Legislative Joint Auditing-State Agencies
Video
Transcript
1 document
Machine transcript
May contain errors. Verify important quotations against the official video.
About transcript accuracy
- Source
- SliQ live captions
- Model
- SliQ live ASR
- Processing date
- October 2, 2026
Representative Steve Unger
Unverified
0:15
thank you that passed I'd like to recognize MrBullington at this time. OK thank
Speaker 4
0:20
you Mr chairir. today we're presenting three reports with findings and we
Speaker 5
0:24
also have several reports without findings and these are listed on page one of the
Representative Steve Unger
Unverified
0:34
audit summary Without objection we filed these reports ok all right the
Speaker 3
0:39
first report with findings is the department of agriculture Fy24 report which contains one finding the department discovered an
Speaker 4
0:46
erroneous unauthorized payroll disbursement of $1240 resulting from an employee's paycheck being deposited into an incorrect bank account. Further review revealed that the employee's direct deposit account information was changed without the employee's authorization by an individual who gained access to the employee's email the department was unable to recover the funds and additionally the department fied to notify us as required by Arkansas code this finding was referred to the prosecuting attorney and the attorney general. make sure that concludes the findings for the department of agriculture.
Speaker 10
1:22
are there any members of the agency here that would like to come to the table thank
Representative Steve Unger
Unverified
1:30
you oncece you're once you're in place would you please identify yourself for the record department of agriculture Inuazaki chief fiscal officeficer
Speaker 15
1:55
Fredheado I'm his deputy with the department of agriculture. thank you
Representative Steve Unger
Unverified
2:05
the gentlemen have have a statement about this yes
Speaker 21
2:09
sir thank you again Mr Chairman members the department agrees with the finding and we've implemented controls in place to ensure that this does not happen going forward.
and in the controls that we have in place Going forward in case of a payroll change or a direct deposit change request from employees now we'll we'll we'll be contacting the employee himself making the request in addition to contacting the employee will also be requesting that they verify that the
date of birth their social social security personnel number home address phone number and also their bank account number Members do you
Speaker 23
3:06
have any questions I see senatoreyton thank you
Representative Steve Unger
Unverified
3:13
Mr Chair. So was there any way
Senator John Payton
Unverified
3:21
to track the funds and who the culprit was and and be
able to make sure this that that person didn't say hey it worked one time now I can do it 10 times to a different agency or something I mean
Speaker 21
3:41
have have we been able to track that so s since since since it happened the RHR department reached out to OPm to report the issue and also our CIO the chief information officer was also involved at
coordinated also with the office of state technology and I believe an identity theft report was filed by the chief information officer with the littleRock police department no report as of yet on the from the little rockck police department so as far as you know the investigation's underway but
Senator John Payton
Unverified
4:26
they have not identified the
Representative Steve Unger
Unverified
4:28
culprit. to the best of my knowledge yes ok thank
Speaker 32
4:43
you are there any other questions yes sir go ahead thank you chair and this may be more of a comment than a question but you know I know that I've been seeing a lot of uptick and wire fraud which is kind of the same sort of thing where someone intercepts an email they send wiring instructions it goes to a bank account but one thing I've seen has changed here recently is now the scammers are
in addition to personating the email they will then hijack the phone numbers so that when you call to verify you're actually talking to the scammer and so just may have a thought of instead of verifying you know have calling the employee verifying email or social security number and birthday which obviously since equifax and things is already out there. I mean essentially your information is everywhere now maybe one way to resolve the problem is like we will not make payroll deposit changes unless you actually physically come into the office and hand us the piece of paper with the information just just maybe a
thought just because I'm I know that my my day job I've seen
Speaker 34
5:32
this it's getting a lot more sophisticated out there with these these hijackings.
