Legislative Joint Auditing-Counties and Municipalities
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The first order of business is the adoption of minutes at the September 11th, 2025 meeting. Mr. Rye, do you have a question? Okay, we've got to, let me give everybody just a second to ponder that. So we do have a motion to accept those and we'll need a second. Second. Okay, all those in favor of adoption say aye. Aye. All opposed, no. Thank you, that will stand adopted. Next item up is an update on private reports. Delinquent December 31st, 2022, water and sewer.
Speaker 7
0:34
Mr. Archer. Thank you, Mr. Chair. This is an update on the engagements that were delinquent from the 2022 year. And this update is based on the parameters that
Speaker 8
0:47
were set in the September LJAC meeting. We have five entities that have provided their 22, 23, and
Speaker 9
0:57
24 engagements. And their turn back has been reinstated by the treasurer. We have a total of 24 engagements, 10 of which provided a 22 and 23 report.
Six provided a 22 report and additional
Speaker 8
1:14
eight provided engagement letters with a projected completion date of prior to December 31st of 2025. These 24 engagements have had letters hand
Speaker 7
1:24
delivered to the Treasurer's Office requesting that their turn back be released. We've got one more that we received earlier this week after the deadline of the Treasurer's Office, that'd be Buckner, if you're looking at
Speaker 8
1:39
that report in the far right hand column.
It letter will be delivered probably earlier next week. And that leaves us with 13 of the 2022 engagements that are still delinquent or we have not heard from. If there are no questions, this completes this report.
Thank you. Committee, are there any questions?
Speaker 12
2:05
I have a question. You're recognized. Question
Representative Carol Dalby
Unverified
2:11
for staff. Joe, on these, when you said
out of these 13 or 14 that are still on here, how many of those you've not heard anything from? We've
Speaker 8
2:22
heard something from all of them at some point in time. And I'll say something starting last July of 24 when the committee asked us to reach out to them. We heard something from all 43 of them between then and the December LJAC meeting. Otherwise, y'all were going to take action at that point on three of them. And they immediately responded and got them off that list. So we've heard from them with either a written plan or a generic engagement letter.
I say generic, one that does not have the actual completion date because that's not something normally that's put in an engagement letter. So we've heard from them, and a lot of them I've received multiple phone calls from. I've talked to them, but they haven't complied with the parameters that were set out in the
Representative Carol Dalby
Unverified
3:05
September meeting. A follow-up, Mr. Chair? Yes, ma'am. Well, I guess I misunderstood because I thought you said there were maybe three or four that you had heard nothing from, but that's not correct. We've heard some.
Speaker 8
3:15
Inside the parameters. They hadn't complied with it. I misspoke inside the parameters that was set in the September meeting.
Representative Jack Ladyman
Unverified
3:20
Okay, all right. Thank you, Chair. My apologies. No problem. Representative Leidyman? Thank you, Mr. Chair. So they contacted you, so these people have not complied. Why did they say they are not compliant? What were the top reasons they gave? Several of
Speaker 8
3:38
them were that they were having a hard time. A lot of them just flat apologized for dropping the ball and they were late to the game. A lot of them, once they were late to the game, they were having CPA troubles.
Speaker 7
3:53
Several of them, CPA was sick, so they were either switched CPAs or were waiting on that one. Some of them have received a few emails that stated that the CPA
Speaker 8
4:07
still needed records from them, that their records were inadequate. I'm quoting a CPA's email that I was copied in on. So a couple of them we haven't heard from since last fall, a couple of them.
The Municipal League has done a great deal of legwork on this. They're in contact with, I'm assuming, everybody on this list. They have provided a great deal of this documentation to get the ones moved over to the September 12th parameters. So out of the 43, 30
Representative Jack Ladyman
Unverified
4:47
of them have complied in some form or other and 13 have not, is that right?
Speaker 19
4:54
That's correct. That's where we stand based on the September 12th parameter set by the full committee, yes.
Representative Jack Ladyman
Unverified
5:00
And to your knowledge, nobody has just totally ignored this request? I don't believe so. I do not believe so. I mean, I think
Speaker 8
5:07
once the committee withheld their turn back, I think they started doing whatever action at that point they could.
Speaker 7
5:13
Okay. Representative Dalby, you're up next. Thank you, Mr. Chair. Joe,
Representative Carol Dalby
Unverified
5:19
I want to go back to something you just said because I guess I'm not tracking, but I made a note. You said that there are some that you haven't heard from since last fall. I haven't heard from them.
The Municipal League may have. Can we call the Municipal League to the front to ask them? Because I think we all want them to comply, and we don't want them to ignore us. And I'm not to the point of just forgiving them. So I'm kind of curious, is there some that the Municipal League has not had any
contact with? So before you guys take the table, Senator Johnson, did you have something that might blend well with the Municipal League's presence?
Senator Mark Johnson
Unverified
6:03
Mr. Chairman, thank you. Representative Dalby's question was part of what I was going to ask because I'm not criticizing you, Joe, but you said someone we hadn't heard from last fall. That was thinking, wait a minute, you mean fall of 24? Yes, sir. That was a little disconcerting. But then you corrected in response to Representative Dalby that they may have contacted the Municipal League, which at least shows an interest of trying to comply on their part. However, the Municipal League doesn't have any legal authority to do anything.
They're an association that helps folks, and I appreciate them very much. But, you know, we passed a law, and now we're trying to enforce it or partially enforce it or whatever the full committee decides to do. I'm just trying to—that was pretty disconcerting what he said since last fall. That's over a year as far as I'm concerned. So that's all I wanted to add to that, and I'll wait to hear what our folks from the municipal leagues. Sure.
Speaker 7
7:09
Let me clarify a little bit. We reached out, at y'all's request, during the fall of 24 to
Speaker 8
7:14
get, because in June 1st they become delinquent of 24. So we started sending letters requesting either an engagement letter, didn't have any parameters on what needed to be in the engagement letter, or a written plan. we received something from all of them between that time and the end of November, first couple days of December. They were supposedly in the process of getting their reports in. That was the last communication we had with them.
Of course, the committee didn't meet until June of 25. So then in July, we made the motion. We reached out to them again with the letter stating that their turn back had been escrowed. And then there really wasn't any reason for them to contact me if they didn't have a report. And then in September, we reached out again and said that there was other avenues to get your term back, and they haven't answered that in
Speaker 49
8:07
the last 30 days or so.
Does that help where we are? Okay. Senator
Senator Ben Gilmore
Unverified
8:15
Gilmore. Thank you, and maybe we're getting to this, because I think it's pertinent to the discussion, but there's been some articles written. And I know based on those articles, there was from the treasurer's office a request for an AG opinion. I think it would be helpful to the committee to hear that. I don't know if Ms. White is prepared to share or discuss that at any point in this committee, but I think it would be pertinent for us to have the discussion based on what that guidance was for the committee's sake.
So at the proper time, I defer to the chair, but I just would
like to hear that. Great. Thank you for that. Yeah, just so we don't stack up too much, if the representatives from the Municipal League could come to the table. And when you get there, please state your name and affiliation for the record. And then Ms. Dalby, when they've finished that,
Speaker 54
9:08
maybe refresh us on your question. John Wilkerson,
Speaker 56
9:13
General Counsel, Augustine Municipal League. Jack Critcher, Legislative Liaison, Municipal League.
Speaker 57
9:19
Steve Dixon, field rep, team lead, Arkansas Municipal League. Thank you, gentlemen. Ms. Dalby, you're recognized. Thank
Representative Carol Dalby
Unverified
9:32
you, Mr. Chair. Y'all were in the room a while ago, and my question is, we have this list of about 13 or
14. And my question to y'all, because I know you've been working on it and been working diligently, and we do appreciate the work that you've been doing to help audit and help us get to the bottom of this.
Out of this number of folks, can you tell us your estimate of how many are going to have those finished, and if so, when? And secondly, are there some that you've either not heard from? We just heard Mr. Archer tell us that there are some, the last time we heard from them, may have been June of 24, Can you just give us an update? Because I don't think there's anybody on the committees looking to punish these towns.
But at the same time, we have a law on the books. So the real question is, do we follow the law or do we not follow the law? And so can you kind of guide us as to what y'all have done and who's left and what you think what's left out of those 13 or 14? Sure.
