Legislative Joint Auditing-Counties and Municipalities
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September 11th,2025 meeting Mr. Ry do you have a question? OK we've got a 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 all those in favor of adoption sayI all opposed no thank you that will stand adopted next item up is an update on private reports delinquent December31st,2022. water and sewer Mr. Archer thank you
Speaker 7
0:42
this is an update on the engagements that were delinquent from the 2022 year and this this update is based on the parameters
Speaker 8
0:52
that were set in the September Ljack meeting we have5 entities that have provided their 22,23 and24 engagements and
Speaker 9
1:02
they turnback has been reinstated by the treasurer we have a total of 24 engagements 10 of which
provided a 22 and23 report6 provided a 22 report and additional
Speaker 8
1:19
8 provided engagement letters with a projected completion date of prior to December31st of 2025. These24 engagements have had letters hand delivered to the
Speaker 7
1:29
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 that report in the far right
Speaker 8
1:46
hand cor right hand column it letter will be delivered probably earlier next week and that leaves us with 13 of the2 022 engagements that are still delinquent or that we have not heard from there are no questions this completes this
report. thank you committee are there any
Speaker 12
2:10
questions I have a question you recognized
Representative Carol Dalby
Unverified
2:17
question 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 heard from all
Speaker 8
2:27
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 but from all43 of them between then and the december Ljack meeting. otherwise y'all gonna 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 talked to them but they haven't complied with the parameters that were set out in the September meeting
Representative Carol Dalby
Unverified
3:10
a follow up Mrir ma well I guess I misunderstood because I thought you said there were maybe3 or4 that you had heard
Speaker 8
3:18
nothing from but that's not correct we've heard inside the parameters they hadn't complied with I I misspoke inside the parameters that was set in
Representative Jack Ladyman
Unverified
3:31
the September meeting. OK all right thank you chair apologies no problem representative ladyman thank you Mr chairir. what so they contacted you so these people that have not complied why did they say they are not compliant? What were the top reasons they gave? several of them were that they were having a hard time
Speaker 8
3:50
a lot of them just flat apologize for dropping the ball and they were late to the game. A lot of them once
Speaker 7
3:58
they were late to the game they were having CPA troubles several of them Cpapa was sick they so they were either switched CPAs or or had or we're waiting on that one some of them have I've seen received a few emails that stated that the
Speaker 8
4:12
CPA still needed records from them that their records were inadequate
I'm quoting acPA CA'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 this this documentation to get the ones moved over to the to the September 1elth parameters but
Representative Jack Ladyman
Unverified
4:53
so so out of the4330 of them have complied in some form or other and 13 have not
Speaker 19
4:59
is that right that's where we stand on the September 1elth parameters set by the full committee yes and to your
Representative Jack Ladyman
Unverified
5:05
knowledge nobody is just totally ignored this request. I don't believe so do not believe so mean I think once
Speaker 8
5:12
the committee withheld their turn back I think they they started doing whatever action
Speaker 7
5:18
at that point they could. Representalby here up next
Representative Carol Dalby
Unverified
5:23
thank you Mr Chair Joe, 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
Speaker 11
5:35
last fall I haven't heard from them this
Representative Carol Dalby
Unverified
5:37
bleak may have. Can we call the municipal league to the chair to the front to ask them because I think we all want we want them to comply and we don't want them to ignore us and I'm not to the point of just forgive forgiving them so I'm kind of curious is there some that the
municipal league has not had any contact with
so before before you guys take the table Senator Johnson did you have a something that might blend well with with the municipal league's presence Mr Chairman, thank you
Senator Mark Johnson
Unverified
6:08
p re s ent ative al by ' s question was part of what I was gonna ask because it mean that I'm not criticizing you Joe but you said some of we hadn't heard from from last fall that was thinking wait a minute you mean fall of 24 that was a little disconcerting
now but then you corrected in response to Representative dalby that they may have contacted the municipally 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 other than just there an association that helps folks and and I appreciate that very much but you know we passed a law and then we tried to enforce it or partially enforce it or whatever the committee's 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 was concerned so that's all I wanted to add to that and I'll wait to hear what our folks
Speaker 7
7:12
from des let me clarify a little bit. We reached out at y'all's requests during the fall of 24 to get because in july June1st
Speaker 8
7:19
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 1st couple of days of December they were supposedly in the process of getting their reports in that was the 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 him 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 turn back again back and we have it they haven't answered that in the last 30 days
Speaker 49
8:12
or so does that help where we are OK Senator Gilmore thank you and
Senator Ben Gilmore
Unverified
8:20
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 for the committee to hear that I don't know if M 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 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 uhs misalby when they've finished that maybe maybe refresh us on
Speaker 54
9:13
your question John Wilkerson general counsel Arkansas
Speaker 56
9:18
municipal League. Jack Critcher legislative liaison municipal league Steve Dixon
Speaker 57
9:25
field rep team lead Arkansas municipal league. thank you gentlemen we all be recognized
Representative Carol Dalby
Unverified
9:38
thank 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 the help audit and help us get to the bottom of this out of this number of folks can you tell us excuse me your estimate of how many you're gonna 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 committee's 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 the what's left out of those 413 or 14 so as soon as the
Speaker 66
10:50
committee made the decision we we instantly went into hyperspeed to try to do as much as we can as quickly as we could
Speaker 67
10:56
so we have a team of seven field reps including not including Jack and I who start calling each of the mem each of the cities that or 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 win 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 ask how many connections they have we ask them who their auditor or their accountant was who they've used we asked have you have you gotten those records too the accountants by now and we heard yeses and no's 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 you get that done and then we followed up with the accountants as well so of the 13 I could 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 2 or3 I believe that we talked to and then we didn't hear anything from them and 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 I'm not asking the committee to do anything different obviously but given another month I think we probably get the rest of the thir minus3 to5 that we just are unable to convince to kick it into gear that's my estimation I I'd like to add to that a little bit
Senator Mark Johnson
Unverified
12:44
