Legislative Joint Auditing-Counties and Municipalities
Video
Transcript
1 document
Machine transcript
May contain errors. Verify important quotations against the official video.
About transcript accuracy
- Source
- Whisper
- Model
- ggml-large-v3-turbo.bin
- Processing date
- October 6, 2026
I call this meeting in order, Chair sees a quorum. I think we're ready to proceed, but before we get started, I'd ask that Representative Carol Darby lead us
Representative Carol Dalby
Unverified
0:12
in a word of prayer. Let us pray. Father in the quietness at this
moment, please turn our hearts to the remembrance of this day 24 years ago and the devastation of the hijackers that they put upon our
country and help us to remember all of those who lost their life help us to always remember that help us and guide us as we recognize those who ran to the disaster and gave up their lives and help us to always hold in our prayers and our thoughts the first responders who stand between us and those who would like to do evil. Father, I pray for our country in this time of turmoil and from the events from yesterday. As each person, no matter the political spectrum, their ideology, their
side of an issue, they have a right in our country and a sacred right to be able to speak their words and to express their views. And let us always remember that each person has that right and we hold each person that was affected by the tragedy from yesterday in our hearts and in our prayers. Help us to resolve to turn down the rhetoric and help us to resolve to listen to others. Father, I pray for this committee as we do the people's work. Help us to be discerning
in our thoughts. Help us to be probing in our questions and help us to always help folks to come to a resolution that will help the citizens of their cities and counties. Be with us now as we go throughout this day, and on this solemn day, let us also remember Senator Gary Stubbefield. A true example of a statesman in our state and
one that we need to always remember that Senator Stubbefield believed what he believed, but he always had a smile on his face and a willingness to listen to others. Help us to adopt that. Be with us now as we go throughout this meeting. In your name
I pray. Amen. Amen. First item on the agenda is the approval of the prior minutes. I need a motion and second
to approve. Motion second. All in favor say aye.
Aye. Any opposed? all eyes
have it thank you next we will recognize staff for the following agenda items
Speaker 11
2:48
thank you mr chair uh item c on our list is to update on the private reports
Speaker 13
2:55
for delinquent december 31st 2022 water and sewer reports in your packet you
Speaker 14
3:01
had uh two lists the first one being the 22 list in the july meeting 43 entities were
Speaker 11
3:10
placed on escrow for their turn back
for lack of providing a december 31st 2022 water and sewer audit report
Speaker 14
3:20
since that meeting we've received 1622 reports uh additional 1123 reports and we've had 224 reports being filed with us additionally we had one entity the city of town of pollard they provided us with adequate documentation to certify that they had less than 100 connections in all three years so
three entities delight horseshoe lake and pollard their turn back was reinstated and
Speaker 11
3:52
earlier today an executive committee they authorized that to be done retroactively to the date the letters were were delivered to the treasurer, so they're receiving their term back as of today. And that leaves us with 40 still on the list of being escrowed until we receive per 14, 234, 120, all current reports which would be reports
And that's our report, Mr. Chair. Without objection, I move that we file this
report. Seeing none, all in favor
Speaker 13
4:36
say aye. Aye. those opposed saying none the motion passes moving to uh agenda item d the update on private reports for delinquent uh
Speaker 11
4:45
water and sewer reports for december 31st 2023 uh staff was notified i mean
Speaker 14
4:50
staff notified the committee in july meeting that there were 64 entities that were now 18 months
beyond delinquent for their 23 report since the july meeting we have received 45 of those reports so we're down to 19 lacking the 2023 reports no action was taken on on these other than to send them a letter and we've had great response to that letter in the july
Speaker 11
5:16
meeting so these entities all are continue are currently receiving their turn back that is our report mr chair without Without
objection, we will file this report.
Speaker 18
5:28
Seeing none, all in favor, say aye. Aye. All opposed, none.
Speaker 13
5:36
Motion passes. Agenda item number E, update on private reports for delinquent December
Speaker 14
5:42
31st, 2023 municipal reports. In the July meeting, staff reported there were four cities that had yet to file their December 31st, 2023 report. Committee asked staff to send them a letter notifying them that those
Speaker 11
5:59
were now over 18 months due.
We have received all four of those reports, or all the cities that have elected to receive private reports are in compliance now. That's our report.
Without objection, we will file this report. Seeing none, all in favor say
Speaker 18
6:16
aye. Aye. Those opposed, saying none, the motion passes. Item number
Speaker 13
6:35
F is to discuss the non-compliance with the municipal county law for the city of Rockport.