Speaker 66
10:45
So as soon as the committee made the decision, we instantly went into hyperspeed to try to do as much as we
Speaker 67
10:51
can as quickly as we could. So we have a team of seven field reps, not including Jack and I, who started calling each of the cities or towns that are on either the 22 list
or the 23 list. And we wanted to go through each list, and especially the 22 list, we wanted to say, we want to ask how many connections do they have? Because we've heard some confusion as to when, not based on the law, the law's clear, but some confusion amongst cities about when they need an AUP or when they need a full audit. So we asked how many connections they have. We asked them who their auditor or their accountant was, who they've used. We asked, have you gotten those records to the accountant by now? And we heard yeses and nos, and Joe's recitation of what he's heard is similar to ours.
Some had, some hadn't. And then we said, look, if you're on the 22 list, you have to have an engagement letter with a date certain by the end of the year. So make sure you get that done. And then we followed up with the accountants as well. So of the 13, I can say this. There's not been a city or town that we have not actually talked to. There are some cities and towns that were unable to get the engagement letter done. There were some cities and towns, not a lot, but there were at least, I can think of one off the top of my head, and another two or three, I believe, that we talked to and then we didn't hear anything from them.
And we've tried to get a hold of them several different ways. and we just haven't heard back from them. So on the whole, my estimation is that given another, and I'm not asking the committee to do anything different, obviously, but given another month, I think we probably get the rest of the 13 minus 3 to 5 that we just are unable to convince to kick it into gear. That's my estimation. I'd like
Senator Mark Johnson
Unverified
12:35
to add to that a little bit.
There are probably, I spent all day yesterday, spoke with all seven of our field reps, got a report from each one. By the way, our field reps, they have kind of like congressional districts, if you will. The state's divided. Each one of them has a territory. And after talking with each of them, taking notes, and by the way, Joe has been so helpful with, I mean, not only our field reps and me and others, Even some city officials, they have worn his email out, and he's always been quick to respond.
Been very helpful on keeping a running account on who has submitted their reports, who hasn't, and what they've submitted. Is it adequate and all that? So it's been great to work with, and we really appreciate that, Joe, you and your staff. But yesterday, I think I'll just tell you, and I've spoke to some of you about it. There are probably going to be four cities. It doesn't matter if you give them the end of this year, next year, whenever. They're probably not going to comply.
And, you know, so, I mean, that's nobody's fault but their own. But that's a long way of answering your questions. But I think John's right. Probably 30 days from now, I think that number 13 will probably be reduced to four. And I think instead of letters, I think most of those audits will be actually completed and turned in. Okay, Representative Lundstrom, do you have
Speaker 71
14:11
something for Municipal League? Actually, not for the
Representative Robin Lundstrum
Unverified
14:14
Municipal League, although it does reflect some of their work.
We have, as I just asked before, as of today, we have 357 cities that have complied with their 2022 audits. So it's well done them. 340 that have done the 2023, 171 have done their 2024, and two have actually completed their 2025 because the year ends June 30th. So the message has gotten out.
This is working. I would encourage this committee to push off any decisions or wait to do anything and just let this process work another month or so and see what's happening. I think you can be proud of the work. They've heard you, and they have followed the law. So that's a real impressive number, 357, 340, 171. They got it. So if we bend or twist this for a small number, when we have this many that have complied, I think that sends the wrong message. So
I just want to encourage you. Things are getting done.
Representative Johnny Rye
Unverified
15:22
Representative Rye? Yes, sir. Yes, sir. Thank you, Mr. Chairman. Jack, if you don't mind to explain this, we're in the year 2025. Is there a time frame of when these cities are supposed to get that
Senator Mark Johnson
Unverified
15:39
in for this year? Well, so, Representative Rye, thank you for that question. I can be corrected here by audit staff or anyone else. But I think the 2025, I mean, you have to wait until January 1 to have an accurate report on 2025 because we operate under a calendar year as opposed to, you know, how y'all operate.
So I would, I mean, it's due, and Joe can correct me if I'm wrong, the 2025 would be due or delinquent December 31 of 2026, I think. Is that right? Thank you. Actually, it
Speaker 20
16:16
would be due December 31st to 26th. It would not be delinquent under Act
Speaker 8
16:22
453 until June 30th of 2026. You get one year of the due date, you become delinquent after 18 months. Representative Dalby.
Representative Carol Dalby
Unverified
16:32
Thank you, Mr. Chair. Representative Wright brought
this question to mind. So 2022, when did they become delinquent? July of 24. July
Representative Carol Dalby
Unverified
16:46
of 23, but delinquent July of 24. Correct. And then, so you've got 22, and so they're already way behind if they're on this 13 group. They are. Same thing with 2023, and same thing with 2024.
That was time of, well, 2024 is not quite yet. At
Speaker 92
17:06
24, they wouldn't be delinquent until July
Representative Carol Dalby
Unverified
17:09
26. Right. Yeah. So the ones we're talking about, though, have been delinquent for more than a year and occasionally two years. Am I correct? Am I understanding it? You're
correct. Okay, thank you. I appreciate that. Thank you, Mr. Chair.
other questions for Municipal League? Representative
Representative Jack Ladyman
Unverified
17:27
Ladyman. Thank you, Mr. Chairman. Well, I understand why we're playing hardball here, and we have to do that.
And I agree with Representative Lundstrom. I
think it's been successful. because we had that large number of people that complied. And I believe the hardcore people that you all mentioned that are not doing anything, you know, we need to still use the big stick on them. I agree with that. But my concern is, I mean, you guys should know this. Are there any cities out there that are doing everything they can do, but they just cannot make this happen?
And are they, I mean, are we putting pressure on these little towns? I looked at the population here, these 13 cities that are left. If you take Bearden out, Bearden is 776 people. The other 12, their population is 339 down to 120. That's a small town. And I know by experience that there are problems that these small towns cannot fix. So is there any town that we're going to be hurting, shutting down? Is their water system going to be shut down?
Are they in that fix or not? Can they go another 30 days without shutting anything down? It's
Speaker 67
18:44
tough to say for each individual town. I can tell you that you're right, that that is a concern that we've always had. Another concern is the actual accountants that are out there. We've heard from the vast majority of accountants out there, they're eager to help. They do admit that, yes, I won't speak for any particular accountant, but I have heard that yeah, we put that small town behind some of our other clients, and yes, we should have been more on top of it. Now granted, the cities and towns should have been more on top of it too. I'm
not excusing that either, but we have heard from accountants having, we're not as quick as cities were needing. We have heard, I heard from one accountant that's like, listen, I don't even like doing this type of work. Now granted, again, if the city or town knows that, they need to go find another accountant. So part of what we're trying to do is identify those accountants that are very eager and very helpful. And we've identified a good number. They're also having to do a lot in a little bit of time, which has been a challenge as well, because there's a lot to do. Doing AUPs
has helped as well. And all those small towns would just, unless there's a federal loan out there that requires a full-blown audit, those small towns, I hope, would just have to do an AUP. So our goal is to not
Speaker 97
19:57
let any town get hurt, at least past December 31 when everything
Senator Mark Johnson
Unverified
20:03
done. But yes, I mean, it could hurt small towns very much. Mr. Chairman, if I could add to that, I talk to these towns almost daily. And to answer your question, are there some that will put extreme financial hardship, the answer is yes.
I'll give you one example. One told me that they had two years audit, and by the way, these audits, the cheapest I've heard of is $3,500, and that's an AUP, and some of them are paying $10,000. That's per year, and they had enough to pay the auditor for the one year, and they said, oh, wait a minute. called the auditor back after I talked to him, I said, you've got to get 24 in, possibly. You've sure got to get 23 in as well.
We don't have the money. So they called the auditor, and the auditor said, well, I was financing your other one at $250 a month or $350, whatever it was, a month. He said, I can't do that. You're going to have to come up with... So they had a fundraiser, and they raised enough money over that weekend to pay. Yeah, the short answer is yes. If they don't have the turn back coming in, it does for some. The number, I don't know. I don't know how many cities that affects, but it does, yes.
Representative Jack Ladyman
Unverified
21:29
Well, I mean, the cities put themselves in this situation. I agree with everything everybody said about that. And we don't want to do something that will put us back to the problem we had at the beginning. But, you know, there may be cities that we need to give a little slack here. If we know that they're doing everything they can and they have good reason not to, and that's my only comment, but for the committee members, you know, maybe we want those people to come in here and talk to us, maybe,
if they really need the money to keep the city open. I mean, if they shut down a water department, that's a big deal for a town. I mean, and who does that hurt? That hurts the people. Even though the cities are at fault, the pain is felt by the people. And, I mean, you can quote me on that. Yeah. One other thing, if
Senator Mark Johnson
Unverified
22:23
I may, a lot of these small towns, I mean, they operate with very little, I mean, almost month to month. And I got a call from one the other day.