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 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 the 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 you know just tell you and I've spoke to some of you about it they're probably going to be4 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 I thinkjon's right probably30 days from now I think there will prop 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 OK Representative Luundstrom do you have something pretty
Representative Robin Lundstrum
Unverified
14:19
usefully actually not for the municipal league although it does reflect some of their work we have as I just asked for as of today we have357 cities that have complied with their 2022 audits so it's well done them340 that have done the 2023171 have done their 2024 and two have actually completed their 2025. because the year ends June30th
so they're getting the job is 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 number357340171 they got it so if we bend or twist this for a small number when we have this many that have complied think
that sends the wrong message so I just want
Representative Johnny Rye
Unverified
15:28
to encourage you things are getting done uhpresentative Bry yes sir thank you Mr. Chairman. Jack if you don't mind explain this we're in the year 2025. is there a time frame of when these cities are supposed to get that in
Senator Mark Johnson
Unverified
15:44
for this year well sopresentative Rye thank you for that question. I I can be corrected here about audit
staff or or anyone else but I think the2025 I mean you have to wait till 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 December31 of2026 I think is that is that right that's what you can actually
Speaker 20
16:22
it'd be due December31st to 26th. it would not be delinquent under
Speaker 8
16:27
Act453 until June30th of 2026. you get you get one year to one year's the the due date you become delincoln after 18
Representative Carol Dalby
Unverified
16:37
months. p re s ent ative dalby thank you
Mr Chairpresentative wright brought this this question to mind so 2022 when did they become delinquent? Julyly
Representative Carol Dalby
Unverified
16:55
delinquent July24 and then so you've got 22 and so they're already way behind if they're on this 13 group same thing with 2023 and same thing with 2024 that there time of f well 2024 is not quite yet at they wouldn't be delinquent ti
Representative Carol Dalby
Unverified
17:14
talking about though have been delinquent for more than a year and occasionally 2 years Am I correct? Is that am I understanding it OK thank you
Speaker 94
17:26
appreciate that thank you Mr Chair thank
you are there any other questions
Representative Jack Ladyman
Unverified
17:32
from Miss Poleague saypresentativeladyman thank you Mr. Chairman. well I understand why we're playing hardball here and we have to do that and I agree with Representative Lunsford.
I think it's Luundstrom 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 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 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 is776 people the other 12 their population
is339 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 gonna be shut down? Are they in that fix or not? Can they go another30 days without shutting anything down? it's tough to say for each individual town
Speaker 67
18:49
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 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 we put that small town behind some of our other clients and yes we 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 as cities were needing we have heard I heard from one accountant that's like listen I don't 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 we've identified a good number they're also having to do a lot and a little bit of time which has been a a challenge as well because there's a lot to do the a doing AUPs has helped as well and all those small towns were just unless there's a federal loan out there that requires a full blown audit those small towns I hope will just have to do an AUP so our goal is to not let any
town get hurt at least past December31 when everything done but
Speaker 97
20:02
I I yes I mean it it could hurt small towns
Senator Mark Johnson
Unverified
20:08
very much chairmanirman if if I could add to that talked to these towns almost daily and to answer your question are there some that will that it'll it'll put a extreme financial hardship the answer is yes I'll give you one example one told me that
they they had two years audit and by the way these audits the cheapest I've heard of is3500 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 call the auditor back after I talked to him I said you got to get you got to get 24 in possibly you sure got to get 20 you know 23 and as well we don't have the money so they
call the auditor and the auditor said well I was financing your other one at at you know $250 a month or350 dollars whatever it was a month but said I can't you know 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 to pay yeah as a short answer is yes if with when they're if they don't have the turnback coming in it does for some. The number I don't know I don't know how many cities that affects but there it it does yes
Representative Jack Ladyman
Unverified
21:33
well I mean they the cities put theirself in this situation. I I agree with everything everybody said about that and and we don't want to do something that will put us back to what the problem we had at the beginning but you know there may be cities that 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 one other thing if I
Senator Mark Johnson
Unverified
22:28
may a lot of these small towns they 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 have three sewer pumps this one sewer pump went out I think it's I don't know35,000 or I don't know how much it is a lot of money and you know as long as they're getting their their turn back they can you know they can tread water but if they if they lose you know they go a couple of months without their turn back they I mean it's they're they're they're in bad shape but let's I really believe this and then I'll hush. I really
believe that next year I think that number will be probably4 cities. I don't think you'll have I think when these the first when January rolls around almost every one of these cities they're on this list will say hey we have to start preparing for our water audit for the year that just concluded because they they have gotten the message thank
you yeah we've we're kind of redoing last month's meeting again so let's try and move on but represent is that
representative rayy or beatty who's got a question down it's hard to
Representative Howard M. Beaty, Jr.
Unverified
23:41
tell from here beatty you're recogn thank you Mrir. I guess my question after last month I agree with
you as far as we don't need to relitigate and rediscuss 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 the committee basically granted the extensions on on
these and and was there notification back to the cities from leg audit that they would be receiving their turnback money? Was there anything communicated back to the cities related to the actions taken
Speaker 7
24:22
by leg audit Mr Archer thank you sir yes the the 24 that I mentioned the those that had filed a 22 and23 those that had filed just a 22 or those that had filed provided the engagement letter with a completion date before 123125
Speaker 8
24:40
which were the parameters set out in the motion on October3,23 letters were sent to them emailed personally and as I del I will email to them I did that and also hand delivered it to the treasure and then Wabaika got in late Friday afternoon5 0 ' c lock and I got it to them on Monday morning the6th. So those 24 have each one of those now I I've there were several of them that I dug forever for an email address cause I want them there I used them thise 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 web pages and I believe I've got all of them but 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 mail. I wanted to get to
Speaker 110
25:30
them immediately since we were down to crunch timeollow
Representative Howard M. Beaty, Jr.