Speaker 11
6:42
Is there a representative from the city of Rockport here today? Some of the officials have notified me that they weren't coming. On page 17 and
Speaker 13
6:55
18, with the pleasure of the committee, we'll go ahead and present this report. City of Rockport, 2023
Speaker 11
7:05
and 2022, under the mayor. Accounting procedures from municipalities are set forth in Arkansas Code 1459.101 through 119.
The city was in noncompliance with these codes and other accounting procedures as noted below. Pre-numbered receipts were not issued for all funds received, this is a repeat finding. Cash receipts journals were not properly maintained to include all receipts and will not reconcile the total deposits per the bank, this is a repeat finding. Cash disbursements journals were not properly maintained to include all disbursements and will not reconcile the total disbursements per the bank, this is a repeat finding.
Bank accounts will not reconcile, this is a repeat finding. Adequate supporting documentation was not maintained for tested disbursements of over $16,000, which represents 17% of the test for 23 and over $26,000, which represents 58% of the test for 22 respectively. Without adequate supporting documentation, validity of these purchases cannot be determined. That finding was turned over to the prosecutor attorney as well. Continuing on page 17 under the mayor.
City has not obtained an audit or agreed upon procedures and compilation report for the city sewer system since 2018. This is non-compliance with Arkansas code. This is a repeat fine in the previous two reports. You will note on your 2022 list Rockport is among those, so they are currently not receiving their turn back. Page 18 under the district court clerk. The district clerk was in non-compliance with Arkansas Code and
proper county procedures as noted below. Bank reconciliations were not properly prepared. This is a repeat finding from the previous report. Cash disbursements journals were not properly maintained to include all disbursements and were not reconciled to total disbursements per the bank. This is a repeat finding. Under 1459.117, when non-compliance, a substantial
Speaker 14
9:10
non-compliance is recommended, that code allows for this committee to notify the city and
put them on a 60 day clock to get in compliance. When that 60 day clock expires, then without being in compliance, 50% of their turn back will then be escrowed until they become in compliance. So that's what we need to either discuss today or Defer it till a member of the representative from the
Speaker 31
9:38
city is here. That would be the will of the committee.
Speaker 36
9:57
Yes, Senator Johnson. Thank you, sir. Has the staff received any communication from Rockport indicating, A, that
Senator Mark Johnson
Unverified
10:05
they could be here another
Speaker 39
10:08
time, or B, why they weren't able to be here? I've talked to
Speaker 41
10:13
the district court clerks. Both of those had medical
Speaker 11
10:16
issues today, appointments today. I asked
Speaker 14
10:20
about the mayor at that time. They didn't know for sure, so I didn't have anything for sure there. We are there doing the 24 now, the current report.
This motion or this discussion would be about their 25 records. So we'll be there periodically. We don't do that engagement
Speaker 31
10:38
on site, but we'll be there periodically. When you say you're there, you're currently doing the report. We've got their
Speaker 14
10:48
records for 24 in our possession. Yes, sir. So during this 60-day period, if that's the will of the committee, we will
Speaker 31
10:54
be in constant contact with them. But they did, the district court clerk, to answer your question, yes, She reached out to me.
Senator Mark Johnson
Unverified
11:02
Ms. Shockley did. Okay. Again, my memory can fail me sometimes, Mr. Chairman, but I
believe that Rockport is one of those municipalities that has been, shall we say, perilously close to violating the speed trap provisions in the law. I just want to make sure that we're keeping a close eye on that. All right. Senator Payton. Thank
Speaker 45
11:25
you, sir. Thank you, Mr. Chair. Just to be clear, Rockport turn
Senator John Payton
Unverified
11:31
back is already on hold because of the other situation, correct?
Senator Ben Gilmore
Unverified
11:34
That is correct. Okay, thank you. Senator Gilmore? Well, Senator Payton asked one of my questions. The other question, just for clarification, you said that, tell me who all you'd talk to about being here. Would you go through
Speaker 14
11:49
that again? Both Darlene Shockey and the other
Speaker 11
11:52
district court clerk, Ms. Orrell, I think that's how she pronounces that. Did not hear from the mayor. And you did not hear from the mayor? Did not.
Speaker 14
12:01
Not directly, no, sir. Not directly. She said she didn't know what his plans were when I talked to Ms.
And she who? Ms. Shockley, district court clerk. Okay, okay.