They had a sewer pump. They had three sewer pumps. This one sewer pump went out, I think it's, I don't know, $35,000 or I don't know how much it is, a lot of money. And, you know, as long as they're getting their turn back, they can, you know, they can tread water. But if they lose, you know, they go a couple of months without their turn back, I mean, they're in bad shape. But I really believe this, and then I'll hush. I really believe that next year, I think that number will be probably four cities.
I think when January rolls around, almost every one of these cities that are on this list will say, hey, we have to start preparing for our water audit for the year that just concluded because they have gotten the message. Thank you. Okay, thank you. Yeah,
we're kind of redoing last month's meeting again, so let's try and move on. But is that Representative Ray or Beatty?
Who's got a question down? It's hard to tell from here. Beatty? Yes.
Representative Howard M. Beaty, Jr.
Unverified
23:36
You're recognized. Thank you, Mr. Chair. I guess my question after last month, I agree
with you as far as we don't need to re-litigate and re-discuss all the ins and outs that happened last month. My question is, related to last month's action in this committee and then the action taken at the joint audit committee on Friday where the committee basically granted the extensions on these. And was there notification back to the cities from LEG Audit
that they would be receiving their turn back money? Was there anything communicated back to the cities related to the actions
Speaker 7
24:17
taken by LEG Audit? Mr. Archer? Thank you, sir. Yes, the 24 that I mentioned, those that had filed a 22 and 23, those that had filed just a 22 or those that had provided an engagement letter with a completion date of before 12/31/25, which were the
Speaker 8
24:35
parameters set out in the motion. On October 3rd, 23 letters were sent to them, emailed personally.
And as I emailed to them, I did that and I also hand delivered it to the treasurer. And then Wabasika got in late Friday afternoon, 5 o'clock, and I got it to them on Monday morning the 6th. So those 24, each one of those, now, there were several of them that I dug forever for an email address because I wanted them there. I used the Municipal League's directory, and half of those bounced back, and I'd go through all my files to see if I'd ever been emailed by these individuals. And I Googled them, went to their webpages, and I believe I've got all of them,
Maybe one that the email didn't come back and I exhausted every effort I had on that. But yes, sir, they were all emailed because I didn't want it to get in the
Speaker 110
25:25
mail. I wanted to get to them immediately
Representative Howard M. Beaty, Jr.
Unverified
25:28
since we were down to crunch time. Follow-up, Mr. Chairman. Yeah, you're recognized. I appreciate the latitude. That's kind of my concern. I know Senator Gilmore asked and referenced the AG opinion and the timeliness of getting that back in for the Treasurer and for this committee. I know at that last meeting there was some discussion on the proper path to take care of this,
and expungement was discussed at that committee meeting, and I think there were some comments that expungement would not work. My concern is we held those turn back, then we notified these cities that we were going to release those funds. They've had council meetings after that notification, And then they made plans thinking some of those cities that they're going to get their turn back funds, not just the month, but the couple of months that were held. So they made financial decisions for their cities based on the notification they were going to receive turn back and comply with the directives of the committee and leg audit.
So my plea today is those cities that made those financial decisions based on that notification, the action that we had taken last month, if we continue to hold their turn back now, we have only compounded that problem for those cities after they received that notification. So I appreciate you letting me speak since I'm not an actual member of this committee. I'm over in education. But I would ask this committee to take that action as identified in the AG letter,
once y'all discuss that, and move to expunge the action that was taken to correct the things in conformity with what AG Griffin sent to the treasurer. And that would be my only comment, and thank you, Mr. Chairman. Okay, thank you. Before
the Municipal League leaves, is there anybody else that has a question for them? I've got a
Senator Mark Johnson
Unverified
27:24
question. Oh, Senator Johnson, go ahead. Okay. Thank you, Mr. Chairman. Senator Critcher, appreciate what you just told
us. I was told by another legislator last month that there was a problem of finding CPA firms willing to do this work.
And you alluded to the fact that some of them, I hate to say, put it on the back burner because they probably had other more pressing matters. But the very idea of a community has to have a fundraiser to pay for an audit so they can keep
their water turned on is problematic. Do you see that or have any of them reported that back to you about the fact that they
can't find a firm that's willing to do that? Yes, sir. They have, Senator Johnson. It depends on which part of the state you live in. If you're in rural Arkansas, South Arkansas, Eastern, it just depends.
But the short answer is yes. As has been mentioned, number one, there's not a lot of money in it. And number two, our finance director has mentioned that auditing or doing this, whatever it's called, the APU or whatever, AUP, is when you do a municipality, there's some more liability involved as opposed to, you know, I guess a private.
So they're not lined up, you know, eager to do those audits. So it is a problem in areas. Do you have a solution, or at least a recommendation for a solution? We have discussed that. Senator Hammer, I don't know if he's in here. Can we?
I feel like we're just going over plowed ground, honestly, at this point. I would offer to have it, Mr. Chair. Thank you. Thank you, Senator Grinch.
I think, Senator Gilmore, you have one more. I have more of a comment than anything, and it will be really short, Mr. Chair, to the Municipal League.
Senator Ben Gilmore
Unverified
29:18
Would you make sure that Mr. Archer has updated contact for the cities? Absolutely. I think that'd be helpful. Thank you. Is there
anybody else that has something they think is really important to discuss with
Ms. Willie? All right. Thank you, guys. I guess, Ms. Wyatt, if you're willing, this would be an appropriate
time to have a quick synopsis of what we've learned since the last meeting.
Speaker 125
29:48
Thank you, Mr. Chair. Emily White, Arkansas Legislative Audit. Thank
Speaker 126
29:53
you, Senator Gilmore, for that opportunity to explain briefly just the advisory opinion that we saw on this issue. It was advisory opinion number 2025-096, and I'll hit the high points of that advisory opinion. So that opinion explains in detail the language of the statute at issue or the law at issue, which you all heavily debated at your September meeting, and that was Arkansas Code Annotated 14-234-120, subparagraph C.
In addition to that, that advisory opinion also recommends to you all as a committee that if you wish to seek to undo the notification to the treasurer and the legal effect of that notification to the treasurer, then you can expunge the action that the full committee took in July, which notified the treasurer and thereby caused the treasurer to have to act regarding those 43 municipalities. And that's it in summary, Senator Gilmore.
Senator Ben Gilmore
Unverified
30:54
Thank you for that, because we debated that heavily last time, whether it was expungement or rescission or whatever it was. So I appreciate the clarity there. So, on that, the initial action that happened in July, the motion was made. I don't remember what that motion was. I think it was, well, I don't remember. So, there would need to be an expungement on that, and then I presume an expungement on any action that was taken thereafter. That's right, Senator Gilmore. I would recommend that as your counsel.
Speaker 130
31:26
Just to be clear, if the committee desires to clean that up, I would recommend
Senator Ben Gilmore
Unverified
31:32
you expunge both and not just
Representative Carol Dalby
Unverified
31:39
one. Yes, sir. I think that's clear. Thank you. I have a question from Ms. White when you made that last statement. So to expunge both, that means we also expunge the action of December 31st and so all deadlines would be off and they can, I mean as far as holding turn back because remember we did
that where we said, okay, you have until December 31st or December 1st, whatever date that was, to either get us an engagement letter or to get us the audit in. Yes. And so if we expunge that, then there are no deadlines. They can just ignore us. Is that correct? As you
Speaker 130
32:18
know, Representative Dalby, an expungement in the law treats the action as if it never existed. So
Speaker 126
32:25
you're exactly right. So those deadlines would no longer exist. That's correct. If you expunge the action you took in September.
Speaker 136
32:34
Representative Leidyman. Thank you, Mr. Chairman. I have a motion
at the proper time. I have two motions. Okay. Is there any more question
Speaker 110
32:50
or comment for Senator Dotson? Thank you, Mr. Chair. This would be a question for staff,
Senator Jim Dotson
Unverified
32:58
I guess, just as far as the actions of this subcommittee cannot overrule the full legislative audit committee, correct?
Speaker 126
33:04
That is correct, Senator Dodson. So all this subcommittee
Speaker 130
33:07
could do is make a recommendation to the full committee. A subcommittee cannot undo the actions of the full committee, and this full committee engaged in both actions in
Senator Jim Dotson
Unverified
33:19
July and September. So just to be crystal clear, even if this committee voted to expunge something, it would not be expunged unless the full committee tomorrow actually expunged it. Our position, my position
Speaker 130
33:31
as the attorney, is that this subcommittee cannot vote to expunge.
