaker 45
55:59
that fixed. Actually, we have to do a little loan in order to get that audit done.
So right now we're working with Communities Unlimited. They're assisting us with this process. And so that is
Senator Kim Hammer
Unverified
56:12
moving forward. All right, just out of curiosity, how much do you have to borrow to get your audit? I think it was like around
$6,000. Okay, so in addition to what you've got to pay back, you've got
Speaker 45
56:28
to pay back that $6,000 also, right? Yes, yes, yes, whenever that follows through. Yeah, whatever payments that is on that, I'm not quite sure at the moment
because we're still working on, you know, completing that whole
Senator Kim Hammer
Unverified
56:42
deal. Okay, and then one other thing. The $50,000 you mentioned, and I'm going to use the word embezzled, is that a fair word to use? Yeah. Were there criminal charges and prosecution, or where
Speaker 37
56:56
are you in being held? Yes, charges was unfiled, and
Speaker 45
57:01
they're in the process of, I don't even think he's been to court yet,
But they're, as they say, I guess they're in the process of trying to prosecute them or, you
Senator Kim Hammer
Unverified
57:16
know, I'm not sure. How long ago has that been? That was last year. I'm sorry, last year?
Yes. Okay. And the $50,000 just
Speaker 36
57:26
vanished overnight or over a period of time? Yeah, it, we missed a statement. The bank didn't get us the statement. And prior to
Speaker 37
57:37
that, he had went on a spree, about a two-week spree.
How I actually found out about it is I called the bank. One of my street workers, he had to go get some parts for the tractor. And he called me. He said, Mayor, he said, he said, man, he said, is there a problem? I said, a problem? And you know what? He said, man, he said, they wouldn't let me get the part. I said, man, I said, we got, it's almost like $40-some thousand dollars in there, man. I said, that shouldn't be a problem. And so I called the bank, and this is the funny thing about the bank when I tried to get the money back.
I called the bank, and I said, I said, ma'am, I said, this is Mayor Randall from Carthage, which I see him. And it was a funny, weird thing. She said, I can't verify you. She said, I know who you are, Mayor. I said, what do you mean you can't verify me? So, lo and behold, what the problem was, when we added this guy that embezzled, stole, robbed, however we're going to say it.
Every time I think about it, I get it. But when we put him on the signature card, they put him as the whole signee. My name wasn't even on it. And so that's when he went to Little Rock, that's how he walked in the bank and got $50,000 cash money on 13 different times. And I went back and forth with the bank. And I walked inside the bank. I said, why is my name not on it?
Well, Mayor, you know, we got to fix it. Okay.
Speaker 85
59:26
I said, you got to fix it. I said, is that chalk? But yes, yeah. Yeah, that was the issue, sir. All
Senator Kim Hammer
Unverified
59:34
right, so they're working. It's being pursued and hopefully you can get
the money back. All right, thank you. All right, I want to
Senator Steve Crowell
Unverified
59:43
recognize Senator Crowell. I believe he has a question. I've got kind of a question slash conversation with the committee here. You know, we've touched on they've got basically an 18,600 held back already.
They owe 16,000. It looks like they haven't hit their 10% yet. So I'm kind of in the thought process of making a motion to keep their hold back even when they get their water done and catch it up to 10% as of date. Actually,
Speaker 100
1:00:19
sir, it's 12,000. But that would get them
Senator Steve Crowell
Unverified
1:00:24
caught up at least in that part
because, I mean, they're not even close to 10%. I mean,
what feedback? Anybody? Senator Crowell, I'd like to give a little feedback. Yes, sir. Mayor. Yes. You know, it sounds like you inherited some problems, and there's been some more problems than
embezzlement. It seems like you've made a valiant effort to try to do the right thing. Always, sir. But my
original question is, what does the city of Carthage plan to repay the money from
the general fund back to the street fund? And we've heard a lot of history and a lot of talking around, but we need a plan that we can reduce the writing. And I think Senator Kroll's in the process of maybe making a motion or has made a motion, but it needs to incorporate everything, even that, maybe catching you up, and then what But you can pay back monthly and still have money to operate on your city. So we need to get along on the tooth. We need to come on point and come up with a plan.
Speaker 36
1:01:33
Yeah, that plan, sir, actually started, well,
Speaker 45
1:01:36
started when I first became mayor. Like I said, we paid
Speaker 37
1:01:43
back roughly about $3,000 on that. And that was an issue that I inherited. But I did move forward and tried to rectify that. We paid the $3,000, I think it was $3,000 or something. We knocked it from $19,000 down to $16,000.
And with other things, we just kind of just fell off of it trying to fix some other issues. But we have definitely been back
Speaker 45
1:02:13
on that process the past two months. I think I've moved like $4,000, and that's what I was referring to the senator there. So now it's 16,000, so now it's down to like 12,000. And so we have started back to plan to pay that because that was one of the findings that I talked to the auditor about, and I told her, I said, I promise we will definitely start that.
And so I've started that, and like I said, the bill now is like 12,000 back
Senator Steve Crowell
Unverified
1:02:43
to the street fund. All right, let me recognize Senator Crowell again. So then what I, Senator Stone, I like your idea. So what we need from you today is, can you pay roughly $170 a month to the back to the street fund? Yes, sir. Okay, because that puts you at about 10%. Okay. So that's a plan that needs to be put into action next month. Yes, sir.
We have a motion from Senator Kroll. Do we have it second? Second. Any discussion? I have
Representative Carol Dalby
Unverified
1:03:23
a question of the senator, if I may inquire of him. Yes. My question is, what would happen if they fall back and don't make, maybe it's more for Mr. Archer. What would happen, let's say, that this is what we adopt, which is what we often do with cities to pay the 10% back. That's not a problem. But given their history of not paying, what happens if they don't pay?
They miss a payment. They don't pay next month. They don't pay whatever. What's our next step? Because I think they need to understand where we are and what our next step will be. Because I just don't ever see them digging out of the hole, absent the street fund. But if
Speaker 33
1:04:04
Mr. Archer could answer my question. 27.7207 says you've got two choices. They can self-impose a 10% payback of general
Speaker 23
1:04:11
fund revenue. In this case, their total revenue for general fund was 19,000 and some change for 23.
