Legislative Joint Auditing-Educational Institutions

Asked to represent maybe if she wouldn't as vice chair step in for this morning or this afternoon's meeting so if you don't mind I know several you're probably new to the committee and we've had restructures and reassignment so if we could start with senator Gilmore and then just work our way up just introduce yourself briefly and your district and where you Sir for the record please. Thank you Mr Sher Senator Gilmore district twenty six which is pretty much all of Southeast Arkansas Sir all those counties down in the four southeast corner from. Mississippi River over to elder radio down to Louisiana so I'm eight miles from Louisiana border so way down south. Senator Lance Eads district seven up in the northwest corner of service bring bill Johnson a little bit of Fayetteville in Elkins. Representive member mackenzie District ninety two so I'm a little further north west up there and Bellavista. We're tearing everything up here Bellavista gravid cater smaller towns. A representative Tippi McCullough district thirty three right here in the middle of Little Rock. I'm represented Stu Smith district sixty three Independence County which is in north central Arkansas and I live in Batesville. But Joyce Elliott St Senate district thirty one and I really do not I'll represent all of Little Rock if you would start a children's hospital and go west all the way to like the big Kroger on shin all and then go straight back to the county line you will have my district it is a pretty big district and and probably a very diverse district and are a central Arkansas area. A representative jim Dotson from Bentonville representing district ninety three which covers the majority of the town of Bentonville plus little sliver of synergen all and then count. Stan Berry represent district sixty eight which is pretty much the mental the the center of Polk County POP and and the northern part of Amesbury Kelly thank. Julie Mayberry representing district twenty seven which is eastern portion of selling county in a small little slither of Pulaski County and normally I would be sitting up here I'm just filling in for a representative buried today so thank you. Senator Cecile Bledsoe from Rogers represent a. Mocha Garfield gateway P. ridge Rogers. Thank you members I'm James Sturch state Senate district nineteen at five counties in north central Arkansas Independent sharp Izard parts Fulton and Randolph counties PCH on being here if you will turn to agenda we will need a motion the chair will entertain a motion to adopt the minutes from the December third meeting these were emailed to you just a few days ago saw entertain that motion. I have a motion Is there a second I have a second motion second on favor say aye. Motion carries. We now the go to item see the Review reports and committee members what you'll see is we have eleven reports that we need to have further explanation and discussion we have ninety three reports and that have no findings that I'll entertain a motion later on that we found those reports someone turned over to our staff missed Matt Fisk for his explanation of each report. Thank you Mr. good afternoon committee today we have a hundred for educational reports for the fiscal year twenty twenty to review of those a hundred four reports as Senator Sturch mentioned the Levin have findings that are reported. our current standing committee guidelines is to invite entity officials for deferred audits reports with repeat findings and reports of school districts currently classified as fiscal distress. There were no deferred audit reports from our December twenty twenty meeting. We do have one report of a school district currently classified as fiscal distress which is Lee County school district. And there are two reports with repeat findings and one of those is also Lee County school district we will begin with the cabinet school district report. And this one was certified to the bomb board the district discovered unauthorized fuel purchases totaling just under fifty five thousand dollars by an employee and her family using district fuel cards during the period January of twenty sixteen third September of twenty twenty subsequent to an investigation by the court Cabot police department transportation ploidy Janice Ellis was charged with felony theft of property in October of twenty twenty employment was terminated in November of twenty twenty a trial has been scheduled for February of twenty twenty one and just a quick note on that that's actually been moved to August of twenty twenty one. In addition neither A. L. A. N. or the district a verified business purpose for six hundred fifty eight dollars in diesel fuel purchases and that concludes the finding for Cabot school district. Okay members you for this report as you see it is going to trial later this year are there any questions for any officials from Cabot school district. Any questions for Cabot. Okay saying nine Mr mat. We can't. Members do you want and I if you could I'll entertain a motion we'll just do that one at A. time could I have a motion that we filed this report. President Johnson moved surveillance seconds all in favor say aye. Posted Oct going mistress. The next two reports for both referred to the applicable prosecuting attorney the first is jury central school district a district parts personnel contacted the Drew County sheriff's department regarding concerns that concession sales were not submitted for deposit the sheriff's department investigation indicated approximately two thousand dollars and concession sales was not deposited district employee April irons whose employment was terminated in March of twenty twenty was responsible for a thousand dollars and deserve on tier Stephen Stan was responsible for the remaining portion both entered pleas of guilty to theft of property charges and were sentenced to thirty six months supervised probation and as of the audit report date the district had received restitution. For the full amount and that concludes the findings for your central school