You all can recommend to the full committee to expunge, but you yourself do not have the power to expunge it because the actual action was taken by the full committee. And again, a subcommittee cannot undo any action of the full committee. So you can make a motion to recommend something to the full committee that they expunge, but that actual expungement would have to come from the full committee. Thank you. Yes,
Senator Gilmore. Asked an answer. Okay, great. Any more question or comment from Ms. Wyatt?
All right, Mr. Ladyman, I guess we'll hear
Representative Jack Ladyman
Unverified
34:11
your motion. Thank you, Mr. Chairman. Well, I recommend that this subcommittee,
I move that this subcommittee recommend to the full committee to expunge the vote taken by this committee at its July meeting to withhold the turn back funds from the cities and towns that had not completed their water and sewer audits for 2022
and 2023 by December 31st.
Speaker 95
34:38
That's my motion. Senator Gilmore. So I'll second to go to
discussion. Say that again? I'll second to go to discussion on the motion. Okay, so we have a motion and a discussion, I mean, and
Senator Ben Gilmore
Unverified
34:55
a second. Can I have a discussion? You bet. Thank you. On that, I just want to make a point of clarification because I think we just heard that there's two motions that need to be done. There will be a second motion. Okay, all right, then fine.
Representative Carol Dalby
Unverified
35:12
I mean, Representative Dalby. Could we as Representative laid him in to restate that? Because in my hearing, I heard two things blended into his one motion. And maybe I heard it wrong, but he talked about the action of July and of September. And so I'm just, I'm not comfortable in voting on a motion that's blended to. I
Representative Jack Ladyman
Unverified
35:38
will reread it, but I did not mention September. Could you reread it? So I move that this committee recommend to the full committee to expunge the vote taken
by this committee at its July meeting to withhold the turn back funds from cities and towns that had not completed their water and sewer audits
for 2022 and 2023 by December 31st. You're recognized. Then I have a
Representative Carol Dalby
Unverified
36:06
question for Ms. White, because it was my understanding when we did that in July, we did not have a date of December 31st or December whatever, and that the date came up in September.
And so I think the motion is not worded correctly, because it's got a date in that we didn't have in July. Do you make a
Speaker 155
36:28
friendly amendment to remove the December 31st? Ms.
Speaker 156
36:40
White, can you address that? Representative Lighteman, I do agree with Representative Dalby's position on that, because the action you all took in July, almost verbatim was, the motion was to withhold turnback for those 44 municipalities or 43 municipalities we now know.
Speaker 126
36:54
The December date did not come up until your September action at the September committee meeting.
Representative Jack Ladyman
Unverified
36:59
Okay, I apologize, I missed the September meeting. Mr. Chairman, if I can, I'd like to remove the last part of that by December 31st,
track that. So let me repeat it. May I
ask you a question? Sure. Since I don't think anything we're going to do here today is going
to carry any water into tomorrow, could we just skip this and do it tomorrow, wherever, when it might matter? I think we have to recommend if I heard.
I don't think the committee has to recommend anything. I mean, I think that's simply a possibility. that's right okay if I'm
correct in my understanding miss maybe somebody that mr. chair I believe that's accurate it could go either way
Speaker 126
37:38
it's however this this body wants to handle it you could recommend if you wish but I
Speaker 130
37:43
also believe that based on the fact that it's on the subcommittee's agenda today that the full committee could hear it tomorrow it's just however you wish to proceed representative lady okay
senator Gilmore you have some discussion yeah thank you
Senator Ben Gilmore
Unverified
37:58
Thank you, Mr. Chair. So, again, I'll defer to whatever the committee wants to do. If you want to recommend, not recommend, it's fine. I just think that if it's not recommended today, I presume then we will have the discussion tomorrow. But I don't want to put the chairs on the spot because I see only one chair. I don't see the other. Senate co-chair. Or if he's here? Okay. Hey, Jim. Good to see you. So I think if we had that assurance that we'll have that discussion tomorrow, then I'll defer as the second. However, I just want to make sure we have that discussion because I do think, regardless of what we do, based on the motions that were made both in July and in September, I'm not entirely sure that those were proper motions in the way they were worded anyway.
So I do think there probably needs to be a discussion on that and an expungement made of those motions. And then we decide where we go from there. Because I do believe that there are some cities that need to be held accountable. And I think we do need to have a discussion on those going forward. I think maybe that discussion needs to happen after December 31st. But as I've explained to the Municipal League, I think there's some real problems that have been identified as a result of all this. I'm not going to belabor the point. I'm rambling as it is, but I look forward to the discussion tomorrow
if the committee doesn't take a recommendation action today. Well, Mr. Chairman, if
it might. So I don't want to put the chairs on the spot either. However, would either of you like to comment? And if you don't, that's totally fine
with me. I want to give you an opportunity.
Representative Jack Ladyman
Unverified
39:41
Okay. Senator, I mean, Representative Ladyman. Well, I believe that the members of the larger committee depend on the subcommittees to
discuss and recommend. And I think
some of those folks think we ought to do our job and recommend to them. Whether it's needed or not, I believe it's an important step. We do this in our standing committees. So the larger committees depend on what the subcommittees recommend. So my motion stands. Okay. Let
me come back to you just
Speaker 78
40:14
a second. Representative Rye, do you have a question or comment?
Well, I've got a comment. Okay. Yes, sir. Thank you, Mr.
Representative Johnny Rye
Unverified
40:22
Chair, for letting me in here. I hope that we've got everything we need, Ms. Emily, even if we take it from here or if we wait until tomorrow, if we've got everything lined up the way that it should be so that we can go forward in the right
direction after tomorrow. Yes, ma'am. Yes, sir. Let's hear your motion restated, please.
Speaker 169
40:50
I move that this subcommittee... Are we
Representative Jack Ladyman
Unverified
40:57
ready? I move that this subcommittee recommend to the full committee to expunge the vote taken by this committee at its July meeting to withhold the turn-back funds from the cities and towns that had not completed
their water and sewer audits for 2022 and 2023. Okay, so
that's the motion in its entirety.
Is everybody clear on what we're about to take up? All right, all those in favor of passage of this motion say aye. Aye. All opposed? No. Question, Mr. Archer, does
Speaker 42
41:34
this require two-thirds? No, no, majority. This is a simple majority. Can we vote one more time? I'm sorry, I had too many things in my mind.
Trying to follow the rules. All those in favor, say aye. Aye. All opposed? No. I'm going to call
the roll call first. How many hands do we have? We've got three. That would be great, thank you.
Speaker 184
42:32
Senator Mark Johnson? Aye. Senator Kim Hammer? Senator Kim Hammer? Senator Ben Gilmore? Aye. Senator Dave Wallace? Senator Dave Wallace?
Senator Matt Stone
Unverified
42:50
Senator Steve Kroll? Senator Steve Kroll? Senator Mass Stone? Aye. Representative Richard Womack?
No. Representative Cameron Cooper? No. Representative Stanberry? Aye. Representative Carol Daube? No. Representative Jack Lederman? Aye. Representative Mark McElroy? Aye. Representative Johnny Rye? Aye. Representative Carlton Wing? Representative Carlton Wing? He resigned. I'm
Speaker 192
43:33
sorry. It's old west. I believe the chairs are
Speaker 58
43:49
actually official members and we can get both.
Speaker 23
43:56
She says that's correct. That's correct. Thank you. Senator Dotson? No. Just put one up above it there. Ms. Lindstrom?
Okay, the motion has passed, okay let's hear this motion
Representative Jack Ladyman
Unverified
44:38
or if someone else want to make this motion I did not attend the September meeting
but I was told by our legal teams that we should expunge the other vote as well that was taken in September so I will make that motion if nobody else wants to to I move that this committee recommends that the full committee expunge the vote that was taken by this committee in September.
Speaker 130
45:04
All right, thank you. Any discussion on that motion? I move that this committee recommends that the full committee expunge the vote that
Representative Jack Ladyman
Unverified
45:13
was taken by this committee in September. All right, thank you. Any discussion on that motion? I
move that this committee recommends that the full committee expunge the vote that was taken by this committee in September. Thank you.
Any discussion on that motion? All those in favor say aye. All opposed? No. All right, and the motion passes.