Unverified
25:33
up Mr Mr Chairman I prerecogn appreciate the latitude that that's kind of my my concern. I know Senator Gilmore asked in reference to the agG opinion and the timely
timeliness of of of getting that back in for the treasurer and for this committee. I know it 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 there were some comments that expungement would not work. my my concern is we we held those turnback then we notified these cities that we were going to release those funds they've had council meetings after that notification and then they've 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 the the directives of of the committee and leg audit so my plea today is those cities that made those financial decisions based on that notification that action that we take 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 my and I appreciate you letting me 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 oncece y'all discuss that and move to expunge the action that was taken to correct the things in in conformity with what AG
griffin sent to the treasurer and that would be my my only comment and thank you Mr
Chairman. OK thank you before the municipal league leaves is there anybody else has a question for them Oh
Senator Mark Johnson
Unverified
27:29
Senator Johnson go ahead. OK 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 hate to
say put it on the back burner because they probably had other more pressing matters but a very idea of a community has to have a fundraiser to pay for an audit so they keep their water turned out is problematic
do you see that or have any of them reported that back to you about the the fact that they can't find a firm that's willing to
to 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 short answer is yes it is it's been a as has been mentioned number one there's not a lot of money in it and number 2 our finance director has mentioned that auditing or doing a 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 so they you just don't they're not lined up you know eager to 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 we've discussed that Senatorhammer, I don't know if he's
in here we feel like we're just going over plowed ground honestly at this point or may have politely thank you thank you so much I
think Senator Gilmore you have one more and just I have more of
a comment than anything and it'll be really short Mr Chair
Senator Ben Gilmore
Unverified
29:21
to the municipal league. would would you make sure that Mr. Archer has updated contact for the cities absolutely think that'd be helpful thank you is there
anybody else that has something they think is really important to discuss with
me right thank you guys. I guess Missy 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
29:54
Thank you Mr Chair Emily White Arkansas legislative audit thank you Senator
Speaker 126
29:58
Gilmore for that opportunity to explain briefly just the advisory opinion that we saw on this issue it was advisory opinion number 2025-da096 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
4234120 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 that's it in s in summary Senator
Senator Ben Gilmore
Unverified
30:59
Gilmore thank you for that because we we debated that heavily last time whether it was expungement or recension or whatever it was so I appreciate the 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
Speaker 126
31:28
that's rightatorgilmore I would recommend that as
Speaker 130
31:31
your counsel just to be clear if the committee desires to clean that up I would recommend you
Senator Ben Gilmore
Unverified
31:37
expunge both and not just one yes
Representative Carol Dalby
Unverified
31:44
sir that think that's clear thank you questionpresentalby go ahead have a question for M White that when you made that last statement it so to expunge both that means we also expunge the action of December31st and so all
deadlines would be off and they can can I mean as far as holding turn back because remember we did that where we said ok you have until December31st or December 1st whatever date that was to either get us an engagement letter or to get us the audit in and so if we expunge that then there are no there are no deadlines they can just ignore it is that correct as you
Speaker 130
32:23
knowpresentative dalby in expungement in the law is treats
Speaker 126
32:28
the action as if it never existed so you're exactly right so the so those deadlines would no longer exist that's correct if you expunge the action you took in Septemb Representative ladyman thank you Mr
Speaker 136
32:39
Chairman. I have a motion at the proper time . I have two motions ok let's is
there any more question or comment for Senator dotson thank you Mr Chair. this would be a question for staff I guess
Senator Jim Dotson
Unverified
33:03
of this subcommittee cannot overrule the full legislative audit committee, correct that is correct Senator dotson so
Speaker 126
33:09
all the subcommittee could do is make a
Speaker 130
33:12
recommendation to the full committee a subcommittee cannot and do the actions of the full committee and this full committee engaged in both actions in July and September
Senator Jim Dotson
Unverified
33:24
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 as the attorney
Speaker 130
33:36
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 do the the 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 Senatorgilmore great any more question or comment for Misswatt right Mr Ladydyman I guess we'll hear your motion thank
Representative Jack Ladyman
Unverified
34:16
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 turnback funds from the cities and towns that had not completed their water and sewer audits for 2022 and2023 by
December31st that's my motion Senator Gilmore to discussion sayy
have a motion and a discussion I mean in a second so you bet
Senator Ben Gilmore
Unverified
35:02
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 OK right then fine
Representative Carol Dalby
Unverified
35:19
I meanpresentative dalby wepresent ladyman to ref 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 will
Representative Jack Ladyman
Unverified
35:43
reread it but I did not mention September yeah please reread it so I recommend that this 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 turnback funds from cities and towns that had not completed their water and sewer audits for
Representative Carol Dalby
Unverified
36:09
2022 and2023 by December31st you recognize then have a question for M White because it's my understanding when we did that in July we did not have a date of December31st 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 you make a friendly amendment to
Speaker 156
36:45
Representative ladyman, I do agree with Representativealby's position on that because the action you all took in July almost verbatim was I just the motion was to withhold turn back for those44 municipalities or43 municipalities we
Speaker 126
36:58
now know the December date did not come up until your September action at the September committee meeting apologize missed
Representative Jack Ladyman
Unverified
37:04
theptember meeting Mr Chairman if I can I'd like to remove the last part of that by December31st track that so