So we're looking at that's where the 170 come from. That's round numbers. If you fail or do not meet that obligation, the law allows this committee to then withhold all street fund revenues until it's paid back in full. Now, as the mayor has stated, they're not getting any street fund revenues right now due to the lack of a water audit. So what that would be was, let's say they got their water. I would think the committee could still impose that. And then if they got their water audits, then they still wouldn't get their street fund money back until they got that done if they defaulted on that plan.
Representative Carol Dalby
Unverified
1:04:56
Does that make sense? Yes, that makes sense. I just wanted to make sure everybody was clear and the mayor understood what
Senator Kim Hammer
Unverified
1:05:06
our next steps would be. Senator Hammer. I'd like to direct to Mr. Archer, if you would please. Yes, please. All right. The comment you just made, you
said this committee could, but history reminds me. I think we did that before, and then are we talking about this committee, or are we talking about the full legislative audit
Speaker 116
1:05:22
committee? This committee did it on another city. They stopped their term back, and it took them about nine or 11 months.
Speaker 50
1:05:30
They had one more month left, because it's just for a year. They escrow it for a year, I misspoke. They escrow it for a year, and if they're not paid back in full in a year, they'd lose it. And the other city was at the 11th month, and
Senator Kim Hammer
Unverified
1:05:43
they paid back in full, and they got all their money back. Right, but I'm talking about whatever action we take in here, it's this committee. We're going to have
Speaker 23
1:05:52
to ask someone with a law degree on that, but it's my understanding. This committee makes recommendations. My understanding, keep that in mind, and then when a chair report is approved, the full committee does it.
But that's just, I probably overstepped there. If you need to answer that, I can get you one, but I can't give it
to you. All right, thank you. All right, this is Senator Kroll. Just so for my own clarification, you
started off talking about holding the term back money. Nope. So we're not going to do that. We're going to go with this motion. So your motion is for the record, so I'll
Senator Steve Crowell
Unverified
1:06:23
make sure I understand them. There may be others to make clarification too. So for the record, the motion is they will pay $170 a month or 10% and get that on the books next month.
And then we will follow the rule 20, whatever it was, the 27-70-20 from there on. Mayor, I said, I believe you said a while ago
that you can meet that obligation. Yes, sir. All right. Thank you. All in favor, say aye. Aye. Any discussion? Say none. Mayor, we have a plan. Yes, sir. Hopefully you can stick to it and you won't have to come back to the end of the table again. Yes, definitely.
One more deal. I want to
recognize Representative Bader. I think he's wanting to weigh in
Representative Howard M. Beaty, Jr.
Unverified
1:07:11
on it. Thank you, Mr. Chair. I just have a question. One, the mayor's talking about an embezzlement or money's missing from the city. But I didn't hear a date when that happened. So I guess my question is to Leg Audit. Did they note these transactions when they were in? Or is this at a different time in a different time period that this happened? And has that been referred to the prosecuting attorney or law enforcement,
maybe the mayor can speak to who his city attorney is and also answer a question. The loan that you received, did
Speaker 37
1:07:48
that come from a bank? Yes, sir. To your first question, yes, which I'm down in Dallas County, sir. Yes, sir, I know where you are. Yes, the prosecuting attorney has
Speaker 45
1:08:02
it. They, when we first filed charges on them, you know, they locked him up, he bailed out. This was in April of last year, April, April, May of last year, and I think they finally got him.
Speaker 37
1:08:20
Now, I want to say they picked him up July, maybe, July, August, like a couple of months later. And so, I've tried to call the prosecuting attorney several times. I haven't got a call back from him. So, as far as I know,
Speaker 45
1:08:42
they have him on the docket. What they plan on doing with them, I have no idea.
Representative Howard M. Beaty, Jr.
Unverified
1:08:52
Go ahead. I mean, that was just my question. See if it had gone to the prosecuting attorney, because it stands to reason for me just sitting here and I'm not a member of the committee and I thank you for allowing me to speak that if the city had $50,000 sitting in an account they could have squared up a large percentage of what we're talking about here for past past errors and so mayor I'm going to tell you just what they told you take care of the current stuff don't don't start focusing on the back stuff make certain your current on what you've got going on and then take care of some
of this other stuff. If they had $50,000, a lot of this should
Speaker 37
1:09:31
have been wiped out. Yes, sir. Well, that $50,000, that was between both accounts, the street fund and the
Speaker 45
1:09:37
general fund. It wasn't just $50,000 just sitting in one fund. So he almost emptied out
Speaker 37
1:09:43
both funds, and that's what it basically totaled. But yes, you're all right, sir. Appreciate that. And I guess we have to also focus on the present issues.
Speaker 36
1:09:54
It's like you said, and also paid some attention to what we owe to, so yes.
Representative Beatty, does that answer satisfy your question? It does. It's just
Representative Howard M. Beaty, Jr.
Unverified
1:10:23
kind of a, just something the committee is going to have to look at here probably next
the next audit. Well, look, Mayor, no one here is unsympathetic, but sometimes life happens. And when it
does, you just can't not do nothing. You have to gather up your
resources and keep moving forward. So that's what we're asking of you in the city of Carches today. And I believe Representative Layden has a question.
Representative Jack Ladyman
Unverified
1:10:50
Thank you, Mr. Chairman. Well, Mayor, you've got quite a mess here. Yes, sir. Sounds like you're
working on it, though. But do you know what your monthly income is to the city, and do you track that every
Speaker 37
1:11:05
month? Yeah, you know, we, like I said, you know, as far as the, you know, our funds are
Representative Jack Ladyman
Unverified
1:11:14
being held back on the street side. No, no, I'm talking about how much money do you have coming in
Speaker 45
1:11:21
each month? Yeah, yeah, that's what I'm basically saying. With the tax revenue that's coming in, just like I was stating earlier, those amounts fluctuate anywhere, you know, between $2,600, $3,200.