Speaker 31
12:10
Okay, but we attempted to reach the mayor. Yes, sir. He was sent an invitation letter, which created Ms. Shockley to call
Speaker 14
12:16
me, so I know they received it. So the city had the letters in hand, yes, sir. Okay, okay. Was
Senator Ben Gilmore
Unverified
12:21
there any other attempt other than the letter to call the mayor or anything like that? We were
Speaker 11
12:26
there during the course of the 24 audit, and I instructed to ask one of our staff members to have this discussion so they understood
Speaker 31
12:32
what was going to be discussed today. Fair enough.
Senator Ben Gilmore
Unverified
12:35
So he should have been, or they, the mayor, should have been fully aware.
not losing my mind as a gnat up here. Does anybody else have
Representative Carol Dalby
Unverified
12:51
any questions on the committee? Representative Dalby. Thank you. Could you have Mr. Archer explain one more time the necessity for this particular
Speaker 63
13:01
statute and what it is that the audit is
Speaker 14
13:06
asking? 1459.117 was put into law to create compliance with the Municipal Accounting Law, which is 1459.101 through 119.
That's the receipts, the disbursements, all the bare bones necessity to keep a set of books. And the legislature at one point put this into effect to hold them accountable so that after so many non-compliance, there was some sort of action that could be taken. And it's my understanding. And then this allows for a 60 day clock. They get 60 days of grace to get it in order, starting vote of this committee.
And then at that time, we'll reassess if they hadn't contacted them. And 50% of their escrow, in this case they don't have any, but if they were to get their audit and they're still not in compliance, 50% of their turn back would be escrowed for another 60 days to get them in compliance. And at that point, they would lose their turn
Speaker 31
14:03
back and it would be redistributed to the other cities and state. What is the will of the committee?
Speaker 69
14:16
Senator Johnson? I'm not sure if you request a motion, Mr. Chairman, if you let me know what you would hear, I would be happy to- Sure, go ahead. Does the chair have a recommended motion just to accept it? Well, I'm
in favor of just moving forward and filing the report unless anybody has an objection. I guess that's what I'm trying to say because people have asked questions and there's been some discussion, so instead of just running off, I just want to hear what people have to say.
Senator Mark Johnson
Unverified
14:48
So with that being said, Mr. Chairman, I'll respond by saying this. If the staff recommends, it's okay, let's go ahead and do it. Certainly, I'd make that motion. On the other hand, they're in the middle of it, and I don't want to be putting the cart ahead of the horse. So if you request, I'll make that motion. All right, and then Senator Gilmore, I
think he had something he wanted to see. I think just, again, another
Senator Ben Gilmore
Unverified
15:10
point of clarification. So the motion would be to file the report, okay, because they're turned back. It's already being held at this point due to the other circumstances.
We've had a bunch of discussions, so I just want to make sure I'm interpreting the committee right. Yep, I'm with the
Senator Mark Johnson
Unverified
15:27
chairman. Thank you. Mr. Chairman, if I can.
Yes, Senator. And you feel free to jump in and fill in the committee as you see fit. But as you know, in executive committee today, there was a discussion of what the law says versus what the discretion of the committee is. And it appears from what Ms. White told us that our hands, if we follow the law, are tied on giving them another bit of discretion to be in compliance with the law.
There are certain things we must allow to go forward and not, in other words, we can't waive our own previous motions, but we can't waive anything that's in the statute. Is that basically,
Speaker 84
16:06
Ms. White? Can I make a note? This, and you
Speaker 14
16:10
correct me, this particular law allows staff to bring the situation and say this is, in our view, professional judgment. They're in substantial noncompliance. And then it's y'all's discretion at that point whether or not y'all move forward or not. The law does not require y'all to put them on the 60-day clock.
It does not require that. It gives you the option. Once you make that motion and then other things take place, once you take a motion to make a vote, then that's what we were talking about earlier. But right now, it's full of discretion to this committee. Y'all can either start the clock, wait, defer it, whatever this
Senator Mark Johnson
Unverified
16:44
committee wishes to do. I'm not so sure. I'm thinking, Joe, that maybe we're talking a little apples and oranges here. That's not the exact situation I was referring to. And maybe, Mr. Chairman, you might want to ask Ms. White to clarify so we're all on the same page.
All right. Well, I'm going to give Ms. White just a brief moment to say something, and then I'm going
Speaker 87
17:06
to move forward. Okay. Thank you, Senator
Speaker 92
17:19
Johnson. Emily White, legislative audit. I do think that we might be talking about two different statutes with two different requirements of
Speaker 93
17:26
this governing body under the circumstances.
Speaker 94
17:30
What we talked about at the executive committee was with regard to the mandate on this committee. Once that decision is made to notify treasurer, what Mr. Archer is communicating to you here in
Speaker 93
17:43
this particular section of code is you have the discretion because their turn back is already being withheld to file the report and move forward. Or you could decide right now to put them on notice pursuant to 1459-117 and start that clock that he spoke about.