let me repeat may may I ask
you a question sincence 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 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 if I'm
correct in my understanding miss may be somebody that Mr Chair I believe that's accurate you could go
Speaker 126
37:46
either way it's how this this body wants to
Speaker 130
37:48
handle it you you could recommend if you wish but 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 proceedpresentative ladyman Senator Gilmore you have some discussion thank you Mrir and so
Senator Ben Gilmore
Unverified
38:04
again I'll 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 othersenate co-chair or if he's here OK hey Jim good to see you. So I 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 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 mo tion s 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 on those going forward I think maybe that discussion needs to happen after December31st 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 rambling as it is but I look forward to the discussion tomorrow if the committee doesn't take a recommendation action today well Mrchaff my so don't
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 . OK senator, I meanpresentativeladydyman well
Representative Jack Ladyman
Unverified
39:46
I believe that the the the 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 my motion stands
Speaker 78
40:20
you want me to let me come back to you in just a secondpresent y do you have a question or comment? Well I got a comment. yes
Representative Johnny Rye
Unverified
40:27
sir thank you Mr Char for letting me in here. I hope that we've got everything we need Miss Emily even if we take it from here or if we wait till 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 let's hear your motion restated please
Representative Jack Ladyman
Unverified
40:57
I move that this subcommittee are we 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 turnback funds from the cities and towns that had not completed their
water and sewer audits for 2022 and2023. that's the so that's the motion it's
entireies everybody clear on what we're about to take up all those in favor of passage of this motion say aye all opposed question
Speaker 42
41:39
Mr Archard, does this require 2/3 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 all opposed I'm going to call that motion failed
roll call first. working on it how many hands do we have we've got3
Speaker 184
42:29
that would be great thank you Senator Mark Johnson Senator Kim Hammer , Senator Kim Hammer senator Ben Gilmore Senator Dave Wallace , Senator Dave Wallace , Senator Steve crowell , Senator Steve crowell
Senator Matt Stone
Unverified
42:59
, Senator Masstone p re s ent ative Richardwomack p re s ent ative Cameron Cooper uhpresentative Stanberry Representative Carolalubby Representative Jack Laderman Representative Mark McIlroy p re s ent ative Johnny Rye represent the Carlton wing p re s ent ative Carlton Wing
Speaker 192
43:30
resign got the alternates on there we had the all right and then pointint of order we have one more yeah let's hear your point of order.ers xxx official member
Speaker 23
44:00
she said that's correct that's correct thank you senator dotson just put one up Mr Lestrom
and motion has passed ok let's hear this motion
Representative Jack Ladyman
Unverified
44:43
or if someone else would 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 expunge that September motion
Speaker 130
45:06
you're recognized Representativeladydyman again I just want to remind the body that it's a motion to recommend to the full committee expungement you all don't
Representative Jack Ladyman
Unverified
45:18
have the ability to expunge it yourself. let me restate that then thank you sir I recommend 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
Speaker 210
45:37
all opposed the motion passes chair Senator Johnson thank you Mr
Speaker 42
45:45
Chairman. regardless of whether these two motions passed or
Senator Mark Johnson
Unverified
45:50
failed that does not bind the full committee in any way of what it should choose to do borrow on these matters correct OK thank you all right thank you we're going to 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 December31st,2023. these water and sewer reports you recognize Mr. Archer what we're
at 23 now yes sir thank you Mr. Chair. The in
Speaker 7
46:40
july let me get together myself here in July there was a motion made to send letters to the those that
Speaker 8
46:47
were delinquent for their 23 report only no turnback has been withheld from these these groups the September meeting we included the deadline on these as December31st of of this year we sent
Speaker 7
47:00
23 letters out to to these individuals that we had not received reports for we are down to 15 now that we have not received
Speaker 8
47:10
reports so we're getting a a very good response to those letters and
Speaker 7
47:15
there was no requirement for them to provide engagement letters we'll from the committee it was
Speaker 8
47:22
simply to ask for reports and like said turn back hadn't been we're just updating you that it's the 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 Act709 of2021. up next it's with the permission of the chair I'd
Speaker 7
47:54
like to go ahead and call the city ofRockport to the table and and present
Speaker 215
48:02
of order I'm sorry you're you're right we're on now isRockport thank you that was my mistake
Speaker 7
48:11
to refresh to refresh the committee's from what happened in in the September meeting obor was their report was deferred because the
Speaker 8
48:21
committee members couldn't couldn't I mean the officials couldn't be here today and we were suggesting that they are recommending that we can the committee consider substantial noncompliance with municipal accounting
Speaker 7
48:34
code they're able to get here today so on page two of your synopsis
Speaker 9
48:51
city ofRockport 23 and22. under the mayor . Counting procedures for municipalities are set forth in Arkansas code annotated 1459101 through 119. the city was in noncompliance with these codes and other accounting procedures as
Speaker 220
49:05
noted below re e number receipts were not issued for all funds received. This is a repeat finding cash receipts journals were not prepared or were not properly maintained to include all receipts and will not reconcile
the total deposits per bank. 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 bank reconciliations were not a bank accounts were not reconciled. This is a repeat finding adequate sporting documentation was not maintained for tested disbursements of over $16,000 or 17% and over $26,000 or58% for
22 and for 23 and22 respectively without adequate supporting documentation the validity of these purchases cannot be determined. Budgets were not provided for 2022 in noncompliance with the Arkansas code. The2022 budget was not provided upon request. However, it was given at report date. No procedures were conducted. the city is not obtained an audit or agreed upon procedure or copulation report for the city's sewer system since 2018. has required barkansas code.