Speaker 42
45:40
Senator Johnson. Thank you, Mr. Chairman. Regardless of
Senator Mark Johnson
Unverified
45:45
whether these two motions passed or failed, that does not bind the full committee in any way of what it should choose to do tomorrow on these matters. - Correct. - Okay, thank you.
- All right, thank you. We're gonna move back into where we were. So, without objection, we're gonna file this report. All right, that's done. Thank you, committee.
Next up is the update on private reports, delinquent December 31st, 2023, these water and sewer reports. You recognize Mr. Archer? - What, we're
at 23 now? Yes, sir. Thank you, Mr. Chair. In July, let
Speaker 7
46:31
me gather myself in. In July, there was a motion made to send letters to those that were delinquent for the 23 report only.
Speaker 8
46:43
No turn back has been withheld from these groups. The September meeting, we included the deadline on these as December 31st of this year.
Speaker 7
46:55
We sent 23 letters out to these individuals that we had not received reports for. We were down to 15 now that
Speaker 8
47:04
we have not received reports. So we're getting a very good
Speaker 7
47:10
response to those letters. And there was no requirement for them
Speaker 8
47:17
to provide engagement letters from the committee.
It was simply to ask for reports. And like I said, turn back, we're just updating you that we're down to 15. If there are no questions, that
completes my report. Thank you. Are there any discussion or questions? All right, seeing none,
without objection, we'll file that report. Thank you, committee. We've got an update on Act 709 of 2021. Up next. With
Speaker 7
47:49
the permission of the chair, I'd like to go ahead and call the city of Rockport
Speaker 215
47:57
I'm sorry, I got out of order. I'm sorry. You're right. Yeah, we're on item. Now is
Speaker 7
48:07
Rockport. Thank you. I'm sorry. That was my mistake. To refresh the committees from what happened in the September meeting, Rockport was, their report
Speaker 8
48:16
was deferred because the committee members couldn't, I mean the officials couldn't be here today. And we were suggesting that they, or recommending that the committee consider substantial non-compliance with Municipal Accounting Code.
Speaker 9
48:46
on page two. Your synopsis, City of Rockport 23 and 22 under the mayor. Accounting procedures for municipalities are set forth in Arkansas Code Annotated 1459-101-119. The city was in non-compliance with these
Speaker 220
49:00
codes and other accounting procedures as noted below.
Pre-numbered receipts were not issued for all funds received. This is a repeat finding. Cash receipts journals were not prepared, 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. Bank accounts were not reconciled. This is a repeat finding.
Adequate supporting documentation was not maintained for tested disbursements of over $16,000 or 17% and over $26,000 or 58% for 23 and 22 respectively. Without adequate supporting documentation, the validity of these purchases cannot be determined. Budgets were not provided for 2022 in non-compliance Arkansas code. The 2022 budget was not provided upon request, however, it was given a report date.
No procedures were conducted. The city has not obtained an audit or agreed upon procedure or compilation report for the city's sewer system since 2018, as required of Arkansas code. This is a repeat finding in the previous two reports. On page three, under the district court clerk, the district court clerk was in noncompliance with Arkansas code and proper accounting procedures is noted below. Bank reconciliations were not properly prepared, this is a repeat finding. Cash disbursement journals were not properly maintained to include all disbursements and
will not reconcile the total disbursements per bank. This is a repeat finding. We have Mayor Kevin Baker and District Court Clerk Darlene Shockey here today. And District Court Clerk
Speaker 6
50:51
Sylvia Oriel. Oriel. If these officials from Rockport will
make their way to the table? They're there. I see you there. I appreciate it. Please state your name and affiliation for the
Speaker 223
51:07
record in the microphone. Kevin Baker, mayor. Thank you.
Speaker 224
51:12
Darlene Schanke, district court clerk and admin assistant.
Speaker 226
51:17
Thank you. Sylvia Orell, admin assistant. Okay,
thank you. Do you guys have a statement you'd like
Speaker 226
51:30
to make? I'm just going to say that I'm new, I just started in October, so some
Speaker 227
51:35
of these findings I'm not aware of until recent, but I will say that since I became, I have started doing
all the reconciliations of the books, and I have those with me, and I have started properly doing all of the accounting and all of that stuff, you know. So prior to all of that, I'm not sure what was going on, but I know that they had several people and things like that. But I will say that for 25, it has been a big improvement. I have all my journals for all the accounts and everything. Okay, thank you.
Speaker 8
52:14
Do we have any questions from committee? Can staff make a statement? Certainly, please do. Just to update the committee, we're currently doing their 2024 engagement. So we've been in contact with them almost weekly, I would say. And I got a report as of Monday that the journals have been, for 25, are manually kept now. And the receipts are being written for all the receipts.
And we did a impromptu disbursement test and they provided all the adequate sporting documentation to the two or three that we asked. So, staff does believe that great progress has been made since the deferral in September. And staff no longer recommends that we start the process of 1459-117 that would end in withholding term back. Staff actually recommends that we file this report as it stands.
Okay, thank you for that. Any question or discussion from committee?
All right, seeing none, then without objection, we'll file this report. Thank you guys for being here today. All right, next up is an update on Act 709 of 2021, repayment of street turnback for Gilmore. Point of clarification. No relation to me, just for the record. Give me
Speaker 95
53:35
one minute. I didn't get all my paper done over here.
Speaker 7
53:47
well no but anyway um city gilmore in the december meeting um
Speaker 9
53:52
they had passed a ordinance in 2023 in 2022 to repay about 9 500 of misused street fund uh that that
Speaker 8
54:03
ordinance was that they would pay back 10 of the unrestricted revenues in the general fund during that audited year they paid back 1.6 percent this committee recommended in the december meeting to escrow their street fund
revenues until which time these funds were paid back in full we confirmed in september that these funds have been paid back in full and we recommend that uh staff um vote to have us turn back to notify the treasurer to release these funds all right thank you mr archer
um is there anybody here from the city no that wouldn't
Speaker 26
54:42
be not a report it's just that we i need a vote to get it turned
back on okay so motion to
give it forward okay um yeah do i have a second all those in favor
of adopting say i all oppose thank you that'll stand adopted uh next up is a review of reports item g on the agenda okay
Speaker 7
55:09
um we had eight deferred reports from the september meeting starting
Speaker 9
55:13
on page one we have the city of searcy 2024 under the district court clerk the district court clerk was unable to identify over 124 000 remaining
Speaker 220
55:25
in the bank account with receipt numbers
for cases not yet adjudicated and payments of all unpaid individual time accounts as required by code This is a repeat finding from the previous 12 reports.
Speaker 242
55:37
I believe we have District Court Clerk Mrs. Linda Wiseman here. Thank you, Mr.
Archer. Ms. Wiseman, if you would turn your microphone on and state your name and affiliation
Speaker 246
55:55
for the record, please. Linda Wiseman, Chief District Court Clerk for Searcy District Court.
Speaker 33
56:00
Thank you. Do you have a prepared statement?
Speaker 246
56:03
Very simply an update, I was here in June in answer to our 2023 audit. And at that time, it appeared we had hit the point that the same dollar amount was showing for the past three audits. And I was told to go and ask Judge Kennedy to prepare an order to send the funds in. I visited with him. He's prepared to do that.
The 2024 audit, of course, was finalized during that time. So the funds have not been sent yet. There's bookkeeping that has to be done. We are working with Ms. Teresa Shaw, one of the business financial analysts at the administrative office of the courts. She indicated she's working with three other courts in addition to ours attempting to send back funds. So it's going to be a longer process than just turning around and writing the checks to send the money.
But it is in the process. We're hopeful by the end of this calendar year, but she absolutely
could not guarantee that. But we're working toward that.
Speaker 42
57:24
questions or comments from committee? Go ahead. Thank you, Mr. Chairman.
Senator Mark Johnson
Unverified
57:29
But below the issue with the $124,000, Mr. Chairman, it says that in August 24, there was an unauthorized withdrawal of over $76,000.
And the city responded there was a positive pay program has been implemented, which basically says if they write a check, they send a copy to the bank, say, hey, we wrote this check. But I just want to know if they identified what happened to the $76,000.