Speaker 95
18:01
That's a completely separate issue from what we did in July with the water sewer audits. I'm sorry about that. Um,
Senator Ben Gilmore
Unverified
18:10
Senator Gilmour. And when you say start that clock, the 60 day clock, is action then required on us once that clock starts ticking? Not necessarily. Okay. Senator
Speaker 93
18:18
Gilmour. It's on legislative audit to follow up with the auditee and make sure whether or not they're in compliance and then come back and report to you. That's
Speaker 77
18:31
perfect. Thank you. Yes, sir. Um, Rep. Dahlbe.
Representative Carol Dalby
Unverified
18:33
Thank you, Mr. Chair. I think that helped clear up what I was trying to figure out the 60-day clock, and I appreciate Senator Gilmore's question because I think that cleared it up for me. But I guess my question to the chair and maybe to audit would be, in these situations when someone doesn't show up and they've been invited and they haven't come, we usually say, show up this next time and explain to us. And I'm just, I'm not quite sure that I'm ready just to file the report without having them to come before us.
But I, so I don't know how that would play into the statute of the 60 days. I mean. No, I mean, y'all
Speaker 14
19:13
don't have to take any action on the 60 days. If y'all assume that we're there doing the 24, y'all should just defer the report, wait to the results of that before you take action on that. That is perfectly within the rights of this committee. It's one of the three options. So staff would
Speaker 41
19:29
have no problem with deferring, waiting on that, and bringing them here in
Representative Carol Dalby
Unverified
19:34
October. That's a valuable option. Okay. May I? Yes. And I guess that's my point.
We're having other people come in and requiring them, which I think is a good thing, so that people aren't just thumbing their nose at the committee. And I personally would like to have them at the end of the table so we can ask these hard questions of them and find out. But if the committee wants to do otherwise, I'm good with that. That's just
my thought. Thank you. All right, I believe
Senator John Payton
Unverified
20:00
Senator Payton has a question. Thank you, Mr. Chair. And so I guess my question is, what are we expecting them to do in the 60 days other than just show up to state their position?
Because this says it's been referred to the prosecuting attorney. And we know from experience that once it's under investigation, they probably are not going to be very forthcoming with any testimony. And we already have their turn back held in the other situation. I'm just trying to figure out what is it we expect to accomplish in the 60 days, other than them being here to testify. Senator Payton, with regard
Speaker 93
20:38
to the technical components of that question, I'm going to defer to Mr. Archer.
But speaking generally just about when you say it's been referred to the prosecutor, the prosecutor may or may not look at it within the next 60 days to get a good idea of what he or she wants to do with it. So that's something that I couldn't answer. Custom and practice with this committee particularly has been in the last two years since I've been with you has been to subpoena someone who doesn't appear. If they fail to appear so many times, you all have directed the legislative auditor many times to subpoena a person to come in and talk either to this committee or to the full committee later.
Speaker 94
21:17
So you most certainly have that discretion at your capability also.
Speaker 14
21:22
Can I, maybe I can help a little bit. On the first finding, the one that, the noncompliance, the fifth bullet that adequate supporting documentation was not maintained on page, top of page 17, that's the finding that was referred to the prosecuting attorney. Just that one, because there was expenditures there that we couldn't determine whether or not they were for good purposes of the city. The other, that finding and the other four bullets on that,
that triggers the possibility of 1459-117 substantial non-compliance as a whole, two different issues. So the, what would, if the committee so chooses to start the 60 day clock, what they would be required to do we'd send them a letter and say you've got 60 days to correct those five bullets to start issuing receipts start keeping adequate journals and to reconcile to the bank that's what 14 59 117 governs there so that that's kind of the objective of of
Speaker 31
22:26
that code i hope i maybe that cleared things up a little bit hopefully thank you appreciate it So Senator Johnson, were
you going to make a motion a while ago? Mr. Chairman, I did make a
Speaker 118
22:39
motion. Okay, could you repeat it? The motion was that we would file the report. All right,
Speaker 120
22:46
do I have a second? I guess then we'll just file the report without objection and move forward. I think I have
Senator John Payton
Unverified
22:53
a second on that. All right, a second. I'd like to object. I wouldn't give it a second, but I thought that the conversation moved towards not filing
it and putting them under the 60-day clock. Do you recognize me? Yes,
Senator Mark Johnson
Unverified
23:07
Senator Johnson. I think there's enough questions about this. I especially appreciate Representative Dalby's comments. And so at this point, I would withdraw that motion and have a substitute motion that we hold this over until the next month's meeting. Second. Second. Second. All in
Speaker 127
23:24
favor, say aye. Aye. All opposed? Ayes have
Speaker 21
23:31
it. Okay. Okay, next item on the agenda is, I've lost my agenda here.