This is a repeat find in the previous two reports on page three on the district court clerk the district court clerk was in noncompliance with the Arkansas code and properper 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 reconciled to total disbursements per bank. This is a repeat finding we have mayor Kevinbaker and district court clerk Darlinghoy here today
Speaker 6
50:55
and district court clerk Sillvia Oo Oo officials fromRockport
will make their way to the table. I'll see you there. appreciate it. please state your name and affiliation for the record in
Speaker 223
51:12
the microphone Kevinakker mayor thank you darlingne shocky district
Speaker 224
51:16
court clerk and admin assistant Sylvia Orrell admin assistant OK
thank you. Do you guys have a statement you'd
Speaker 226
51:35
like to make I'm just gonna say that I'm new. I just started in October so some
Speaker 227
51:40
of these findings I'm not aware of until recent but I will say that since I've 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 so thank you do we have
any questions from committee Can staff make a statement
Speaker 8
52:28
please do just to the committee we're currently doing their 2024 engagement so we've been in contact with them almost weekly Iu 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 s supporting documentation to the two or three that we asked so a staff does believe that great
progress has been made since the the deferral in September and staff no longer recommends that we start the the process of 1459117 to that would end in withholding turn back staff actually recommends that we filed this report as it stands. OK 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
right next up is an update on actct7092021 repayment of street turnback for Gilmore our point of clarification no relation to me just for
Speaker 95
53:40
the record give me one minute I didnt get all just a second well no
Speaker 7
53:52
it but anyway cityity Gilmore in the december meeting they had passed a ordinance in
Speaker 8
54:08
misused street fund that that 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%. 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 staff
vote to have us turn back to notify the treasury to
release these funds all right thank you Mr. Archer. is there anybody
Speaker 26
54:47
here from the city they wouldn't be here they're not a report it's just that we
I need a vote to get it turned
back on so motion to give the report yeah do we have a second all those in favor of adopting sayy y all oppose thank you that'll stand adopted
next up is a review of reports item g on
Speaker 7
55:14
the agenda OK we had 8 deferred reports from the September meeting
Speaker 9
55:18
starting on page one we have the city of Ceri 2024. under the district court clerk district court clerk was unable to identify over $124,000 remaining in the bank
Speaker 220
55:30
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
Speaker 242
55:42
12 reports believe we have district court clerk Mr Mrslinnda Wiseman here. thank you Mr.
Archer. M Wiman if you would turn your microphone on and state your name and affiliation for the
Speaker 246
56:00
record please Lindassman chief district court clerk for Cearcy District court thank you do you
Speaker 33
56:05
have a prepared statement very simply an update I was here
Speaker 246
56:13
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 twenty24 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 Mresa 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 longer 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 thank you
Speaker 42
57:29
committee? go ahead thank you chairman below the the issue with the
Senator Mark Johnson
Unverified
57:34
h 2400 $0 Mr Chairman it says that august 24th there was an unauthorized withdrawal of over76,000 dollars and the city
responded there was a positivepa 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 se6,000 dollars. Pardon me was that in
Speaker 246
58:03
the district court's audit part the only the only letter I have implies that it is yes ma'am I don't know but that's
Speaker 251
58:11
it but we we issued that fine if I may we issued that
Speaker 8
58:15
finding under other issues instead of under a
particular report an official because there was no fault of the city and they got their money
Speaker 7
58:22
back the process where internal controls work so it was it was part of the it was more likely it was part of another question thank you Mr. Chair thank you. We recommend we
file this report there are no questions are there any more questions then without objection we'll file this report. thank you for being here
Speaker 9
58:42
today continuing under deferred reports on still on page one we have the town of garner
2024 and2023 on the recorder treasure a a fixed asset listing was established but
Speaker 220
58:53
not updated to include all purchases as required by Arkansas code. In addition, fixed asset asset policy has not been adopted by the governing body. This is a repeat finding we have a clerk treasurer Carla Johnson here to answer questions. thank you Johnson if you wouldn't mind state your
name and affiliation for the record carla Johnson, recorder treasurer for the
Speaker 254
59:15
town of garner right thank you you have any
statements you'd like to make my counsel finally did approve a dollar amount for us to track for the fixed assets it will
Speaker 256
59:27
be $1000 or more. we are working on getting that ordinance done and finalized before the end of the year. thank you any questions from committee
right then without objection we'll file that report. Thank you for being here today on page two we have the city of Portland 2024
Speaker 9
59:51
under the mayor . The city was in noncompliance with Arkansas code as noted below. General fund disbursements s exceeded budget appropriation by over $97,000 or34% street fund disbursements exceeded budgeted appropriations by5900 dollars or 23%. Budgets were not adopted by ordinance or resolution. This is a repeat find in the previous four
Speaker 8
1:00:15
reports I believe we have mayor Thomas Frasier here today
if if you would please state your name and affiliation for the record Thomas Frasier mayor city of Portland. thank
Speaker 259
1:00:33
you sir. do you have a statement all the explanation I can give you at my own expense is when I walked in 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 does what's not made in the correct manner as far as making the report or have anything done especially like having a budget up maybe about a resolution that was just by old lack of knowledge to knowing how to do that but I have been working with our district municipality field rep Mrjo EBush. she has
been guiding me extremely well and try to make sure I do get things done correctly they'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. OK, so you feel
like measures are in place to keep you from being back with the same issues
Speaker 259
1:01:47
I'm doing my best to make sure we do not have the same issues I'm tried 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. righty thank you any questions from committee seeing none and we will without objection we'll file this report thank
Speaker 9
1:02:12
you for being here today you sir continuing on page 4 and5 we have4 private reports all water reports
Speaker 7
1:02:19
that were referred deferred from the previous meeting. we have still not received adequate responses on those staff recommends that we defer these one more time
Speaker 85
1:02:36
take a look to probably so well you can do it
without objection so we unless there's an objection from the committee then we will go ahead and defer