district. Membership for this report Senate Chesterville. Senator Hester moved that we file this report is their second. Template so second set all in favor. Motion is carried. The next is Prescott school district. An analysis of an east lab fundraiser revealed that approximately fifty one hundred dollars and revenue should have been deposited however only four thousand was deposited in the district's activity fund bank account leaving unaccounted for fundraising proceeds of approximately one thousand dollars. The ease lead sponsor was considered in of these unaccounted for funds and that concludes the findings for Prescott school district. Senate Chester. So we see that the districts the previous districts collected the The funds from those individuals but we don't see anything here from Prescott that indicates that they try to recuperate archery coach the one thousand eighty five dollars what's up with that. Yes in this instance they had purchased T. shirts to have a fund raiser and so what we did is we took the T. shirts they still had on hand and also into account the T. shirts that they sold when there is missing T. shirts that didn't add up with once you multiply the selling price to the total that was deposited so there was about a thousand dollars there that if she they had been sold then they should have also been deposited we did talk to the lab sponsor and I think it might have just been a procedural issue however we felt like we still need to submit that to the prosecuting attorney to determine any criminal intent. Senate. Yes that that that you referred to the prosecuting attorneys that the thousand eighty five dollars is that what you referred to the whole thing. One thousand eighty five again and I'm I wanted us to do a check on this because I don't want anybody to be misled because generally speaking I think it is the case Mister chair and Mr Fink. That when we refer something to the prosecutors we don't need to necessarily assume from that something's going to happen with it a force to be reminded of that especially one of the smaller amounts because becomes purely the discretion to prosecutors the correct okay it is entirely possible that they gave away T. shirts to the students who are volunteering for the fund raiser reckons why there's a discrepancy in the funds because T. shirts given away to students so you're you're very correct okay all right thank you. Can I have a motion filed this report. Senate Chesterfield moose is their second second all in favor say aye. Motion carries. The next to audit reports for review both contain repeat findings the first meeting Lee County school district which is also a fiscal distress school district. During our examination of payroll records we noted the following discrepancies two employees were underpaid twenty eight dollars and twenty one hundred dollars respectively and two employees are over paid twenty five hundred dollars and three hundred dollars respectively. Probably approve time she documentation was not prepared provided for five employees. And of this amount twenty one hundred dollars was paid from title one properly approved and signed contracts were not maintained for ten employees additionally NO contract was maintained for one employee a similar finding was reported in the previous five audits they had a second finding as well there was also a repeat. Argus emanation of Castroville the destruction a ledger cash balance at June thirty was overstated by twenty one thousand dollars additionally the district's bank reconciliation balance at June thirty was thirty four thousand dollars less than the G. general ledger balance and they're also significant corrections to the cash balance and bank reconciliation which we noticed checks totaling ten almost eleven thousand dollars were manually forwarded by the district but not void in the general ledger and we're include is it as outstanding items on the district bank reconciliation other error errors noted totaled almost seventeen hundred dollars on the outstanding check listing per your heirs not corrected by the district totaled twenty nine thousand dollars and nineteen thousand dollars in operating and special revenue funds respectively. Current year heirs not corrected by the district include identified errors totaling six hundred sixty two dollars in operating fund and an un reconciled variance of thirty two thousand dollars a similar similar finding was reported in the previous five audits. Members you have heard these reports just some background if you'll recall we did in the previous audit have eleven findings with Lee County we now just had to for this seven to me with that and we had seven previously we now just have these two two years ago the state did take them or fiscal distress so we have both representatives from the school district here with us today and representatives from eighty if you have questions. Okay are there any questions okay Senate questions for the school district or eighty or. Whomever okay if the representative from Lee County school district would come up please. If you would please state your name and title for the record please. Willie Murdock superintendent Lee County school district thank you Mr Murdoch Senator Chesterfield to have a question yes I do thank you okay an argument Murdock senator Chesterfield always I guess I'm concerned because we continue to have this in your under state control what is the state doing. To preclude us having the same findings again in the upcoming year. Well we've corrected all the the problems that we had last year is and we're working with a PSR see who's been a great support group as well as eighty to do more training for staff to make sure that we don't have these problems again and we've had some ever changing issues of course a new superintendent this year and then of course last year and the year before we've had changes in our finance team as well so so you just came on board this year again may yes. You've been there before so I'm just trying to figure it all out so upon examination we have this overstated twenty