And then the turn back money also to the city side, you know, like I was saying earlier, you know, those fluctuate too. You know, some months it may not be but $500. Some months it may be like $1,000. So it's never, you know, I just can't sit here and just tell you the exact number because I don't even know what the checks will be, you know, the next couple of months. Well, the December checks is. But yeah,
Representative Jack Ladyman
Unverified
1:11:56
we do keep up with it. You have a monthly
report that you look at maybe 10 days after the month ends or something like that.
Do you know how much your income is after a few days? Not right off hand. I would suggest you do that. You figure out what your income is each month and you figure out what your expenses are each month. You can do that the 15th of the next month if you want to. Okay. And then you will know, and like the representative said, pay your current bills. Pay your current bills. And the amount you have left, when you subtract your expense from your income,
that's what you use to pay off your bills. That's the only way you're ever going to dig out of this and it's going to take you a long time. Yes, sir. But if you do that You can keep your city. Yes, sir.
If you don't do that, you may not be able to keep your city Yes, sir. Thank you. Thank you. Appreciate
it. All right, and I want to recognize Senator Mark Johnson. I believe he has a
Senator Mark Johnson
Unverified
1:12:59
question Thank you, Mr. Chairman and mayor I commend you for being here and being candid with us and trying to fix this
Representative Beatty is a banker and a businessman and understands cash flow and things like that. So I encourage you to listen to his sage advice. Representative Ladyman is a former mayor of a small town. Yes, sir. He's dealt with these things. So he's been in your shoes and understands what you have to deal with. But, Mr. Chairman, I wish I had a nickel for every situation similar to this that I've seen come through this committee since I've been a member of it.
I think we could give it to the mayor and all his back payments would be covered because we see this not just a lot. We see it way, way, way too much. And so I turn to all my colleagues on the committee and say, you know, when you've seen this, you know, they say, you know, insanity is doing the same thing over and over again and expecting a different result. I think we've got to find some long-term solution to this, And I'm not trying to punish any municipality or any other agency that might have this.
But when you incorporate, even if it was done before you were born and all that, but being a city official, you take on certain responsibilities that you can't just ignore. And as you said, you know, and that fact what Representative Ladyman just said, you may lose your city if you can't do that. You can't just continue to kick a can down the road and think that everything's going to straighten out. The responsible thing for the town of Carthage is the things that the mayor's trying to do,
but the responsible thing for the General Assembly is to come up with a long-term solution for this where we're not seeing this same problem over and over again and expecting a different result. So I just say that in general for the members of the committee to consider. I certainly don't have a solution on the tip of my tongue, but I think collectively that we can make some pretty good progress toward it, and I encourage all of us to work together on it. But, Mayor, thank you for being here and trying. Keep trying, but you've got some good advice today, and I encourage you to listen to it.
Speaker 145
1:15:21
I will. Thank you, Mr. Chairman. I will.
Speaker 33
1:15:30
weigh in on it, so please do this. Thank you, Mr. Chair. To Representative Beatty's point, on page seven,
Speaker 22
1:15:37
the first finding under the mayor. As of report date, Arkansas legislative audit and law enforcement agency are in the process of investigating certain financial transaction within the
Speaker 23
1:15:46
city to be included in a successful report. We don't comment on ongoing investigations.
This happened after our audit year, but we did think it was pertinent enough to include it in the report so that the reader would know that we were aware of it. but we can't offer on it, but very soon, January, February meeting, we're going to have it here. But thank you for pointing
that out. All right. Well, Mr. Mayor, I think that concludes everything, but just make sure nothing is said or taken action taken here today is not punitive in nature. We're just looking for solutions to help get you back into compliance with the law.
Yes, sir. Thank you. Thank you. Appreciate it. Do I have a motion to file the
report? Motion? Second? All in favor? All opposed? Motion is passed, file the
Speaker 33
1:16:38
report please. Moving on to item C on the agenda. Discussion of non-compliance with municipal county law for the city of Adonia. If the, with the
Speaker 22
1:16:49
chair's permission, I'd like to go ahead and present their report from page five, please.
Please do. On page five, under reports, referred to the prosecuting attorney in the AG's office for the city of Adonia 2024, under the recorder treasurer, accounting procedures for municipalities are set forth in Arkansas Code Annotated 1459-101-119. The city was in noncompliance with these codes and other proper accounting procedures as noted below.
A review of disbursements revealed inadequate supporting documentation for tested disbursements totaling almost $2,400. Subsequently, the City provided documentation to support $207 of these disbursements. However, the validity of the remaining almost $2,200 cannot be determined. This is a repeat finding in the previous three reports. Cash receipts and disbursement journals were not properly posted to include all items of income and disbursements. This is a repeat finding in the previous three reports.
Fixed asset listing was established, but records were not updated. In addition, the city has not adopted a fixed asset policy. This is a repeat finding in the previous two reports. Bank accounts were not reconciled on a monthly basis. This is a repeat finding in the previous three reports. I believe Mayor Mark Cosley and Recorder
Speaker 33
1:18:21
Treasurer Carolyn McAllister is here to answer questions. Mayor, would
Speaker 48
1:18:39
you and your associate state your name and position for the record, please?
Yeah, my name is Mark Cossie, the mayor of the city of Adona. And I'm
Speaker 155
1:18:49
Carolyn McAllister, recorder and secretary or treasurer of Adona. I'm not a city clerk. I was just hired as a secretary treasurer. All right. Thank you. Mayor, do you have a statement to make? No. We really don't. We just figure out what we
Speaker 161
1:19:07
need to do to make it right. All right. Members, do you all have any questions? All right, Senator Hammer.
Senator Kim Hammer
Unverified
1:19:17
Thank you. being here. Do you guys work with the Municipal
League very much as far as getting guidance from them or reaching out to
Speaker 163
1:19:28
them or do they reach out to you? We'll reach out to
Speaker 155
1:19:38
May I say something, please? All of this has to do with the bookkeeping accounting part. So that's me. And I was informed about this last year. And I did, I thought, what was correct and like creating a journal or in our disbursements that don't have receipts.