Speaker 9
1:02:51
these again. thank you they'll be deferred 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 24, the mayor charged
almost $2900 for hotel and fuel charges for out of state trip. Council meeting minutes from August to 24
Speaker 220
1:03:15
reflect the council member counsel's approval to pay you the expenses Subsequently councilin 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 April8th of 25, the mayor provided supporting documentation to audit staff . However, the documentation
could not be substantiated as the report date the mayor had not paid the credit card ch 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 appear to conflict with Article 12 Section5 and theublicur doctrine. on the district court clerk the following discrepancies totaling over $23,000 were noted in the district court clerk's bank deposits and receipts Almost 1el,000 in receipts
issued between January 1 of 23 in August 13th of 24 was subsequently voided leaving a balance on defendant's accounts. the validity of these voided receipts could not be substantiated . Almost6,300 dollars in receipts issued between January1 of23 and August 13th of 24 were voided and the cases adjusted by crediting the defendant's accounts adequate sporting documentation was not provided for these adjustments 540 $0 in receipts between
January1 of24 in July of 24 of24 could not be traced to a bank deposit law enforcement is currently investigating these these matters staff recommends we file this report if there are no questions. thank you any questions from committee
ofpresentative ray thank you Mr Chairman just
Representative David Ray
Unverified
1:05:06
have a question on this this first finding where it says the mayor provided supporting documentation to audit staff. how the documentation could not
be substantiated what does that what does that mean in a
Speaker 7
1:05:24
little bit more specificity there wasn't a agenda provided there was basically a recap provided that that appeared that he created it
Speaker 8
1:05:32
though the the wasn't there wasn't anything that we could trace to a a scheduled meeting online or there wasn't an agenda that city business was was conducted there where was this travel to? I believe it was Chicago
Representative David Ray
Unverified
1:05:50
right and 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 that benefited the city ok right I appreciate that clarification. thank you. any more questions from committee then without objection we'll file this report on page se of the city of Mountottta
Speaker 220
1:06:25
treasurer the mayor and recorder treasurer received more salary payments and health insurance reimbursements then they were entitled to during the period January1 of24 through May31st of 25 resulting in an overpayment totaling over 108,000 dollars. for the mayor received26 extra checks totaling74,000 dollars and and36 extra health insurance reimbursement checks totaling
over $20,000 for a total of 94,0491 dollars. as of May31st of 25, the mayor had been paid31,121 dollars if he's authorized 2025 yearly salary of34,799. in addition the mayor received $985 for mileage without proper documentation of business purposes and and $958 for a cellphone stipend without authorizing policy or counsel approval
the recorder treasurer received3 extra payroll checks totaling almost3,900 dollars. this is a repeat finding from the previous report in 18 extra health insurance reimbursement checks totaling just over $10,000 for a total overpayment for the quarter treasury of 14,193 dollars. in addition to the recorder treasurer received a750 dollars cellphone 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 W3. This is a repeat finding the mayor payroll prepare and other employees and officials were paid a benefit for not particip for not participating in the city providedr program in 2024. This benefit was not reported to the IRS. This is a repeat finding in the previous two reports
Speaker 9
1:08:25
continuing on page 8 under the mayor the 2024 budget was not adopted by ordinance or resolution in noncompliance with the Arkansas code. This is a repeat finding under the recorder treasure accounting procedures for municipalities are set forth in Arkansas code 1459101 through 119. The city was in noncompliance with these codes and other accounting proper accounting procedures as noted below. annual financial statements were not posted this is a repeat
Speaker 220
1:08:55
finding fixed asset records but we're not properly updated. This is a repeat finding believe we have mayor Van Morgan and quarter treasurer Amber Weston here to answer questions. 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 of you have a statement you'd like to make before questions
Speaker 270
1:09:28
have several we did adopt policy for cellphone 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 bank account and 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 for6+ months and then when I get them back to catch them up and 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 we have 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 Mr Mayor do you
have a statement? OK. Representativealby you're recognized for a question. Thank you
Representative Carol Dalby
Unverified
1:10:55
Mrir. Were you the are you the mayor that's listed in this report and you that received all
the excess money 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 it it you knew you were getting extra pay I mean what 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 you're getting a whole bunch of extra money you weren't entitled to or you just claiming overtime or what? I'm just
Speaker 269
1:11:44
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
9900 already. so each month I don't get a salary I don't get any kind of insurance reimbursement and also I'm got my house for sale so I'm gonna at the end of my term if I hadn't paid it all back I'm gonna finish paying it back with my selling of my house. ol low ups follow up Mr Chair you
Speaker 18
1:12:22
recognize so has this been the practice in Mount Ida
Representative Carol Dalby
Unverified
1:12:25
that if you needed more money you could
just go and say I need another check and get an advance on your pay
no ma'am thank you mess with that any other questions from committee right then without objection we'll file this report. thank you guys for being here today. we have our own starting on page nine we have 11 reports that
Speaker 9
1:13:04
were referred to the prosecuting attorney in the AG's office the first one is the monticcear water and sewer system a review of selected transactions for January1 of23 through August the31st to 24 we have our staff member Micchelee Atley here to present
Speaker 231
1:13:18
this report. thank you this report is issued in
Speaker 279
1:13:24
response to requests from the 10th judicial district prosecuting attorney for audit to
Speaker 280
1:13:28
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 the link delinquent accounts being improperly removed from shutoff list. Our review was conducted for the period January1 of2023 through August31 of2024 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 had been improperly removed from shutoff list even though they had delinquent balances and had not made timely payments. Staff review of system financial records revealed3,483 dollars 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 list 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 have 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 form former office manager Andrea Chambers was charged with theft of property. On September 9th of this year this concludes the report on Monticcelo water and sewer system.