eight one thousand five hundred seven what accounted for that the twenty one level seven on page three. Again it's more of bookkeeping type of issues Journal intriguing and all that kind of thing so we we again we've corrected all of those problems so you have no no There's nothing untoward about this these are simply areas that could be corrected if the individuals were properly trained air areas that could be corrected if the individual's properly trained all right thank you thank you Mr command Senator Elliott. Thank you Mister ms Murdock of the individuals who made the error as. Who in this group of people has been in the district more than one year are these new people make in the same areas last year it was. A new person to that position and then it was another person added that was new to Lee County so the previous year it was a new person so it's been ever changing of course I was out of the loop for the last three four years so if the people ever changing I know this does happen when people get better opportunities or specially when they get better paid someplace if the people are ever changing what is that does that tell you anything about the system that is in place that should be maybe a mainstay for whoever is is is doing this work is there a systemic issue here to you well there could be as you will realize Senator Elliott that we had a a board and it would that was continual changes in superintendency there's been three superintendents the last three years and so there's been some other personnel changes in the last three or four years as well so now we are under state control and again we have lots of support of for training of for all of our staff and hopefully we'll be able to keep the staff that we have for some time. well I did that that's not exactly what I'm asking about let's just say the staff might change In a well oiled machine I'm not set has to be perfect but generally speaking if the systems are in place people can come in and use that system and not just have these repeat find and so I'm asking about. What's in place there are does that need to be appointed examination to make sure if I'm the one who walks in I know what the protocols are we've developed our financial plan and also our operations plan for our business office so we do have a plan in place for if someone else comes in they will be first of all it it depends on the training that they receive doing that throughout the year because things system change but we do have our business manual in place also when someone else comes in they will know what I process these are and all of our staff are secretaries are building principles of all of the are all of our department heads are being trained on the proper process okay all right thank you very much. Yes ma'am Senator Hester thank you. One of the things that we have found is a problem in the Pulaski County special school district as we are underpaying. The individuals who are tasked with doing this great work I think we have come to under Preciado or bookkeepers for instance because they are the driving force behind getting everything in its place is there an issue with the amount of salary because a lot of times the amount of salary an individual get to do is is key to what kind of quality person you get. So I know Pulaski County has increased the salaries of the bookkeepers with an appreciation of how difficult that job duties are we looking at anything like that in the county yes ma'am currently we're receiving training from APS R. C. staff all hopefully within the next year or two will be able to fully be operational and be able to support our bookkeeper as we should be paying the minimum wage are we paying them a better rate that's what I would do a better rate okay yes ma'am I need to know because because it is a lot of work it is a lot more all right thank you will. It members are there any other questions for separate and Murdock. Any further questions. CNN thank you ma'am for coming we appreciate. Members I intend the motion that we filed a report for the council. I have a motion Is there a second second on favor say aye aye motion carries members the last a report with repeat finding will be Ozark mountain school district. Yes Ozark mountain school district had one finding the district's capital asset records were not updated for additions deletions or depreciation for fiscal year twenty twenty a similar finding was noted in the prior report. Members are there any questions on their capital asset reports. The what they have to say about it. We're going to continue to work to ensure but what did they say specifically they were going to do so that three three they're finding is not repeated because they said the same thing before their superintendent is here I believe if you'd like to ask him. I have the superintendent for Ozark mountain. If you would please our state your name and title for the record please. And there should be a red button there in front of you on the microphone if you would representative turns green. Kerry sailors superintendent Ozark mountain school district Sanchez for any master questions yes Sir this is a repeat finding in the last time if I recall you said that you were going to ensure all capital assets records were updated did not end up in here we are again yes ma'am are you a new superintendent. Were you the one that told us this last time yes ma'am I am okay so what happened. Careful look at my notes of course. The business office duties are being changed. The person in charge of fixed assets has been reassigned to different position for the twenty twenty one twenty two school year. AP SRC has been kind contracted to serve as a general business manager. In New procedures are being written APS are seeing staff members assigned to our district have over seventy years of experience in school but keeping. The district is putting procedures in place to ensure that all assets are properly accounted for **** will be flagged at purchase to facilitate adding them to inventory each month. A detailed report will run monthly to ensure