They're like from Amazon orders we had. And we did not make copies from the Amazon orders to show a receipt. We had the visa bill. but not the receipt for the particular items. So I've been informed by this auditor of what I need to do. Okay. And I can explain each one if you would like me to. I think that would be all right.
Senator Kim Hammer
Unverified
1:20:25
I mean, the tone is you want to get it right, and that's the right tone to have.
I was just curious if when you have questions, do you initiate reaching out to the Municipal League or to your
auditor that, you know, you work with from legislative audit? You know, this
Speaker 164
1:20:43
time I had like four or five different ones that I talked to. But
Speaker 155
1:20:49
Mrs. Schmeckenbecker, I spoke with her today, and now she has informed me that I can call her at any time to find out any situation that needs to be corrected. That's great. Okay. Thank you.
So I'll start with the first
Senator Kim Hammer
Unverified
1:21:05
item. Oh, ma'am, for my part, if you're doing that because of questions I asked, I'm okay. Oh, okay. Unless the chair
wants to hear it. Okay. No, I believe we're good. Well, members, I believe, Senator Johnson,
Senator Mark Johnson
Unverified
1:21:21
are you recognized? Thank you, Mr. Chairman. I'll be brief. This may be a staff question. Mr. Archer may know. On the finding about the mayor and court or treasurer being compensated with a 1099 NEC
rather than a W-2, and I understand the logic. However, the question to the staff is, does the IRS allow that? They define what an employee is, and it doesn't matter if that employee's paid $1 a year or $100,000 a year, you have to follow if they're a W-2 employee. Am I correct on that assumption? We're not
Speaker 26
1:21:57
IRS experts, but that's our understanding, yes, the W-2 is
Senator Mark Johnson
Unverified
1:22:01
required. You operate then, or the audit operates under that presumption.
That is correct. Okay. And so all I'm saying to advise the recorder, treasurer, and the mayor, H&R Block didn't do you any favor. No. Because they don't have the right to make that decision. And I know it might cost you a little more in the administrative side to have it 1099 simplify things, but, you know, you've got to follow the law. And that really jumped out at me, and I just wanted to make sure I was reading it correctly and
not being tough on them. Thank you, Mr. Chairman. Thank you, Mayor McCordery.
Speaker 155
1:22:38
Yes, Mr. Chairman. Every time I took the things to H&R Block, they said, you don't need a W-2. I said, yes, I do, because the auditor said I did, and they did not do it. So I have reached out because of Mrs. Meckenbecker to the Arkansas Municipal League, And we have a call in, and they are going to return the call to me and let me know how to deal with this instead of being $1,000 out of the city's pocket for H&R Block to do W-2s.
Speaker 41
1:23:09
All right, Senator Johnson has a follow-up. Just
Senator Mark Johnson
Unverified
1:23:11
a quick, just a quick. Oh, here it is. Just a quick follow-up, Mr. Chairman. I seem to recall years ago, H&R Block's TV ad said
that if they make a mistake that costs you penalty or interest, they'll pay that penalty or interest. So you might check back with them. They're a big company, probably could cover this cost of fixing some of these things for you if their guarantee that I remember from years ago still applies,
and I would almost bet that it does. This is clearly, you said, I need this, and they said, no, you don't. So they were incorrect, and some supervisor would probably stipulate to that and maybe help you out. Thank you, Mr. Chairman. All right. Well,
I would just say, remember one thing. When you're talking
to H&R Block, they're working for you. You're not working for them. Okay. So get them to
do it like you want it. That way you know you're in compliance and don't draw down the IRS and have another problem.
Representative Johnny Rye
Unverified
1:24:16
Representative Wright, do you have a question? I do, Senator. I think I've got something that will help them. I was speaking with Joe a little earlier. And, you know, each county, and I thought cities were basically the same way, but a fixed asset list. In other words, we used to have something like 500. I think it went to $1,000. In other words, if you buy anything that's $1,000 up and above, then that has to be put on a list.
and that list is given to the auditors every time they visit the office. So all you've
got to do is keep up with that as you go, and I believe that would really help you.
Speaker 155
1:24:58
Yes, the last mayor, we had the asset list from him, and then when the auditor contacted me, we tried to fix that and give it to the auditor. It shouldn't be
Speaker 186
1:25:10
hard. It shouldn't be hard. I don't know.
Speaker 151
1:25:16
You know, I try. Easy, man. I try. Hey, Senator
Speaker 191
1:25:28
Stone, I'm closed, sir. Okay. So with that being said, Mr. Archer,
just to make sure that everybody's on
the same wavelength, I think we need a motion and a second, if it's the will of the committee, to start the 60-day clock.
So if the city does not comply, we can start withholding turn back. So with that being said, what's the
will of the committee? Motion. Motion. Do we have a second? All in favor, say aye. Aye. Any opposed? The ayes have it. I'm saying you all have 60 days to get your house in order or your turn back money will
Speaker 164
1:26:10
be held. Okay, and we contact Mrs. Makenbecker, is
Speaker 50
1:26:12
that correct? That is correct. At any time between now and the 60 days, which will be February 11th.
Okay. So, and then at that time, if not, you'll be asked to come back. So, at any time, you know, and she can show you exactly what we're looking for to
get you on the right track. Okay. Thank you. Thank you. You're dismissed. Thank you. Yes. I need to make a motion to file the report. Motion. Do we have a second? Second. All in favor say aye. Aye. None. Any opposed? Please file the report, Mr. Archer.
Speaker 21
1:26:51
Mr. Chair, we're down to item G, review of reports. Starting on
Speaker 22
1:26:57
page one, we have 11 reports deferred from the previous meeting. On page one, we have the town of Blue Eye, 2024 and 2023. Under the mayor, the annual financial statements were not published or posted as required by Arkansas code. This is a repeat finding. Budgets were not adopted as required by code. It's a repeat finding in the previous five reports.
The government body did not review the prior report or company comments at the first regular scheduled meeting following the receipt the report, as required of Arkansas code. This is a repeat finding. Adequate sporting documentation was not maintained for all disbursements as required of Arkansas code. Similar finding was issued in the previous report. I believe we have
Speaker 199
1:27:44
Mayor Sondra Eby here today to answer questions. Mayor,
would you state your name and position for the record, please?