Speaker 265
1:15:27
any question or comment from committee right then without
objection we'll file this report pages 11
Speaker 9
1:15:39
on pages 11 through 13 we have theozan water department review of selected transactions January 1 of 21 through July31st of 24 and again we have
Speaker 220
1:15:49
staff member Micchelee Aley here to present this report this report is issued pursuant to
Speaker 279
1:15:57
a request for audit to review receipts and deposits of the town of
Speaker 280
1:16:02
Ozan Water Department. The8th 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 January1 of2021 through July30th,31st2024. 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 recorded 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 $1530 in undeposited funds due to inadequate records, staff were unable to determine if all other collections were properly deposited. several internal control deficiencies contributed funds being misappropriation 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 recorder treasurer agreed to pay and paid the department $1530 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 physical oversight. The report has been forwarded to the eth North Judicial District prosecuting attorney and the attorney general. thank you
Speaker 9
1:17:44
. Any question or comment from committee? right without objection we'll file that report. continuing on page 14 with reports filed with the referred to the prosecuting attorney and the attorney general's office we have the city oforreton 2023 under the mayor and clerk treasurer the city
Speaker 220
1:18:05
paid theolton area chambers of commerce4,000 dollars in sponsorship fees for a local event. in noncompliancearkle 12 Section5.
no questions staff recommends we file this
Speaker 265
1:18:19
report any question or comment from committee
without objection well we'll file this report
Speaker 9
1:18:26
pages 14 through 16 we have Marion County 2023 under the county judge of 24+ $1000
Speaker 220
1:18:31
in credit card payments tested. we were unable to substantiate625 due to the lack of supporting documentation
Speaker 9
1:18:45
of this408 dollars worth of county library purchases with local vendors and 217 were for the sheriff's office consisting of meals and fuel. Furthermore we noted account credits totaling344 dollars without supporting documentation this is a repeat finding from the previous two reports back to 2021. there are no
Speaker 220
1:19:02
questions staff recommends we file this report any questions without objection we'll file this report
Speaker 282
1:19:17
page 17 of the town ofayon 23 and22.
Speaker 9
1:19:21
under the mayor and recorder treasure the the town paid a council member to serve concurrently as fire chief in apparent conflict
Speaker 220
1:19:29
with the Arkansas code442107 and the common laww doctrine of uncompatibility discussed in attorney general's opinion 2005-172 there are no questions staff recommends we file this report. Any questions from committee right then we will with no
Speaker 9
1:19:48
objection we'll file this report 10 on page se7 of the city of Jedsonia 2024. under the police
Speaker 220
1:19:56
chief the city's police department paid over $1200 for gift 14 gift boxes for employees in apparent conflict with public purpose doctrine in Article 12 Section5 is discussed in attorney general's opinion 9141. there are no questions staff recommends we file this report any questions from the committee
Speaker 245
1:20:14
? right then without objection we'll file this report
Speaker 9
1:20:20
continuing on page 17 city of Leola 24 and23. the mayor
Speaker 220
1:20:25
and the mayor and recorder treasure. the city paid $900 for gifts for two retirees in apparent conflict with Article 12 Section5 as interpreted by attorney general opinion 9140 in addition the transaction's lack supporting documentation. therefore the validity of these purchases could not be determined. The Arnold question staff recommends we file this report. Any questions from committee
right then we without objection we'll
Speaker 9
1:20:56
file this report page 18 continuing under reports filed with the prosecuting attorney and attorney general's office
Speaker 220
1:21:02
the city of Parinn 2024 under the mayor and police chief buys and call revenue of
Speaker 9
1:21:11
over $284,000 exceeded30% of the city's expenditures in the preceding year by over60,000 dollars noncompliance the Arkansas code annotated 12843.
Speaker 220
1:21:22
the revenue was generating from the traffic offense citations written by or arrests made by the city's law enforcement personnel relating to law enforcement of traffic offenses there are no questions staff recommends we file this report. Any
questions? without objection we'll file this report on
Speaker 9
1:21:43
page 18 we have ashley County 2023 under the sheriff commissary inmate any ballot succeeded bank deposits and cash
on hand by almost4,900 dollars and almost $2800 for December31st of 23 and December31st of 24 respectively. in addition kiosk deposits are not being
Speaker 220
1:22:03
made timely there are no questions staff recommends we file this report. Any questions committee without objection
Speaker 265
1:22:10
we'll file this report page 19 we have a
Speaker 220
1:22:16
private CPA report on the on the bauxite water and sewer system for 2023.