Speaker 13
23:37
Is the city of Lakeview on page three and five. With
Speaker 14
23:54
go ahead and present this report. On page 3 and 5, we
Speaker 13
24:01
have the city of Lakeview, which is Phillips County, 2023. Under the
Speaker 11
24:06
mayor and recorder treasurer, county procedures for municipal policies are set forth in a municipal accounting law.
The city is not in compliance with these codes during the fiscal year '23, as noted below. Bank reconciliations were not properly prepared. Reconciliations did not include all outstanding checks and contain other errors. Additionally, they were not approved by a municipal official or employee other than the person preparing the bank reconciliation. This is a repeat finding. A listing of all fixed assets owned by the city was not maintained. This is a repeat finding from the previous seven reports.
Pre-numbered receipts were not issued for all sources of income. This is a repeat finding from the previous six reports. Cash receipts journals did not indicate the receipt numbers. Supporting documentation or invoices were not provided for 24 of the 26 disbursements examined. This is a repeat finding from previous seven reports. General
Speaker 14
25:09
fund and street fund disbursements were not always posted to the journal in the proper period. Page four, restricted street funds were improperly dispersed for
water clerk salaries totaling over
Speaker 11
25:24
$8,200 for 2023 in noncompliance to Arkansas Code. The city transferred $2,000 from the general fund to the street fund during 23 as partial repayment for these restricted revenues. Combining the aforementioned amounts with $29,982 due from the street fund from prior years, resulting in a total of over $36,000 due to the street fund at December 31st, 2023. On September 19, 2023, the city passed the ordinance to repay the street fund 10% of general fund revenues until repaid.
However, only 7% of October through December's revenues were paid to the street fund in 2023. Restricted court funds were improperly dispersed for fuel totaling $500 in 2023. Combining the aforementioned amounts with over $2,100 due to the court fund from prior years resulted in a total of over $2,600 due to the court fund at the end of 23.
Restricted fire department funds improperly dispersed in the prior year resulted in a $578 due to the fire department fund at the end of 23. This is a repeat finding. Continuing on page four under the mayor. Although Schedule 1 of this report reflects a cash balance of over $11,000 in the general fund for 2023, review of records revealed that as of December 31st of 2023, the city owed significant amounts to the IRS, Arkansas Department of Public Safety, the Street Fund, and the Court Fund.
As shown in Note 6 of Schedule 3 of this report, when these outstanding amounts are considered, the general fund would have a deficit balance of over $116,000. This is a repeat finding from the previous three reports. The government body did not review the prior report and accompanying comments and recommendations at the first regularly scheduled meeting following the receipt of the report as required by Arkansas code. This is a repeat finding in the previous two reports. Continuing on page five under the record of Treasurer,
authorizations for salaries and wages were not reflected in the council minute. This is a repeat finding from the previous five reports. Federal taxes were not always remitted by the city. The total amount due the IRS from 2017 to 2023 is $105,000. It's a repeat finding from the previous seven reports. The city received grant funds of $22,627 from the Arkansas Department of Public
Speaker 14
28:00
Safety in error. The city failed to return or contact the department to determine proper disposition.
Speaker 28
28:09
Quarter Treasurer Cheryl Carroll is here today from
the city. Ms. Carroll, would you set your
name and position for the record, please? Can you turn your mic on, please? Cheryl
Speaker 141
28:35
Carroll, Treasurer. Thank you, you may proceed. As for the bank reconciliations, I was in error.
I was reconciling just from the bank statements. But I have fixed that. We fixed that. And I did give a list of the fixed access, all that I'm aware that we have. And the pre-numbered receipts and invoices, we have gone and fixed that. And the supporting documents, the reason for the 24 out of 26, we had a flood in January of 24.
And everything in my office was destroyed. The general fine, we are paying street back on the general fine. I think in 23, we did do $2,024. We paid $6,000, and this year we've paid, through August, I believe, over $8,000.
The court funds we paid back, the fire department we paid back. We did pay back the money from public safety. We sent that $22,000 back. And authorization for wages and salaries were included in the 24 minutes. Federal taxes, that should not include, well, when I came in 20, February of 20, I stopped paying the federal taxes and have not missed a month, so they are paid up through March of 23, and we have started paying back.