I'm Sondra Eby. Eby, my apologies. And you're the mayor? Yes. All right, thank you. Do you have a statement that you would like
Speaker 202
1:28:06
to open with, please? I do not. I'm just here to ask for forgiveness on the things I did not know. Well, that sounds
like a statement. All right, members, are there any questions of the mayor? All right, Senator Hammer, you're
Senator Kim Hammer
Unverified
1:28:21
recognized. Mayor, thank you for being here. I'll ask you the same question I asked the previous. Do you know who to contact when you have questions as far as municipal league or who the auditor is?
Speaker 202
1:28:30
Do you know who that is now? Yes, I do now. I wasn't aware that I could contact my auditor before he comes and picks up all my stuff to make sure I had all my ducks in a row. So that is my fault. And so I'm going
Senator Kim Hammer
Unverified
1:28:47
to use him to the best of his ability next year and throughout
the year. Okay. I have a question of staff, please. Sure. Proceed. Does legislative audit notify the municipalities of who their point of contact is? if they have a question, or is it just call into the number and it's randomly assigned?
Or what's the communication link between legislative audit and these municipalities, so if they've got a question?
Speaker 23
1:29:10
We've divided the state up into, we've changed, I think it's seven districts now, and there's a supervisor over each district. That supervisor assigned all the engagements in that district, and they assign a particular auditor as needed, but the supervisor is over all engagements, And that individual is very knowledgeable of all their engagements
Speaker 199
1:29:29
within that district. So that would be their point of contact throughout the year. Okay.
Senator Kim Hammer
Unverified
1:29:35
How long have you been mayor, madam? Three years. Three years. Did you know in a three-year period who you were supposed to contact,
Speaker 202
1:29:47
or was it as a result of this? Well, I knew that we would be audited, but they just said they'd pick up the paperwork. And then I did, the auditor did call and, you know, we became friends and he said, I'll pick up your stuff. And I said, okay. But I wasn't aware of all of the repetitive that I needed to do. I just, there was no class that I went to.
I'm a volunteer. So this isn't a paying job for me. But I love my little town and I don't want it to be dissolved. So I'm learning. And so he's been very patient and he'll be like, no, you need to, you needed to do two receipt books. And these are what we were messing up is just the, I don't like we have one. You know, I thought common sense would play into that a lot for such a small town. And now I know that everyone has to have two receipt books. And you have to put down that you talked about the audit in the meeting.
Speaker 210
1:30:41
I just assumed that would be public. I mean, like, that you would know that we talked about the audit. Okay. So, yeah. That's
Senator Kim Hammer
Unverified
1:30:48
fine. Part of the reason I ask that line of question is because, and can have an offline discussion, is making sure that the municipalities know who it is that they're supposed to contact. So if there's a doubt in your mind, you know who to reach out to. That's the reason. And I appreciate you being here and appreciate the tone. Thank you. Representative Ledeman. Thank you, Mr. Chairman.
Representative Jack Ladyman
Unverified
1:31:12
Mayor, have you ever gone to the Municipal League meetings, like the annual meetings? I've
Speaker 202
1:31:17
attended two so far. Since I am a volunteer, it has to fit in with my work schedule as well. But yes, and I have reached out to them several occasions, and they've always been more than gracious. Yeah, well, you learn a lot from the
Representative Jack Ladyman
Unverified
1:31:32
other mayors if you go to those meetings, and that helps you a lot. Yeah, and in
Speaker 202
1:31:37
our small area, we're up by the state line, I have reached out to the other mayors,
and they're always more than willing to give me advice on things. But this is a learning process. So how big is your city? We have 34. So do you have an income? Yes, we do. We do have some. It's a very small income. But our city might not be big, but we have lots of things going on in that town. And so we have to keep the money flow coming so that we can keep the soccer fields for the kids in the square for the community, you know.
Representative Jack Ladyman
Unverified
1:32:13
Well, the Municipal League is a very good source if you have a question.
Speaker 219
1:32:20
Right, they are. Thank you. Thank you. Are there any
more questions? So, what is the will of the committee? My motion to file. Do we have a second? Second. All in
Speaker 22
1:32:37
favor, say aye. Aye. All opposed? The motion passes. Thank you. Thank you. You're dismissed. Continuing on page one through page three, we have seven private reports that were previously
Because we were waiting on good responses, we've received those responses for Compton, Dermott, 24, 23, and 22, Evening Shade, 23, Franklin, 24, and Franklin, 23. Staff recommends we file these reports. Motion to file the report.
Second. Second. All in favor, say aye. Aye. All opposed, file the report. On page
Speaker 22
1:33:12
three, we have three reports. deferred from the previous report that we still have not received proper responses for staff
recommends we defer these three
reports. Motion. Second. All in favor. Aye. All opposed. Motion passes. Defer, please. On page
Speaker 22
1:33:31
four, we have one report that we've certified to the bond board and referred to the prosecuting attorney in the AG's office, and that is the town of Felsenthal 2024 and 2023 Under the recorder treasurer in 2024, the recorder treasurer paid herself almost $1,800 in excess of appropriated salaries without supporting documentation and
noncompliance to the Arkansas code. No budget was provided for 2023, therefore we were unable to determine
Speaker 23
1:34:02
the authorized salary for the recorder treasurer. There are no questions. Staff recommends we
file this report. Motion, second, all in favor? Motion passes, file the report. We
Speaker 22
1:34:15
have 13 reports referred to the prosecuting attorney in the AG's office, starting on page 5. We have the Buffalo Island Regional District, which is for June 30th of 2025.