we could not reconcile the proof of cash year-end balance to the book balance for for oneuck account. We could not re reconcile deposits for 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
without objection we'll file the report page 20
Speaker 9
1:22:48
we have a lakeview water and sewer department it's also a private report for 2023
Speaker 220
1:22:56
we noted that receipts posted to customer accounts receivable accounts did not agree with the bank deposits the total cash deposit it was over $107,000 and the total cash receipts posted to the accounts receivable and billing system were over 135,000 We also noted that three of the ten0
Speaker 9
1:23:13
customer payments tested could not be traced to bank deposits We noted no evidence of independent review or approval of adjustments there are no questions staff recommends we file this report
Speaker 257
1:23:27
. Any questions committee? and without objection we'll file
Speaker 262
1:23:34
this report continuing on page 20 we have 8 reports oh excuse me missed two there on page
Speaker 7
1:23:40
221 we have two reports with res repeat findings the first one they're on page at the bottom of page
Speaker 9
1:23:46
20 is the town oflue Eye is mayor Sanndra Iby here today . OK she called earlier in the week and requested
Speaker 7
1:23:55
us to defer this to November and staff
recommends we defer this so she can be here OK? any
Speaker 9
1:24:07
objection committee then we'll defer this report continuing under repeat findings we have the town of Valley Springs for 24,23, and22. under the recorder treasure 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 a quarter treasurer Sheryl Breedlove here
to answer questions thank you for coming and would you please state your name and
Speaker 291
1:24:37
affiliation for the record? Yes, I'm Cheryl Breedlove treasurer recorder of the town of
Valley Springs. Thank you and do you have
Speaker 291
1:24:44
a statement you'd like to make? Yes we 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 it 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 put 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 thank you any questions committee
right without objection we'll file this report. thank you for being here today at the bottom of page 21
Speaker 262
1:25:30
starting there we have 8 reports with
Speaker 7
1:25:33
findings and no responses at the time we printed this number 24 there the first one Lake lakeside Water Association 24 private report we've actually received a good response from them earlier this week and staff recommends we file that report . OK,
Speaker 167
1:25:47
without objection we'll file that report. The following six
Speaker 7
1:25:51
which would be all private reports on water systems would be three reports for the city ofermot's water
Speaker 9
1:26:00
system for the 24,23 and22 year. the evening shade water report for 23 to Franklin water departments for 24 and23
Speaker 7
1:26:08
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 last one wed the last
Speaker 7
1:26:22
one is the Humphrey's water and sewer systems that's a private report for 2023. we did
receive a good response from them earlier this week and staff recommends we
Speaker 265
1:26:36
file that report. right any question or comment
Speaker 9
1:26:44
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 2033 staff
Speaker 7
1:26:57
would like committee to review those staff recommends we batch all
these together and 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 through there you recognize
Senator Mark Johnson
Unverified
1:27:21
senator share it on page 24 that the the second half of the page it has a finding on city of Sherwood but there's no response for recommendation I just
Speaker 7
1:27:32
is that just missing or when it's it's underlined and underline indicates that we have a good response for those and it's been resolved that's the the standard for thank you
for that question anybody do you recognize Mr. Cooper?
Speaker 7
1:27:51
Mr. Archer could you describe what that response was from the city of sherwood off the top of my head they actually came in and
Speaker 8
1:27:57
we met with them they have since the the finding let me just go ahead and read the finding the city
Speaker 7
1:28:04
paid over $190,000 for construction and sidewalks and noncompliance with Arkansas code annotated 229203. the city has for 25 they now bid the sidewalks at the beginning of the
Speaker 8
1:28:14
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 is acceptable.
no sir you're you're there's no public comment on the agenda get
Speaker 296
1:28:45
to speak so can you make a note on the record that you're refusing
to let me speak certainly certainly alright committee you've had a chance to look over those are there any that you'd
Speaker 297
1:29:04
like pulled out all right without objection we'll file these reports
Speaker 9
1:29:11
on pages34 through38. there are 89 reports with no findings.taff recommends we file all these reports had my I'm not on
Representative Matt Brown
Unverified
1:29:22
the committee but I I am from sherwood and this issue's been a real bone of contention in our community and I was just wondering if I might ask have have they done something have they done sidewalks
subsequent to this to this situation that where they've handled it appropriately we haven't done the 25
Speaker 282
1:29:47
engagement so we haven't haven't checked but like I said they
Speaker 8
1:29:50
provided us with with their current policy that they they had done for the year 25. we haven't verified that policy because we hadn't we have to
Speaker 7
1:29:57
wait till the 25 years' complete before we go in and do our engagement. OK thank you that will help me thank you 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 the next meeting of legislative joint auditing committee will be held on November 13,2025 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
Unverified
Speaker 7
Speaker 8
Speaker 9
Speaker 12
Representative Carol Dalby
Unverified
Representative Jack Ladyman
Unverified
Speaker 19
Speaker 11
Senator Mark Johnson
Unverified
Speaker 49
Senator Ben Gilmore
Unverified
Speaker 54
Speaker 56
Speaker 57
Speaker 66
Speaker 67
Representative Robin Lundstrum
Unverified
Representative Johnny Rye
Unverified
Speaker 20
Speaker 87
Speaker 92
Speaker 94
Speaker 97
Representative Howard M. Beaty, Jr.
Unverified
Speaker 110
Speaker 125
Speaker 126
Speaker 130
Speaker 136
Senator Jim Dotson
Unverified
Speaker 95
Speaker 155
Speaker 156
Speaker 78
Speaker 42
Speaker 181
Speaker 184
Senator Matt Stone
Unverified
Speaker 192
Speaker 23
Speaker 210
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Speaker 220
Speaker 6
Speaker 223
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Speaker 226
Speaker 227
Speaker 26
Speaker 242
Speaker 246
Speaker 33
Speaker 248
Speaker 251
Speaker 254
Speaker 256
Speaker 259
Speaker 85
Representative David Ray
Unverified
Speaker 270
Speaker 269
Speaker 18
Speaker 231
Speaker 279
Speaker 280
Speaker 265
Speaker 282
Speaker 245
Speaker 257
Speaker 262
Speaker 291
Speaker 167
Speaker 296
Speaker 297
Representative Matt Brown
Unverified