We got a letter for 2013, where we owed $13,000, I believe, and we made arrangements for $2,000 a month, And we got a letter for 15, which was 1,000 and something, and we paid that in full. But that's
Senator Stephanie Flowers
Unverified
30:49
the only letters that we've gotten so far. Does anybody
have any questions, Ms. Carroll, Senator Payton?
Senator John Payton
Unverified
31:02
Thank you, Mr. Chair. So one of the findings that you didn't
necessarily address is it says the governing body did not review the prior report and accompanying comments and recommendations. Does the city council know what's going on? I mean, obviously the mayor and you do, but it says that this is a similar finding was noted in previous two reports. So at least three times they've had reports that they did not review at their regular meetings.
Yes, sir, we do review. So how do we know the city
Speaker 150
31:38
council knows what's going on if they're not discussing it in their meeting? Well, they are, they are. We are discussing that in the meetings. Do we have any representatives here from your city? Yes, there's a city council member right here, Eva Gammon. If we
Speaker 45
31:57
could recognize her? Yes, would you state your name and position for the record, please? your mic on.
Senator John Payton
Unverified
32:14
If you would, just tell us what the discussion has been at the council level, because what we're seeing says that
Speaker 155
32:24
they did not review the prior report. Yes, sir, we --
Speaker 153
32:29
actually we talk about it every meeting, so we have been revering it. So there's just no action taken? As of now, we have put it -- we have tabled it for right now.
We are trying to come up with some type of plan that we can come up with.
Senator John Payton
Unverified
32:58
One more question. Yes, go ahead. How many meetings have you all kicked the can down the road? How many meetings have you had where you intend to come up with
Speaker 155
33:10
a plan but you haven't yet come up with a plan? Maybe
Speaker 45
33:16
three to four. Okay. Thank you. Okay, any other questions?
Speaker 14
33:22
Mr. Archer? We need to address the September ordinance that they passed to pay back 10%. They failed to
Speaker 11
33:33
do that in 23, they only paid 7%. And according to the Court of Treasurer's account, they're about at 5%, because my calculations show that they need to pay about $14,000 back each year based on the 23 figures. So 27.7207 gives committee a couple choices.
Speaker 14
33:52
One would be to withhold the street revenues, which we did in December on a city similar to this. Or accept an alternative proposal to the 10%, which
Josie Vasquez
Unverified
34:05
it all allows. So those are our choices. Senator Gilmore. question just so I
Senator Ben Gilmore
Unverified
34:14
understand sorry I'm asking a lot of clarifying questions that's okay see you said they did go back through that one more time I thought
what I heard was they had discussions but they didn't
Speaker 14
34:30
actually come up with a plan in September 19th they passed a ordinance saying they would pay back 10 percent
Senator Stephanie Flowers
Unverified
34:36
of unrestricted that was in 23 when we passed it
Speaker 11
34:40
all right September 19th 2023 so we're starting from that point October through the rest of that year
Speaker 14
34:45
they were supposed to pay back ten percent they paid back seven percent so they violated that ordinance okay
Speaker 31
34:51
which puts them into a violation of twenty seven seven two oh seven got it so
Senator Ben Gilmore
Unverified
34:58
question to the to the witnesses please
go ahead thank you mr. chair is there an explanation of why there was you only We only paid back 7%
Speaker 141
35:10
and not 10? Well, I guess I read the ordinance wrong. I looked at the ordinance and I was thinking we were paying
Speaker 117
35:21
back $1,000 every month. Okay. All right, for that month. Okay, thank you.
Senator Mark Johnson
Unverified
35:35
Senator Johnson. I'm not sure who this is for. It might be to the
clerk or it might be to Mr. Archer, but the percentage we're referring to, whether it's 10 or
7, is of their available uncommitted general revenues. That is correct. So that varies from month to month. Okay, so, ma'am, when you say $1,000, $1,000 one month might be 10%, 11%. Next month it might be 7%. But the commitment was to pay back 10% of available revenues,
and I figure that would change if I understand that correctly.
That's correct. Thank you, Mr. Chairman. But it looks like at the end of the year they ended up paying 7% of their
Representative Carol Dalby
Unverified
36:27
total revenue. Am I saying that right, Mr. Archer? Correct. Okay. Rep. Dalby. Thank you, Mr. Chair. Ma'am, I'm curious, on
page 5 of our report, where it finds that authorization for salaries and wages not reflected in the council minutes and a similar issue was noted in the previous five reports dating back to 2016.