no SS are missed in any incorrect coding is corrected in a timely manner. Depreciation will be done as part of the year in closing deletion procedures are being reviewed and will be adjusted to ensure assets are removed from inventory and timely basis well I think that answers that thank you so much Sir I appreciate you yes ma'am Senate you have a question yes please recognized would you repeat your last name I'm sorry Mister sailors Mr sailors thank you was a person who had who was responsible for that first finding and this finding point was that the same person yes ma'am okay and so the person and that person's going to be removed and you can replace somebody else in this position that somebody already with the school district and that somebody with a different set of skills or a different set of attitudes or something what's new about the new person. Honestly I've been interviewing for the last two weeks and I've had or follow up interview with the young lady yesterday and I have offered her the position and I plan on making that recommendation to my school board to next Thursday and then the APS R. C. is going to work with us to ensure that she receives the proper training that is that somebody already with the school district to somebody outside a house today okay all right thank you very much yes man and happy moving ahead. Any further questions from the committee. All right hopefully we'll see this resolved in an upcoming school year thank you Sir appreciate. Resented Dotson moved that we adopt this report is there a second second all those in favor say aye. Motion carries when I move to the reports with findings for the first time. Yes the so these findings were not repeat and they were not required to be reported to a prosecuting attorney. The first is Blevins school district. In our test the payroll expenditures we identified unallowable payroll costs totalling one thousand dollars they were paid from the title one program. Members you see the recommendation and response is there any questions on this change process. Say no questions is there a motion to adopt the report. Motion Is there a second. Second all those in favor please say aye. Motion doctor. Nexus Brinkley school district are examination of cash revealed six direct deposits totaling approximately eleven thousand dollars and one direct deposit of fifty three hundred dollars for the prior year for Medicaid revenue were not receded or recorded in the general ledger. Per your revenue any revenue totaling thirty four thousand dollars that was receded twice was not corrected. And after accounting for cash heirs the district's bank account was under reconciled fifty one hundred dollars as of June thirty twenty twenty but from the period Jill July through June we noted on reconciled variances range from a negative sixty six thousand two two hundred ten thousand dollars. Members you've heard the finding you can read the response are there any questions. Senate some there's a little something I didn't quite understand I think when you said that That was this finding the year before and then you came back and it had not been corrected so that would not be considered a repeat finding is just that they didn't do what they said they were going to do. Yes so in the prior audit we did not have a report finding for this issue we did make that district where that they had some reconciliation use that they need to resolve since they did not we included as and a report finding FOR FY twenty one was it not a read a findings would just. So we have certain items that if we think the they're either materiality may be involved or the the significance of the control that we think is there or maybe the on rock as an un reconciled variants is not as and as much as it was this time around then we won't necessarily include that as a report finding but we will notify the district that they need to make corrections and changes okay. The person can see. Thank you Mr chairman so that I understand correctly since the the. The reconciliation of variances changed each month so it wasn't like it was one. One area that they could not correct they continue to have error upon error each month correct. That's correct. follow up so. That's concerning Board and when you said made and made them aware did they not him if they're reconciling this each month they were sitting there just not trying or they are trying in. I'm baffled. Look at looking at their response they they did mention that they are very concerned about the issues and the they have reached out to both Afghan and division within the Division of elementary and secondary education to figure out what the problem is and why it's not reconciling. Any further questions suggest for go ahead. I guess this was baffling me. Is because they would go to the Department of elementary secondary ed and asking in and yet the indication here from them is it asking and no or. Yes desi or whatever they call themselves this time I cannot nine the on reconciled issue. So how is it that you were able to fund it but these individuals who are tasked with helping them find their way can't find what the problem seems to be that is what I'm reconciled Amendment. So in this instance the un reconciled amount we we do not know why it's not reconciling either we just know that the bank statement reconciliation is not matching back to what's in the general ledger. We'll is there any reason why the division and asking wouldn't sound the same thing you would find I mean do they not do. In depth thought it may be out as a medical department may if I may Mister. And is there someone here from the Department of it great can you answer that question. Grazer's my question. You would please identify yourself and title for the record Sir. Thank restrict Greg Rogers department education I agree. How are you. I'm just I'm just so interesting to me that audit can find these on reconciled bank statements but they said they have worked with you I with the Division they've worked with asking. And they can't find any errors. How do you guys determine whether