Speaker 246
57:58
Pardon me, was that in the district court's audit part? The only letter I have-- It implies that it is, yes
Speaker 251
58:06
ma'am, I don't know but that's-- Well we issued that fine, if
Speaker 8
58:10
I may. Yeah, please. We issued that fine under other issues instead of under a particular report official because
Speaker 7
58:15
there was no fault of the city and they got their money back. That's all I heard of. The process, the internal controls worked. So it was this, okay. It was part of the other, it was more
likely it was part of another official. That answers my question, thank you Mr. Chairman. thank you we recommend we file this report if there are
Speaker 9
58:37
no questions yeah are there any more questions okay then without objection we'll file this report thank you for being here today thank you continuing under deferred reports on stay still on page one we have the town of garner 2024 and 2023 under the recorder treasure a fixed asset listing was established but not updated to
Speaker 220
58:50
to include all purchases as required by Arkansas code. In addition, a fixed asset policy has not been adopted by the governing body. This is a repeat finding. We have Clerk Treasurer Carla Johnson here to answer questions. All right, thank you, Ms.
Johnson. If you wouldn't mind, state your name and affiliation for
Speaker 254
59:10
the record. Carla Johnson, Recorder Treasurer for the town
of Garner. All right, thank you. You have any statements you'd
Speaker 254
59:16
like to make? Yes, my council finally did approve a dollar amount for to track for the fixed assets. It
Speaker 256
59:22
will be $1,000 or more. We are working on getting that ordinance
done and finalized before the end of the
year. All right, thank you. Any question from committee? All right, then without objection, we'll file
Speaker 9
59:43
that report. Thank you for being here today. On page two, we have the city of Portland 2024 under the mayor. The city was in noncompliance with Arkansas code as noted below. General fund disbursements exceeded budget appropriation by over $97,000 or 34%.
Street fund disbursements exceeded budget appropriations by $5,900 or 23%. Budgets were not adopted by ordinance or resolution. It's the repeat finding of the
Speaker 8
1:00:10
previous four reports. I believe we have Mayor Thomas Frazier here today. Hey, Mayor, if you would, please
state your name and affiliation for the record. Thomas Frazier, Mayor, City of Portland. Thank you, sir. Do you have
Speaker 259
1:00:28
a statement? The only explanation I can give you at my own expense is when I walked into this position,
I was blind and ignorant as far as proper proceedings, making sure things were done correctly. But everything that I'm aware of was appropriated through the city council. It just was not made in the correct manner as far as making the report or I haven't done anything done, especially having a budget made by a resolution.
That was just my old lack of knowledge of knowing how to do that. But I have been working with our district municipality field rep, Mr. OE Bush. She has been guiding me extremely well and trying to make sure I do get things done correctly. And I've been working with our city clerk, a lot more closely with her to try to make sure that everything gets done correctly from here on. Okay, so you feel like measures
are in place to keep you from being back with the same issues?
Speaker 259
1:01:42
I'm doing my best to make sure we do not have the same issues. Okay. I'm trying to do my best to make sure everything is done correctly and everything is reported correctly and everything goes through the way it needs to, that we do not have to
be back here again. All right, thank you. Any question from committee? All right, seeing none, and without objection, we'll file this report.
Speaker 9
1:02:07
Thank you for being here today. Thank you, sir. Continuing on page four and five, we have four private reports,
Speaker 7
1:02:14
all water reports that were deferred from the previous meeting. We have still not received adequate responses on those. Staff recommends that we defer these one more time. Okay. Probably so, you can do
Speaker 85
1:02:32
a bad objection. Okay, so unless there's an objection
from the committee, then we will go ahead and defer these again. Thank you, they'll be deferred.
Speaker 9
1:02:45
Starting on page six, we have two reports that have been certified to the bond board and Referred to the prosecuting attorney in the AG's office. We have the city of Earl, 2024, under the mayor. In August of 24, the mayor charged almost $2,900 for hotel and fuel charges for our out-of-state trip. Council meeting minutes from August
Speaker 220
1:03:10
of 24 reflect the council's approval to pay the expenses. Subsequently, council minute meetings from October 24 reflect the council voted not to pay for expenses related to this trip since adequate supporting documentation had not been provided to the treasurer.
On April 8th of 25, the mayor provided supporting documentation to audit staff. However, the documentation could not be substantiated. As a report date, the mayor had not paid the credit card, I mean, the city had not paid the credit card charges, and the mayor had not reimbursed the city. Without adequate supporting documentation reflecting a business purpose, these charges appeared to conflict with Article 12, Section 5, and the Public Purpose Doctrine. Under the District Court Clerk, the following discrepancies totaling over $23,000 were noted in the District Court Clerk's bank deposits and receipts.
Almost $12,000 in receipts issued between January 1 of 23 and August 13th of 24 was subsequently voided, leaving a balance on defendant's accounts. The validity of these voided receipts could not be substantiated. Almost $6,300 in receipts issued between January 1 of 23 and August 13th of 24 were voided and the cases adjusted by crediting the defendant's accounts. Supporting documentation was not provided for these adjustments.
$5,400 in receipts between January 1 of 24 and July of 24 of 24 could not be traced to a bank deposit. Law enforcement is currently investigating these matters. Staff recommends we file this report if there are no questions. Thank you. Any questions from committee? Representative
Ray? Thank you, Mr. Chairman. I
Representative David Ray
Unverified
1:05:01
just have a question on this first finding where it says the mayor provided supporting documentation to audit staff. However, the documentation could not be substantiated. What does that mean in a little bit more specificity?
Speaker 7
1:05:19
There wasn't a agenda provided. There was basically a recap provided that appeared that he created it.
Speaker 8
1:05:27
There wasn't anything that we could trace to a scheduled meeting online, or there wasn't an agenda that city business was conducted there. Where was this travel to? I believe it was
Representative David Ray
Unverified
1:05:42
Chicago. Okay. All right. And based on the documentation that was provided,
it didn't appear like the travel was to a legitimate function or event? Is that what you're saying? That benefited the city. Okay, all right, I appreciate that clarification, thank you. Any more questions from committee? Then
Speaker 7
1:06:15
without objection, we'll file this report. Page 7 of the city of Mount Ida,
Speaker 220
1:06:20
2024, under the mayor and recorder treasurer.
The mayor and recorder treasurer received more salary payments and health insurance reimbursements than they were entitled to during the period January 1 of 24 through May 31st of 25, resulting in an overpayment totaling over $108,000. For the mayor received 26 extra checks totaling $74,000 and 36 extra health insurance reimbursement checks totaling over $20,000 for a total of $94,491.
As of May 31st of '25, the mayor had been paid $31,121 of his authorized 2025 yearly salary of $34,799. In addition, the mayor received $985 for mileage without proper documentation of business purposes, and $958 for a cell phone stipend without an authorizing policy or council approval. The recorder treasurer received three extra payroll checks totaling almost $3,900.
This is a repeat finding from the previous report. And 18 extra health insurance reimbursement checks totaling just over $10,000 for a total overpayment for the recorder treasurer of $14,193. In addition, the recorder treasurer received a $750 cell phone stipend without authorizing policy or council approval. The following issues were noted while reviewing the payroll records. The sum of the quarterly 941 tax liabilities does not agree to the federal tax remitted on Form W-3.
This is a repeat finding. The mayor, payroll preparer, and other employees and officials were paid a benefit for not participating in the city provided insurance program in 2024. This benefit was not reported to the IRS. This is a repeat finding in the previous two reports.
Speaker 9
1:08:22
Continuing on page eight, under the mayor, the 2024 budget was not adopted by ordinance On resolution of noncompliance with the Arkansas Code, this is a repeat finding.
Under the record of treasurer, accounting procedures for municipalities are set forth in Arkansas Code 1459-101 through 119. The city was in noncompliance with these codes and other proper accounting procedures as noted below. Annual financial statements were not posted, this is a repeat finding. Fixed asset
Speaker 220
1:08:51
records were not properly updated, this is a repeat finding. I believe we have Mayor Van Morgan and Recorder Treasurer Amber Weston here to answer questions. All right, thank you for coming today.
Please state your name and affiliation for the record. Amber Weston, Recorder Treasurer. Van Morgan, Mayor. Thank you. And do either
Speaker 270
1:09:21
of you have a statement you'd like to make for questions? I have several. We did adopt policy for cell phone and mileage going forward. They had been doing that previous to me being there, so just kept on with the practice.