I missed that if you addressed that while ago. Has that been addressed? Has the City Council taken any action? On complying with that, listing the salaries, reflecting them
Speaker 141
36:58
in the city minutes? Well, I wasn't aware of that until last year when we got the finding. Okay, so... And so we did, it is addressed in the 24 minutes.
Senator Stephanie Flowers
Unverified
37:15
We did correct it and address it in the 24 minutes. So it's
Representative Carol Dalby
Unverified
37:20
been done for '24, but no action was taken for this particular audit. Is that what I'm understanding? Is that correct? I'm sorry, say that again.
Speaker 185
37:31
You took the corrective action for the year 2024, but you
Representative Carol Dalby
Unverified
37:36
didn't take any action for this audit when you found out about it. For
Senator Stephanie Flowers
Unverified
37:42
'23? Y'all just let it go. No, I didn't do anything for '23.
Representative Carol Dalby
Unverified
37:46
I didn't. Okay. And then when you go on down there, if I may, Mr. Chair, ask
a couple more questions. Yes, you go ahead. Thank you. There's a lot of money owed to the IRS. In 2023, there's $105,000, and similar issues were noted in the previous seven reports dating back to 2014. From 2014 to 2022, did all the IRS, has all that been paid back to the IRS?
Speaker 141
38:20
No, ma'am, and that's actually through 2019. Okay. When I came in 20, I started paying the taxes. Okay, so. We ran that letter from IRS for 2013 and 2015. We paid 2015, 2013, we requested a payment of $2,000 a month
Senator Stephanie Flowers
Unverified
38:44
and we paid $2,000 to $4,000. I think we just sent $2,000.
Representative Carol Dalby
Unverified
38:51
Are you still paying that amount? Yes, ma'am. Okay, so,
Senator Stephanie Flowers
Unverified
39:00
but they're still owed $105,000, is that correct? Well, I guess you just take what we paid off. It says they sent the amount
Speaker 141
39:08
by the year, and as they send them, we are paying. Can you
Representative Carol Dalby
Unverified
39:14
happen to know off the top of your head what your gross receipts are each
month? I mean, do you have the money to pay all of this?
Speaker 189
39:24
No, we don't. Okay, that's what I thought. Thank you.
Mayor, what's your plan to repay back the money? Because you're currently not doing it now, so what's your
Speaker 194
39:38
plan moving forward? We are paying that. You mean the IRS? Well, no. Not the IRS, but the other money. The street fund. The street fund. We're paying that 10%.
Speaker 141
39:49
This year we haven't missed a payment of 10%. But
what about the money that you're late on that you were supposed to pay?
You're in arrears on some of it, so you
Senator Stephanie Flowers
Unverified
40:01
need to get that brought up. We haven't made a plan to repay it. I guess
Speaker 13
40:15
we'll discuss that at the next council meeting. The committee can either
Speaker 11
40:20
accept that or ask for a different pay plan or start escrowing their street revenues. I mean, they're in violation of 2770-207 because that's 7%.
I'm going to say in absence of a plan from the city, what's the
Representative Carol Dalby
Unverified
40:37
will of the committee? Representative Dobby. I would move that we follow the statute of, is it 27-7? 207. 207. That's what I jotted down, 27-7-207.
All right, Senator Crowell. I second. All in favor or any discussion? All in favor say aye. Aye. Ayes have it.
Speaker 11
41:00
Just to clarify, we're escrowing, street turn from that,
Speaker 31
41:06
correct? Street, yes, until they get paid in full. Yes, Senator
Senator Mark Johnson
Unverified
41:16
that. In the immortal words of the late Yogi Berets, deja vu all over again. We see this happen so many times. And to clarify for people in the
audience that don't understand what we mean, You get general fund turned back, and you get street turned back.
That's supposed to go to roads and
bridges and fill potholes and whatever. But sometimes cities put that money in the wrong account or spend it on things other than the street things. So it's their money, but when we're withholding, they're paying themselves back. They're not paying it back to the state. They're moving it from the account they shouldn't have put it in into the account that fills potholes and things that they should put it in.
So I just want to clarify it
for anyone that doesn't understand what we're dealing with because this happens so much. As Senator Gilmore and I were talking earlier, we don't know how to systemically stop this or
slow it down. We're turning off the tap. They're not getting more into that account, but that doesn't replenish the needs of that and meet the needs of those citizens. I want to make that comment that just because we do this in this case, it was the appropriate thing, and I voted for Representative Dalby's motion, but I feel like we're chasing our tails sometimes on this.