Representative Steve Unger
Unverified
5:40
members are there any other questions Senatoreyton thank you and
Senator John Payton
Unverified
5:45
I guess that kind of goes back to my question maybe do you know if it was a sophisticated hijacking by some foreign actor like that or or could have just been a relative or a a angry spouse or something
Speaker 21
6:05
dotgov the employee's actual email address so there's there's no telling we're actually who who's actually initiated that that request OK thank you Are there any other questions Without objection we will
Representative Steve Unger
Unverified
6:25
file this report thank you gentlemen
Speaker 9
6:39
all right the next report we have with findings is the Department of Education Fy24 report and this
Speaker 4
6:45
report contains four findings the first finding according to the Learns Act, the division of elementary and secondary education shall administer the Arkansas Children's Educational Freedom Account programme Educational freedom accounts are state funded accounts used to cover approved educational expenses including private school tuition curriculum tutoring etc. During our review we discovered that the AC did not have controls in place to review
students with EFA's for duplicate enrollment in a public school based on analysis of VFA's it disbursed funds to EFA providers and state fiscal year 24 we identified 239 students with potential duplicate enrollment in a public school during the 2324 school year which could result in duplicate funding to either the public school or to the EFA provider a test of34 of the239 students revealed 28 inches of duplicate enrollment. the second finding
the Arkansas Constitution states in part that no money shall be paid out of the treasury until the same shall have been appropriated by law and then only in a course was said appropriation Act572 of the wre regular session authorized a $10 million appropriation for the merit teacher incentive grants to local education agencies in addition to the $10 million that was dispersed from the merit teacheracher incentive appropriation the AC used almost $2 million in unexpended funds appropriated for the national board offessional Teaching Standards Financial incentives
to pay the remaining merit teacher incentives on June 21st,2024. the initial appropriation of $10 million was an estimated amount and did not include fringe benefits Appropriations are established so that funds can be used for authorized purposes these funds were appropriated for one purpose but used for another in violation of the constitution the third finding Ad rules govern national board for professionals teaching standards incentive payments based on teacher certification dates and school poverty levels
annual incentive payments may be 25,005,000 or 10,000 dollars. specifically ad rules allow for a teacher who is working full time in a public school that is not a high poverty school or a high poverty charter school to receive a yearly incentive payment of $24,500 for no more than five school years a review of48 incentive payments identified one instance where an eligible recipient that was not in a high poverty school was paid5,000 dollars rather than $2500 which resulted in an overpayment
of 2500 dollars. and the fourth finding the board of trustees for the Arkansas schools for the blind and deaf was informed on July18,2023 that one gatorer utility vehicle valued at about $10,000 was stolen The Ac notified law enforcement of the incident but did not report the theft to the chief fiscal officer or to Arkansas
Speaker 9
9:31
legislative audit as required and make sure that concludes the findings for the department of Education. thank you with
Representative Steve Unger
Unverified
9:39
the agency representatives please come to the table and identify
yourselves Courtney Salisford, chief of staff department of edd
Speaker 45
9:57
g re g rogers department ed good afternoon. do
Representative Steve Unger
Unverified
10:04
you have any statements to make yes sir on the
Speaker 48
10:07
first finding, this was the first year of the UFfa kind of looking at it now we
do have an a standard operation procedures in place now we are looking at the looking at enrollment more often I think we're doing it quarterly now we are checking those through tryan we're going through each one of them that may come up as showing us duplicate working with the the private school or the public schools sometimes it's a public school that's coding them as a residents resident attendee when they shouldn't been because they're only taking some of the classes there so we're working with that we're also
making sure that each student has identified a unique identifier number so we can compare that quickly quicker and trying to make sure that we are trying to catching these duplicates on the front end now we've also after this we've partnered with we've asked OigG to come in and just do an overall look at the entire program to help us identify any additional weaknesses or any ways we can make this program stronger and making sure we are tracking and figuring out how these are d up lic ate duplicates being put into the system
on the next one the the merit teacher Bay we did meet all the obligations for the national board that was a teacher incentive program so we use any excess appropriation we had there to make sure that we were making sure all the teacher merit pay payments went out to those teachers at that time we've fixed that also now we've gone through and we've got a federal appropriation we're using right now as well as if we ever need any additional appropriation our appropriation bill allows
act allows us to have two appropriation transfers throughout the year or if we're in a fiscal session we'll take care of it that way so we we've got things in place to make sure we have the appropriation in that line item now the third one which was the teacher that was just a run a mistake that was made they keyed it in as eligible for the5,000 when it wasn't we went back and checked all the other ones that received5,000 didn't find any additional errors on that we've also added a statement of assurance from the
superintendents making sure they know what's going on with that and we are working with that teacher to make sure that we get the the $2500 bag and then on the last one there was a piece of equipment on the desk school that was was stolen it was reported to the the board for the deaf and blind just they didn't it was we've gone back and retrained our people that went in something that s still out of place for what is required to be filed and that's necessary even before you