We have now, last council meeting, adopted policy for both. I have talked to Todd, my auditor, about how to fix some of these bank account not being reconciled properly what it, you know, exactly in detail what he wanted me to do going forward. And with the cash receipt journals, which have a little bit of an issue. We had a three-year audit. They kept them for six plus months, and then when I get them back to catch them up, then Todd comes
back to get them. So it's kind of hard with cash receipt journals that are being taken out of the office to keep them updated correctly and properly when you don't have them there to go as you're going along with your bank statements and other things. So as far as our council, we have also fixed all the payroll issues going forward. - Okay. - We have ways to pay it back and then policy going forward on not, you know, we passed a resolution
on to not do this going forward. - Okay. Mr. Mayor, do you have a
Representative Carol Dalby
Unverified
1:10:50
statement? Okay. Representative Dalby, you're recognized for a question. Thank you, Mr. Chair. Are you the mayor that's listed in this report that received all this excess money? Yes, ma'am. Yes, ma'am. And I've read this two or three times sitting here, and I guess I'm not... I guess I'm being a little slow today and can't figure it out, but you knew you were getting extra pay?
I mean, what precipitated this? This is what's just really kind of fascinating to me. I mean, I know what my paycheck is, and if I'm getting something extra, I sure know where that came from. I mean, what happened that all of a sudden you're getting a whole bunch of extra money you weren't entitled to? Are you just claiming overtime or what?
Speaker 269
1:11:39
I'm just curious. Well, I didn't really realize it was that much, but it come out to be that much. I was just needing money, helping my kids, and I was getting advanced checks, which I'm not anymore.
And I'm paying it back. I'm not getting paid anymore. I've already paid back about $9,900 already. So each month, I don't get a salary. I don't get any kind of insurance reimbursement. And also, I've got my house for sale, so I'm going to, at the end of my term, if I hadn't paid it all back, I'm going to finish paying it back with my selling my house. Follow up, Mr. Chair.
Speaker 18
1:12:17
You're recognized. So, has this been the practice in Mount
Representative Carol Dalby
Unverified
1:12:20
Ida that if you needed more money,
you could just go and say, I need another check and get it advanced on your pay? No, ma'am. Okay. Thank you.
All right. Any other question from committee? All right, then without objection, we'll file this report. Thank you guys for being here today.
Speaker 9
1:12:56
We have, starting on page nine, we have 11 reports that were referred to the prosecuting attorney in the AG's office. The first one is the Monticello water and sewer system, a review of selected transactions for January 1 of 23 through August the 31st of 24. We have our staff member, Michelle
Speaker 231
1:13:13
Atchley, here to present this report. Thank you. This report
Speaker 279
1:13:19
is issued in response to requests from the 10th Judicial District Prosecute and
Speaker 280
1:13:23
Attorney for audit to review selected financial records of the City of Monticello water and sewer system.
ALA staff assistance was requested after city officials discovered improprieties, including customers with delinquent accounts, being improperly removed from shutoff list. Our review was conducted for the period January 1 of 2023 through August 31 of 2024. Located in Drew County, the system provides water and sewer services to residents and businesses in the city and certain surrounding areas. The city employed an office manager who supervised other office staff and oversees the accounting duties of the system.
The employment of the individual who served as office manager during the review period was terminated on August 9th of 2024. Shortly thereafter, city officials discovered that some accounts, including that of a family member of the office manager, have been improperly removed from shutoff lists even though they had delinquent balances and had not made timely payments. Staff review of system financial records revealed $3,483 in unaccounted-for funds. The transaction dates for these undeposited funds were backdated in the computer system, which concealed the unaccounted-for funds.
In addition, certain customers were removed from shutoff lists even though they had a delinquent balance and had not made timely payments. Furthermore, the method of payment was not always properly entered in the computer system. As a result, staff could not determine if additional funds were misappropriated. As reflected in the appendix of the report, the mayor provided a response outlining the steps that had been taken to address the audit findings. The report was forwarded to the 10th Judicial District Prosecuting Attorney and the Attorney General. The prosecutor has responded that the former office manager, Andrea Chambers, was charged with theft of property on September 9th of this year.
This concludes the report on Monticello Water and
Speaker 265
1:15:22
Sewer System. Thank you. Any question or comment
from the committee? All right, then
Speaker 9
1:15:32
without objection, we'll file this report. Pages 11 through 13, we have the Ozan Water Department review of selected transactions January 1 of 21 through July 31st of
Speaker 220
1:15:44
24. And again, we have staff member Michelle Ashley here to present this report.
Speaker 279
1:15:52
This report is issued pursuant to a request for audit to review receipts
Speaker 280
1:15:57
and deposits of the town of Ozan Water Department. The 8th North Judicial District Prosecuting Attorney requested our assistance after receiving allegations of cash receipts not being deposited. This review was conducted primarily for the period January 1 of 2021 through July 31, 2024. Ozan Water Department is located in Hempstead County and provides water service to approximately 130 customers.
During the review period, the recorder treasurer collected department funds, issued receipts, and prepared deposit slips, while the mayor took funds to the bank for deposit. The mayor relieved the recorder treasurer of all department responsibilities in July of 2024 after discovering that some cash collections were not included in the prepared deposits. Our comparison of manual receipts with bank deposits revealed $1,530 in undeposited funds. Due to inadequate records, staff were unable to determine if all other collections were properly deposited.
Several internal control deficiencies contributed to funds being misappropriated, the misappropriation not being detected timely, and staff being unable to determine if additional funds were misappropriated. Subsequent to discussions with the prosecuting attorney, the recorded treasurer agreed to pay and paid the department $1,530, which is the amount of undeposited funds noted in the report. As reflected in the appendix of the report, the mayor provided a response to the findings that addresses the steps that have been taken to strengthen internal controls
and providing better fiscal oversight. The report has been forwarded to the 8th North Judicial District Prosecuting Attorney and the Attorney General. Thank you. Any question or comment from
Speaker 9
1:17:46
the committee? All right, without objection, we'll file that report. Continuing on page 14 with reports filed with referred to the prosecuting attorney in the Attorney General's office, we have the City of Moralton 2023 under the Mayor and Clerk Treasurer.
Speaker 220
1:17:59
The City paid the Moralton Area Chambers of Commerce $4,000 in sponsorship fees for a local event. In noncompliance, Starkle 12, Section 5. In our own question, staff recommends
question or comment from committee? Without
Speaker 9
1:18:21
objection, we'll file this report. Pages 14 through 16, we have Marion County 2023 under
Speaker 220
1:18:26
the county judge. Of 24 plus thousand dollars in credit card payments tested,
Speaker 9
1:18:33
we were unable to substantiate 625 due to the lack of supporting documentation. Of this, $408 were for the county library purchases with local vendors. And $217 were for the sheriff's office consisting of meals and fuel. Furthermore, we noted account credits totaling $344 without supporting documentation. This is a repeat finding from previous two reports
Speaker 220
1:18:57
back to 2021. There are no questions staff recommends we file this report.
Any questions? All right, without objection,
Speaker 282
1:19:11
we'll file this report. Page 17 of the town
Speaker 9
1:19:16
of Guyon, 23 and 22, under the Mayor and Recorder Treasurer. The town paid a council member to serve
Speaker 220
1:19:24
concurrently as fire chief in apparent conflict with the Arkansas Code 1442-107 and the common law doctrine of uncompatibility discussed in Attorney General's opinion 2005-172.
If there are no questions, staff recommends
we file this report. Any questions from committee? All right, then we
Speaker 9
1:19:45
will, with no objection, we'll file this report. Continuing on page 17 of the city of Jetsonia,
Speaker 220
1:19:51
2024, under the police chief, the city's police department paid over $1,200 for 14 gift boxes for employees in apparent conflict with public purpose doctrine in Article 12, Section 5, as discussed in Attorney General's opinion 91-410. There are no questions, staff recommends we file this report.
Speaker 245
1:20:09
Any questions from committee? All right, then without objection, we'll file
Speaker 9
1:20:15
this report, thank you. Continuing on page 17, the city of Leola,
Speaker 220
1:20:20
24 and 23. The mayor, under the mayor and recorder treasurer, the city paid $900 for gifts for two retirees in apparent conflict with Article 12, Section 5, as interpreted by Attorney General's opinion 914. In addition, the transactions lack supporting documentation. Therefore, the validity of these purchases could not be determined.
There are no questions, staff recommends
we file this report. Any questions from
Speaker 9
1:20:51
committee? All right, then we, without objection, we'll file this report. Page 18, continuing under reports filed with
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1:20:57
the prosecuting attorney and attorney general's office, the city of Parkin 2024, under the mayor and police chief.
Speaker 9
1:21:06
Fines and cost revenue of over $284,000 exceeded 30% of the city's expenditures in the proceeding year by over $60,000.