This is a private report. During our audit, it came to our attention that two employees were overpaid in the form of additional payroll
Speaker 23
1:34:38
checks and unauthorized overtime by a proximate total of $15,000. There are no
questions staff recommends we file this report. Motion, second, all in favor
Speaker 22
1:34:50
say aye. Motion passes, file the report. Going to jump down to page six, the city of Alexander, 2023. Under the record of treasure, the city did not have adequate internal controls
relating to the use of credit cards and other expenditures. Our examination of disbursements revealed the following. A council member who is not an employee of the city obtained a credit card in their name. According to the council member, the card was given to the police chief for purchases. From May of 23, when the card was activated, to November of 23, when the card was closed, the city paid over $8,000 for purchases made using the card. Of the $5,500 in payments we examined,
over $5,000 of it did not have proper documentation to support a business purpose. Other disbursements examined totaling over $4,000 did not have adequate supporting documentation throughout. Therefore, the validity of these transactions could not be determined. That finding has been referred to the prosecutor attorney in the AG's office. We have an additional finding for the district court clerk. And clerk Janet Guess was invited today, but she's in court today. So therefore, staff would recommend we defer this report.
Motion, second, all in favor. Motion passes to further
Speaker 22
1:36:18
to page 10, Town of Delight, 2024-2023. Review of disbursements revealed inadequate supporting documentation for tested disbursements of almost $24,000 and over $13,000 for 24 and 23 respectively.
Subsequently, the town provided documentation to support these disbursements or let slave audit obtain documentation directly from the vendor. In addition, the town did not provide supporting documentation for disbursements of over $1,700 and $161 in 2024 and 2023 respectively. Due to the lack of documentation, the validity of these disbursements could not be determined. This report's been filed with, referred to the PA and the AG, staff recommends we file
it. Motion, second, all in favor?
Speaker 22
1:37:08
Aye. Motion passes, file the report. Page 11, City of Melbourne, 2024 and 2023, under the mayor. In July of 2023, a council member purchased eight acres from the city for $8,000. Prior to the purchase in October of 22, the city advertised the sale of the property and solicited bids. The only bid received, which the city rejected, was from the council member. Nine months later, the council member verbally offered the city a higher amount,
the $8,000, and the city accepted the offer. Recording of council meetings indicated the council member did not leave the room during the vote regarding the sale. And no documentation was available to confirm whether the council member participated in the vote. In addition, the city did not adopt an authorizing ordinance allowing business to be conducted with the council member as required by Arkansas Code. There's no question, staff recommends we file this report. Without objection, we'll file this report.
Page 12, with the city of Ryzen, 2024, under the mayor. The city paid over $1,400 to the mayor's spouse for bookkeeping services without an authorizing ordinance in apparent conflict
Speaker 23
1:38:27
with Arkansas Code. There are no questions, staff recommends we file this report. Without objection,
Speaker 22
1:38:36
we'll file this report. Continuing on page 12, still under reports referred to the prosecutor and the Attorney General's office, we have the city of Stevens 2024 under the mayor.
August 28th of 2024, the city initiated an ACH transaction, totaling just under $30,000 for online purchase of what appeared to be an out-of-state vendor selling heavy equipment. The city discovered that the sale and vendor was fraudulent when the equipment was not delivered and reported the incident to the Wachita County Sheriff's Office. As of the report date, the city has not recovered their funds. There are no questions staff recommends we file. Without objection, we'll file the report.
Speaker 224
1:39:20
Page 13 and 14 of the town of Wabaseka, 23 and 22,
Speaker 22
1:39:26
under the record of treasurer. Invoices and supporting documentation were not maintained for disbursements of almost $1,500 and over $5,700 for 2023 and 2022 respectively. Due to the lack of documentation, the validity of these disbursements could not be determined. This is a repeat finding. This finding has been referred to the Prosecutant Attorney in the AG's office.
There are no questions staff recommends
Speaker 224
1:40:03
we file. Without objection, we'll file the report.
Speaker 22
1:40:06
On page 15 and 16, we have the town of Williford, 24 and 23, under the mayor and the recorder treasurer. The payroll preparer invoiced the town and was paid $1,000 for performing additional services. These payments were not approved in the town council minutes or included in the approved budget.
Additionally, we were unable to determine the amounts paid to the payroll preparer in 2024 due to the lack of payroll records. If there are no questions, staff recommends we file this report.
Speaker 224
1:40:41
Without objection, we'll file the report. On page 17, we have a cost
Speaker 22
1:40:47
of water system 2022. This is a private audit report. Records detailing the component breakdown of individual deposit transactions were not maintained.
Therefore, we were unable to agree cash check composition of the deposits with the receipt information. Historical documentation was not maintained for customer billing adjustment transactions. We noted that the employee received an insurance supplement payment on a reoccurring basis for which management could not locate documentation specifying the terms of the agreement. Disbursements during the period for this
Speaker 23
1:41:21
supplemental health insurance payment total $6,000 for the year. If there are no questions, staff recommends we file this report.
Speaker 22
1:41:31
Without objection, we'll file the report. Lane Municipal Water Works 2024 is a private report. We found that the daily deposit amount did not agree with the daily receipt allocation reports. We selected a sample of 10 bank deposits and compared each of the corresponding daily allocation of receipts, reports for agreement of total amounts. For the sample tested, the total amount recorded on the daily allocation of receipts reported was over $16,600.
While the total amount deposited for the bank records were $15,900, resulting in a difference of $735. We did not determine the cause of these differences, as it is not within the scope of the agreed upon procedure. There are no questions. Staff recommends we file this report. Without objection, we'll file the report. Continuing on page 17, Thornton Water Works 2022, another private report. The following deposits totaling over $17,000 did not match the total of corresponding daily receipt reports.
If there are no questions, staff recommends we
Speaker 234
1:42:40
file this report. Without objection, we'll file the report. I don't have an objection
Representative Carol Dalby
Unverified
1:42:44
to filing, but I have just a quick question. Sure, go ahead. Mr. Archer, on this Thornton Water Works, and it gives the date, and that's the deposit. Do you know how much they were off? We just don't know, or? The private CPA did not
Speaker 23
1:42:58
indicate. Okay. We have reached out on a similar instance with the CPA, and he's going to provide us, not on this report, but he's turning one similar to that, and we're going to get more details in the future.