errors exist when you do an audit of districts there's gotta be some reason that they could come to you and say yeah I couldn't find anything but audit which is tasked with finding something found something that you couldn't find help me with that so I think what they're trying to say is that there have and dig deeper into absent and did the printer there's to see why the bank reconciliation is out we can see that the bank reconciliation is out in abscam but it's going to take us time to go back to because it could be a reconciliation is been gone not reconciled for many months might be that months has risen McKenzie said it could be continuing something they did wrong that month that adds to it so we can see there we're just having as much trouble as they are trying to find out where they made it to help them say this is a check that should have been void or this was something was wrong with that so that's what's taking the time with it but we do see and we are we do work with them on it is just if some are more complicated and others okay so we have numerous email documented communication is that either they have been working with the district and they cannot find the error so it's not that the area does not exist craze that you cannot find it is the worst I don't sound the difference yes ma'am was to work with them trying to get the reconciliation to all right thank you thank you Mr any further questions for department. Say no further questions I have a motion to accept this report. Motion and second is there any indiscretion. Tino for discussion on favor say aye. Motion carries going down to a. Conway. Comely school district had one fighting finding time certifications for the special education program we're not completed or were income correctly completed. Members of any questions on this here time certifications being. Changed. Okay I have a motion that we have a second. Second all in favor of this report adopting this reports say aye. Motion carries go ahead. Nexus Hoxie school district the district had uninsured and uncle letter collateralized deposits totalling five hundred fifty six thousand dollars at June thirty in noncompliance with Arkansas Code. Members are there any questions. He found you say finding you see the response. Any further discussion. Say no further discussion is there a motion to adopt this report. Motion to file the report sure secondary second on verifying this report St motion carries down Rogers. Roger school district had to findings of they both had to do with time certifications in their child nutrition cluster in the first finding the that employees. That five out of twenty that they tested for the child nutrition cluster that time certifications were not completed and then the time certification for the director was improperly approved by the Director him or herself and the time certifications for the child nutrition managers were improperly approved by the child nutrition managers themselves. Members are there any questions on these findings for their change in process. Any questions. Say no questions do I have a motion filed this report. Motion and second all in favor say aye. Motion is adopted Springdale. This is the last school district with findings. the first one eligibility determination performed by district management for the temporary assistance for needy families was performed incorrectly it was noted that eligibility was not properly determined by district staff. Finding to although payroll reports supporting employees work in the and ten F. and the John interest your child nutrition cluster programs were available for inspection time certifications were not completed for all employees tested for ten F. and for all employees to serve for child nutrition cluster procedures are in place for personnel to complete time certifications at the end of each semester if employees work one hundred percent in one program or monthly and if the employee spends time with the multiple programs however the district did not properly monitor time and effort. And finding three the time certification for the director of the child nutrition cluster programs was improperly approved by the Director him or herself. Senate president makes. questions on the the. For the day the eligibility determination improperly that result in students who needed help not getting help order that result and we were helping more students than we should and if that was the case or is there a cost to the district. We know that that I do not know that this was done by a private or other. Members Senator Elliot recognized for a question I thank you. I'm just wondering on the recommendations as defined in number one okay where they're gonna do They said the first thing or do that or need the need for that to be in a and I don't understand why it's either or you get any insight into that. Has it become a nice no which one they're going to do if they're gonna force are gonna do both. Yeah I'm I'm not sure since this was the the private firm who made that recommendation of I keep forgetting yes. Okay thank you but is it is it possible you could follow up with them I mean is it is it proper just to find out are they gonna do both these things are they going to choose one of them if they're choosing tell us which one they're going to do could we find that out yes I guess we'll we'll know okay all right thank you welcome are there any further questions. Any questions on this last report Springdale mmhm. Say no further questions is there a motion filed this report there's a motion filed second. Second. All in favor say aye. The motion is adopted members you'll see that the last few pages are your ninety three reports that did not have any findings ninety three out of a hundred force not bad but can I have a motion to file all these reports as a batch. Dotson center Chesterfield seconds all in favor say aye. Motion is adopted. Is there any new business to come before the committee. Any business map anything else all right is there a motion to adjourn. So moved and seconded on favor. I thank you members present.