Noncompliance, the Arkansas Code Annotated 128403.
Speaker 220
1:21:15
The revenue was generated from the traffic offense citations written by or arrests made by the city's law enforcement personnel relating to law enforcement of traffic offenses. If there are no questions, staff recommends we file this report.
Any questions? All right, without objection, we'll file
Speaker 9
1:21:38
this report. Continuing on page 18, we have Ashley County, 2023, under the sheriff.
Commissary inmate ending balance exceeded bank deposits and cash on hand by almost $4,900 and almost $2,800 for December 31st of '23 and December 31st of '24, respectively. In addition, kiosk deposits are not
Speaker 220
1:21:58
being made timely. There are no questions, staff recommends we file this report. Any questions, committee?
Speaker 265
1:22:05
All right, without objection, we'll file this report.
Speaker 220
1:22:11
Page 19, we have a private CPA report on the box site water and
sewer system for 2023. We cannot reconcile the proof of cash year end balance to the book balance for one bank account. We could not reconcile deposits per proof of cash for the year with deposits per journal for two accounts. There are no questions, we recommend we file this report.
Any questions? All right, without objection, we'll
Speaker 9
1:22:43
file the report. On page 20, we have a Lakeview Water and Sewer Department.
It's also a private report for 2023.
Speaker 220
1:22:52
We noted that receipts posted to customer accounts, receivable accounts did not agree with the bank deposits. The total cash deposit was over $107,000 and the total cash receipts posted to the accounts receivable and billing system were over 135,000. We also noted
Speaker 9
1:23:08
that three of the ten customer payments tested could not be traced to bank deposits. We noted no evidence of independent review or approval of adjustments.
Speaker 257
1:23:20
There are no questions staff recommends we file this report.
Speaker 262
1:23:29
Any questions committee? And without objection, we'll file this report. Continuing on page 20, we have eight reports. Oh,
Speaker 7
1:23:35
excuse me, I missed two there. On page 2021, we have two reports with repeat findings. The first one there at
Speaker 9
1:23:41
the bottom of page 20 is the town of Blue Eye. Is Mayor Sondra Eby here today? Okay, she called earlier in the week
Speaker 7
1:23:51
and requested us to defer this to November Staff recommends we defer this
so she can be here. Okay, any objection committee? Then
Speaker 9
1:24:02
we'll defer this report. Continuing under repeat findings, we have the town of Valley Springs for 24, 23, and 22 under the recorder treasurer. A detailed fixed asset listing was not provided as required by Arkansas code. A similar finding was issued in the previous two reports dating back to 2016.
I believe we have Recorder Treasurer Cheryl Breedlove here to answer questions. Thank
you for coming. And would you please state your name and affiliation for the
Speaker 291
1:24:32
record? Yes, I'm Cheryl Breedlove, Treasurer Recorder of the Town of Valley Springs.
Thank you. And do you have a
Speaker 291
1:24:39
statement you'd like to make? Yes. At the time when I started this position, I didn't know there was a such thing as fixed assets. But I learned from the last audit before this one that there was. We did update it.
we just didn't find it. It was looked over in the paperwork that I had. So we had a computer crash. They did take the computer into the computer place and we found them. So we do have them updated at that moment, but I will start making sure that it is updated from now on further to make sure that it's every year if that's what I need to do. Okay. Thank you. Any question,
committee? All right. Without objection, we'll file this report. Thank you for being here today. Thank you.
Speaker 262
1:25:22
At the bottom of page 21, starting there, we have eight reports with
Speaker 7
1:25:28
findings and no responses at the time we printed this. Number 24 there, the first one, Lakeside Water Association 24 private report. We've actually received a good response for them earlier this week, and staff recommends we file
Speaker 167
1:25:42
that report. Okay, without objection, we'll file
Speaker 7
1:25:46
that report. The following six, which would be all private reports on water systems, would
Speaker 9
1:25:51
be three reports for the city of Dermot's water system for the 24, 23, and 22 year.
The evening shade water report for 23, two Franklin water departments for
Speaker 7
1:26:03
24 and 23. We still do not have responses for these and staff recommends that we defer all six of these. Any question or comment
from committee? Then without objection, we'll defer. And the
Speaker 7
1:26:17
last one is the Humphreys Water and Sewer System. That's a private report for 2023. We did receive a good response from them earlier this week, and
Speaker 265
1:26:29
staff recommends we file that report. All right, any
Speaker 9
1:26:39
question or comment on that one? Then without objection, we'll file that report. Staff would like to ask the committee to review. there's 29 reports with resolved findings on pages 24 through 233.
Speaker 7
1:26:52
Staff would like the committee to review those. Staff recommends we batch all these together and file them, but if there's one that the committee wishes to pull out, staff will oblige.
I'll give the committee just a minute to flip
Senator Mark Johnson
Unverified
1:27:16
through there. You're recognized, Senator. Mr. Chairman, on page 24, the second half of the page, it has a finding on the city of Sherwood, but there's no response or recommendation. Is that just missing
Speaker 7
1:27:29
or anything? No, it's underlined. And underlined indicates that we have a good response for those and it's been resolved.
Okay, great. That's the standard form. Thank you,
Speaker 7
1:27:46
Mr. Chairman. Thank you for that question. Does anybody, do you recognize Mr. Cooper? Mr. Archer, could you describe what that response
Speaker 8
1:27:52
was from the city of Sherwood? Off the top of my head, they actually came in and we met with them. They have since, the
Speaker 7
1:28:00
finding, let me just go ahead and read the finding. The city paid over $190,000 for construction of sidewalks and noncompliance with Arkansas Code Annotated 229203.
Speaker 8
1:28:09
The city has, for 25, they now bid the sidewalks at the beginning of the year by, like, yard or, you know, by foot or something. So anytime they have that to do, they've got a solid bid for the whole year for as many sidewalks as they wish, which
Speaker 26
1:28:21
is acceptable. Senator Sir, I'm going to mess it up, Sherwood, can I
speak just like these other people did? No, sir, there's no public comment on the agenda.
Speaker 296
1:28:39
Can you make a note on the record that you're refusing
to let me speak? Certainly, certainly. All right, committee, you've had a chance to look over
Speaker 297
1:28:59
those. Are there any that you'd like pulled
Speaker 287
1:29:03
out? All right, without objection, we'll
Speaker 9
1:29:07
file these reports. On pages 34 through 38, there are 89 reports with no findings.
Staff recommends we file all these
Representative Matt Brown
Unverified
1:29:17
reports. Excuse me, I'm sorry, I'm not on the committee, but I am from Sherwood. And this issue has been a real bone of contention in our community. And I was just wondering if I might ask, have they done something, Have they done sidewalks subsequent to this situation where they've handled it appropriately? We haven't done
Speaker 282
1:29:42
the 25 engagement, so we haven't checked.
Speaker 8
1:29:46
But like I said, they provided us with their current policy that they had done for
Speaker 7
1:29:52
the year 25. We haven't verified that policy because we have to wait until the 25 years complete before we go in and do our engagement. Okay, thank
you, that'll help me. Okay, thank you. All right, thank you. Any question or comment on these reports without findings? All right, seeing none, without objection, we will file these reports. That's the end of today's meeting. Next item, the next meeting of Legislative Joint Auditing Committee will be held on November 13th, 2025, and this meeting is adjourned.
Agenda
A. Call to Order by Chair
B. Adoption of Minutes of the September 11, 2025, meeting
C. Update on Private Reports – Delinquent December 31, 2022, Water and Sewer Reports
D. Update on Private Reports – Delinquent December 31, 2023, Water and sewer Reports
E. Discussion of Noncompliance with Municipal Accounting Law - Rockport
F. Update on Act 709 of 2021, Repayment of Street Turnback – Gilmore
G. Review of Reports (Refer to the Synopsis)
H. The next meeting of the Legislative Joint Auditing Committee will be held on November 13, 2025.
I. 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 Standing Committee on Counties and Municipalities October 9, 2025
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - COUNTIES AND MUNICIPALITIES, Oct 9, 2025 | Agenda | 4 | Official source ↗ |
Speakers
Representative Richard Womack Chair
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Representative Carol Dalby
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Representative Jack Ladyman
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Senator Mark Johnson
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Senator Ben Gilmore
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Representative Robin Lundstrum
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Representative Johnny Rye
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Representative Howard M. Beaty, Jr.
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Senator Jim Dotson
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Senator Matt Stone
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Representative David Ray
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Representative Matt Brown
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