Representative Carol Dalby
Unverified
1:43:10
So it could be a couple of thousand, it could be
Speaker 23
1:43:14
a couple of hundred thousand, we just don't know. Well, it could be no more than $17,008, because that was the
Speaker 241
1:43:20
total amount there, so it's between there
Speaker 26
1:43:29
and zero. Okay, I was just curious. Thank you, Mr. Chair. Oh, my pleasure. We have
Speaker 22
1:43:35
eight reports with repeat findings. On page 18, we have the City of Greenwood, 2024, under the mayor. The city did not solicit bids for the purchase of a street department truck in the amount of $61,000 in non-compliance Arkansas code.
Speaker 23
1:43:48
This is a repeat finding. I think we have Mayor Doug Kinslow here today to answer questions. Mayor, would you
Speaker 244
1:44:01
come down to the table, please? Yes, sir, good afternoon. Can you state your name and position for the record please? Yes sir, Doug Kinslow, mayor of
Speaker 245
1:44:08
the city of Greenwood. Do you have an open statement? Guilty as charged, I just wanted to try to convince or definitely tell the committee that we're gonna do our best to keep this from happening ever again.
And I take full responsibility. And does any of the
members have a question of the mayor? All right,
Senator Kim Hammer
Unverified
1:44:27
Senator Hammer, you're recognized. Thank you, and thank you for being here, mayor. I guess my question is had
this gone out for bid, what do you think would have been the difference of a compatible truck to this one, or do you have any idea? I really don't, but I think it would have ended up the
Speaker 125
1:44:41
same. I think we would have probably acquired the same type of truck for approximately the same amount of money. Yes, sir. All right, thank you. Yes, sir.
Without objection, make a motion to file the report.
motion, excuse me, make a motion to file the report by first and second. All in favor? Aye. Any opposed? It passes. Thank you, Mayor. Thank you
Speaker 22
1:45:09
very much, appreciate you. Continuing on page 18, we have the City of Harrison, 2024. District Court Clerk Sandy Wright was invited here
Speaker 34
1:45:15
today. She's in court today. She asked if we defer to the January meeting where she could be present.
Speaker 24
1:45:25
Without objection, we'll defer this report. Continuing on
Speaker 22
1:45:28
page 18, we have Carroll County, 2024. We invited the airport manager, Mark Peoples, here today. He has a conflict and he also asked to be deferred till January meeting. Without objection, we'll defer this report. On page 19, we have Isard County, 2024. County Treasurer Warren Sanders was requested to be here and he asked if we defer till January. Without objection, we'll defer this report.
Continuing on page 19, we have the Town of Banks, 2024, under the recorder treasurer. A review of Town's payroll records revealed IRS quarterly 941 reports were not prepared, and the Town did not remit payroll withholdings for reporting periods dated back to 2020. On September 26th of 2025, the town remitted over $2,500 to the IRS for the year 2018. And on September 29th of '25, the town remitted almost $2,700 to the IRS for the year 2019.
Speaker 34
1:46:35
This is a repeat finding. I believe we've got Recorder Treasurer Leah Vaya here today. Hello,
Speaker 158
1:46:47
would you state your name and position for the record, please? Leah Vi, Treasury
Speaker 250
1:46:53
Recorder of Town of Banks. Do you have an opening statement?
No, sir. Do the members have any questions of Ms. Vi? I
make a motion that we file it, or do we have a motion to file it?
set first and second all in favor say aye thank you you are
Speaker 22
1:47:25
dismissed thank you bottom of page 19 we have the town of 56 for 24 23 and 22. the mayor ernest dean mcdaniel and recorder treasurer christine bird were
Speaker 34
1:47:36
invited here and they asked we would defer until january
make a motion to defer excuse me uh
make a motion Let me back up with that objection, we'll defer.
Speaker 22
1:47:52
There you go. I'll get it straight here in a second. Page 20, where the city of Hampton 2024 and 2023 under the district court clerk. Bank reconciliations were not prepared for the district court clerk county account and the small claim civil accounts as required by Arkansas code. This is a repeat finding. Any balances in two accounts were not identified with receipts issued for cases not yet adjudicated in non-compliance that Arkansas code has shown below. The district court county account had $57,000 and
almost $28,000 in 24 and 23 respectively unidentified. Small claim civil account had $523 and $458 for 23 and 24 respectively. This is a repeat fine in the previous two reports. But we've got District Court Clerk Scholar Ray here today.
Would you state your name and position for the
Scholar Ray
Unverified
1:48:58
record, please? My name is Scholar Ray, I'm the District Court for the City of
Hampton County Division. Do you have an open statement?
Representative Carol Dalby
Unverified
1:49:10
No, sir. there any questions? Representative Dahlbe? Thank you for being here. Have you worked with the Administrative Office of Courts, the District Courts Division, to help you out getting this fixed? Yes, ma'am. And I understand what I need to do to
Scholar Ray
Unverified
1:49:21
fix it, and it's in the process of being fixed as we speak. Okay. I just want to make
Representative Carol Dalby
Unverified
1:49:26
sure they're a great resource. I want to make
sure you utilized them. Yes, ma'am. They really are.
All right, without objection, we'll file the report. Saying none, you are dismissed,
Speaker 22
1:49:45
please. Thank you. Yes, ma'am. Continuing on page 20, we have the town of Perla, 2024-2023. Under the mayor, total disbursement for the general fund in 2023, exceeded appropriations by over $25,000 or 32% in non-compliance Arkansas code.
Speaker 34
1:50:02
A similar finding was issued in the prior report. I believe we have Mayor Raymond Adams
Raymond Adams
Unverified
1:50:08
here today to answer questions. Mayor, would you state your name and position for the record, please? My name is Raymond Adams, and I'm the mayor of Perla since 2007. Do you have an open statement, Mayor?
Speaker 262
1:50:24
Well, I really don't have an open statement. I understand that this got out of hand, and there have been problems with the reason why, you know,
things I've got out of hand, but I think I am back on the right track, and I would like to truthfully say that I lost my wife and my only son within the last year or so, and it's just only me now, so I've been going through a lot, so she's been sick for about three or four years, so I'm back kind of strong now, so something that had something to do with me not, you know, keeping up with what's going on.