take it to your board we've also added additional security out at the blind and deaf school campus now and so we've gone through retrained and added more security to make sure that doesn't happen anymore and I'd be happy to answer any questions thank you
Representative Steve Unger
Unverified
13:03
members do you have any questions Representative Brown thank you Mr
Speaker 31
13:12
chair. regarding finding number one on the overpayments
Speaker 32
13:14
for the students that were enrolled in two different schools is that something that that y'all are
able to recruit bys can you just take that money out of the next payments or how does that work if
Speaker 48
13:25
it actually was an overpayment but just because it was a duplicate in this first year doesn't actually mean it was overpayment if they were registered to take an EFfa they went to that the private school in the first part of the year but for whatever reason that wasn't working out and they went back to the the public school since we were pulling the records on the back end it would show as a duplicate but they were actually in that private school at that time then they went back to their public school so there's instances of that happen but if there was an
overpayment then yes we are able to go back and access that members do you
Representative Steve Unger
Unverified
14:10
have any other questions seeing none without objection we will file this report thank you our last
Speaker 4
14:18
report with findings today is the Department of Health Fy2y24 report and this report contains three findings
the first finding while performing bank regation reconciliation testing we found two instances in which the bank reconciliation did not agree with the book or bank balance even though they were reviewed and approved by supervisors These instances reveal that employees did not follow established internal controls after we questioned the agency correct reconciliations were produced but the new re reconciliations did not includetowny signoffs or dates. the second finding, according to Department of Health internal audit and employee falsified or
altered travel receipts from July 1st,2023 through June 19,2024 for meals and lodging resulting in fraudulent overpayments of about $1500 this amount includes charges for alcohol that were reimbursed in full or in part with34 meals. The employee resigned from the department of healthalth on June 20,2024. This finding was referred to the prosecuting attorney and the attorney general and it was also certified to the bond board the third finding according to Arkansas code contracts exceeding an estimated purchase
price of75,000 dollars shall be awarded by competitive sealed bidding unless they determinations made in writing by the agency procurement official or the state procurement director that this method is not practicable and advantageous and and specifically states the reasons while conducting capital asset additions testing we noted one item costing approximately $117,000 that was not awarded by competitive sealed bidding according to AC staff, evidence of proper purchase does
Speaker 9
15:50
not exist Mr chair that concludes the findings for the department of healthalth.
Representative Steve Unger
Unverified
15:57
you with the members of the agency come forward and have a seat and identify yourselves for the record please Don
Speaker 53
16:17
Adams chief of staff health department Matt Gilmore department
Representative Steve Unger
Unverified
16:23
of health you actually have a question on finding number three last paragraph last sentence
according to the agency staff evidence of proper purchase does not exist could you explain exactly what you mean by
Don Adams
Unverified
16:38
that yes sir that was at the time when the auditors found this particular issue this finding we did not have the appropriate paperwork to show that we had gone through the sealed biard competitive process we have sub subsequently found where we did post an invitation for bid as required on our website for the
public we have found a bid response sheet but we were missing some paperwork in this process so that's what that is referring to thank you members do
Speaker 10
17:10
you have any questions Senatoreyton thank you Mrir so the
Senator John Payton
Unverified
17:16
you almost answered my question in but what was the piece of equipment and who had to sign off on that purchase Wouldn't they have needed to have seen the documentation
Don Adams
Unverified
17:31
it was a steam sterilizer for our public health lab. It was $117,000 purchase I'm not sure I understand your last part of your question we we did do an invitation for bid which is what is required for the byp procurement law we did have a vendor submit a bid and we completed a response packet on that bid what we do not have is the tabulation sheet so there's some indication that we only had one bidder but we
can't prove that for sure and that's the problem with the paperwork being incomplete but the solic it ation was done correctly but
we did not have all the paperwork that we needed to to have well guess that explains why somebody would
Senator John Payton
Unverified
18:15
have signed off on it. I don't know how your agency works but you know somebody had to write a check or sign off on a electronic transfer or something in order to pay for it and I would think that that the person with that responsibility would
Don Adams
Unverified
18:33
want to see the documentation sir the purchase order that we created had the bid response sheet on it of the vendor so we did have that
and what their bid was and they were the awarded vendor we just didn't have the documentation to show if there were other vendors that also bid thank you members are there any other questions
Representative Steve Unger
Unverified
19:06
seeing none without objection will file this report Moving on to new business the next meeting will be held on November 13,2025. and we are adjourned
Agenda
A. Call to order by Chairman.
B. Adoption of minutes of the September 11, 2025 meeting.
C. Review of reports. (Refer to the Summary)
D. New Business. The next meeting will be held November 13, 2025
E. Adjournment.
500 WOODLANE STREET, SUITE 172 • LITTLE ROCK, ARKANSAS 72201-1099 • PHONE: (501) 683-8600 • FAX: (501) 683-8605 www.arklegaudit.gov
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - STATE AGENCIES, Oct 9, 2025 | Agenda | 2 | Official source ↗ |
Speakers
Representative Steve Unger
Unverified
Speaker 4
Speaker 5
Speaker 3
Speaker 10
Speaker 15
Speaker 21
Speaker 23
Senator John Payton
Unverified
Speaker 32
Speaker 34
Speaker 16
Speaker 9
Speaker 45
Speaker 48
Speaker 31
Speaker 53
Don Adams
Unverified