I've been depressed and wondering about myself, but now I feel like I'm back on the track and I'm
Raymond Adams
Unverified
1:51:13
able to stand the test. All right. Are
there any questions about the members? Without, with no questions, I make a motion we file the
Speaker 224
1:51:27
report. Mayor, you're dismissed, please. Thank you. Yes, sir. We
Speaker 22
1:51:32
have six reports with findings, on page 21, Eureka Springs Water and Waste Department 2023, a private report.
We have since received a good response for Eureka Springs and for Pendle and Pea Ridge Water Association. Staff recommends we file both of these reports if there are
Speaker 149
1:51:51
no questions. Without objections, we'll file both
Speaker 22
1:51:55
these reports. That leaves us four private reports lacking proper responses. That's Fulton 23, McRae 24, Montrose 24, and Wheelan Springs 23. Staff
Speaker 23
1:52:04
recommends we defer these reports. Without
Speaker 228
1:52:07
objection, we'll defer these reports.
Speaker 224
1:52:12
On pages 22 through 32, we have 43 reports with resolved findings. Staff
Speaker 22
1:52:18
would request that the members take a minute to look through them, If you have any questions, if
Speaker 23
1:52:24
we don't, staff recommends we file these reports after no questions.
Speaker 267
1:52:54
Do you all need any more time? Representative Dalby? No, just give me a hand over there. Okay.
Representative Carol Dalby
Unverified
1:53:54
Thank you, Mr. Chair. For the staff, there are some awfully big numbers in some of this. I mean, it kind of jumped out, we've got one city $500,000 and $300,000 and all of that. Are you working with them to, if it's turned back, to start getting that paid?
Speaker 264
1:54:27
Because, whoo, they're it. Which one? We're
Speaker 23
1:54:34
talking about Lake Village? Yes, Lake Village stuck out to me. The normal operating procedure of this committee is if the officials are in the first year, we accept their response and give them a pass if they answer how they're going to fix it. Well, the Lake Village officials are in their first year. But yes, we've worked extensively with Lake Village, and they've gotten a lot of help from the Municipal League. And they've actually reached out to some
Speaker 233
1:54:59
other cities around them that I'm aware of, to get a great deal of help.
Representative Carol Dalby
Unverified
1:55:04
Thanks, I mean, that's good to hear that just jumped off the page, so thank you. All
Speaker 146
1:55:18
right, are there any other questions? Hearing none, I move we file this report. On pages 33
Speaker 237
1:55:23
through 35, we have 118 reports with no findings. Staff recommends we file these reports. All right, I'll give everybody a few minutes to-
There's no findings. Oh, there's no findings?
No. So without objection, we'll file the report. Yes, sir.
Next meeting is January 8th. our next meeting will be january the 8th uh we're dismissed oh well
i'm sorry i didn't see it but i don't mind if you
Representative Stan Berry
Unverified
1:55:55
want to make a comment you're not going to hurt my feelings that's okay it was simply a question to the staff i guess of the reports that we refer to the prosecuting attorney
Speaker 274
1:56:09
how many or is there a percentage or or how do we know how many of those are satisfied on an annual
Speaker 23
1:56:16
basis michelle actually does an annual report to the full committee and it's scheduled for january or
Speaker 22
1:56:22
february uh i believe but she can step to the microphone and that's correct yes that's that she she
Speaker 23
1:56:27
encouraged what i said there's we do an annual report of all the ones that we we summarize them and every year we uh michelle does a report to the full committee
Speaker 50
1:56:39
On Fridays, and it's usually scheduled for the early spring. So
Speaker 275
1:56:43
I'm about to find out. Yes, sir, hopefully, real soon. Thank you, Mr. Chair. Thank
you all. If there's no other comments, we're adjourned for the day.
Agenda
A. Call to order by Chairman.
B. Adoption of minutes of the October 9, 2025 meeting.
C. Review of reports. (Refer to the Summary)
D. New Business. The next meeting will be held January 8, 2026
E. Adjournment.
500 WOODLANE STREET, SUITE 172 • LITTLE ROCK, ARKANSAS 72201-1099 • PHONE: (501) 683-8600 • FAX: (501) 683-8605 www.arklegaudit.gov
LEGISLATIVE JOINT AUDITING COMMITTEE ARKANSAS LEGISLATIVE AUDIT DECEMBER 11, 2025 STANDING COMMITTEE ON STATE AGENCIES
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - COUNTIES AND MUNICIPALITIES, Dec 11, 2025 | Agenda | 5 | Official source ↗ |
Speakers
Senator Matt Stone Chair
Unverified
Speaker 5
Speaker 11
Senator Steve Crowell
Unverified
Speaker 16
Speaker 18
Speaker 21
Speaker 22
Speaker 23
Speaker 29
Speaker 33
Speaker 35
Speaker 37
Speaker 45
Senator Kim Hammer
Unverified
Speaker 36
Representative Carol Dalby
Unverified
Speaker 70
Speaker 76
Representative Johnny Rye
Unverified
Speaker 71
Speaker 85
Speaker 100
Speaker 116
Speaker 50
Representative Howard M. Beaty, Jr.
Unverified
Speaker 132
Representative Jack Ladyman
Unverified
Senator Mark Johnson
Unverified
Speaker 145
Speaker 146
Speaker 48
Speaker 155
Speaker 161
Speaker 163
Speaker 165
Speaker 164
Speaker 26
Speaker 41
Speaker 186
Speaker 169
Speaker 151
Speaker 191
Speaker 199
Speaker 202
Speaker 210
Speaker 219
Speaker 232
Speaker 224
Speaker 234
Speaker 241
Speaker 244
Speaker 245
Speaker 125
Speaker 34
Speaker 24
Speaker 158
Speaker 250
Scholar Ray
Unverified
Speaker 258
Raymond Adams
Unverified
Speaker 262
Speaker 149
Speaker 228
Speaker 267
Speaker 264
Speaker 233
Speaker 237
Representative Stan Berry
Unverified
Speaker 274
Speaker 275