I appreciate your comments, Senator Johnson. This is a chronic problem,
but that being said, I move we
Speaker 209
42:51
file this report. Thank you, ladies. I thought we just voted on it, didn't we? Okay. Sorry,
Representative Carol Dalby
Unverified
43:00
I was thinking of other things that possibly could trigger. No worries. You know, my mind sometimes chases rabbits down the hole.
Speaker 13
43:13
No worries. Mr. Archer. Moving on to the next item agenda, we'll go into the reports. Starting on page one, we have eight deferred reports from
Speaker 11
43:27
the previous meeting in July. We have the city of Harrison, 2023, under the district court clerk. Bank reconciliations were not properly prepared for all accounts and balances remaining in the bank account were not identified with receipts issued for cases not yet adjudicated and payments made on all unpaid individual time accounts,
as required of Arkansas code. This
Speaker 28
43:47
is a repeat finding of the previous year. I believe we have District Court Clerk Sandy Wright here
to answer questions. Would you state your
Speaker 214
44:05
name and position for the record, please? Yes, I'm Sandy Wright, and
Speaker 216
44:13
I'm the Court Clerk for Boone County. You're recognized. I have been working diligently to identify the balance, and I have it—I've made good progress getting it decreased.
Senator Ben Gilmore
Unverified
44:32
Senator Gimbel. Thank you, Mr. Chair. Ma'am, you said you made good progress. Would you
Speaker 216
44:50
mind elaborating on that a little bit? The balance is a result from the hot check fund that had been going on for several years. And so I have worked and this was the finding at the end of 2023.
In 2024, I've worked really hard. There were two accounts when Judge Campbell took the bench, or when she came in, after Judge Kirkpatrick, we opened up a new account. And so this is our old general fund. And so I now have the balance down around $100 from, it was quite a bit in there. And so now in our main account fund, I have worked this year.
And so by the end of this year, I should have it
Senator Ben Gilmore
Unverified
45:41
identified. Okay, and by the end of this calendar year or fiscal
Are there any more questions? I'm saying none, I recommend that we file the report.
Speaker 11
46:10
Thank you. Continuing- You can dismiss her. You're dismissed. Okay, thank you.
Speaker 14
46:23
Continuing on page one with previously deferred reports. We have the Yorktown Water Association 2024. This is a private
Speaker 11
46:30
report. We deferred this from July because we lacked a proper response. We have since received a proper response, and staff recommends that we file this report.
Speaker 212
46:44
Without objection, we'll file this report. On page two,
Speaker 11
46:54
under the record of treasurer, bank accounts were not properly reconciled and were not approved by someone other than the preparer as required of Arkansas code. This is repeat finding since 2008. I believe
Speaker 28
47:07
we have a quarter treasurer Deanna Dotson here today to answer questions.
Ms. Dotson, would you state your name and position for the record, please?
Speaker 75
47:26
I'm Deanna Dotson, City Clerk of Jackson Board. Yeah, and that red light needs to be
Speaker 233
47:37
on. Okay. There you go. I'm Dana Dodson with the city of Jacksonport. All right, you may proceed. That got me on the bank. My bank account, it wasn't matching. It was my, well, my bank statements weren't matching.
It was my, what we had in our city meeting. I guess you'd say, like, on our funds that we get back and the funds that we give out on our state taxes and stuff, they wasn't matching up. And because I wouldn't show how to properly reconcile it. And I've had Miss Tiffany Tillman came down, and Kimberly Myers came down last month, and they went over it all with me. And now we've got it all fixed up, and I've got my new books and stuff that I can start working with to get everything straightened out. Are there any questions?
Representative Carol Dalby
Unverified
48:21
Representative Dalby. Thank you, Mr. Chair. Also, it says your response was you've got someone else lined up to approve it other than you.
Senator Jane English
Unverified
48:27
Yes, well, the mayor had been signing off on it, but she wanted him to sign off on the reconciliation side of the bank statement, and he'd been signing the other side of it, so she just wants him to sign on the opposite side of the bank statement, saying that he approved it. Okay, so you've got that all worked out? Yes, ma'am. Okay,
Speaker 161
48:46
thank you. Are there any other questions? Without objection, we'll follow this report.
Speaker 14
48:52
Thank you for your testimony. Thank you. Continuing on page two of the
Speaker 11
49:00
city of Joyner, under the record of treasurer, the bank statements for the general street Act 833 funds were not properly reconciled, noncompliance with code. A similar finding was noted in the previous seven reports. The cash receipts and disbursement journals for the general street Act 833 public safety funds were not properly posted, noncompliance with code. similar finding the previous two reports a separate account was maintained for the street
fund as required by arkansas code however sanitation revenue and disbursements were co-mingled within the fund making the activity unclear as the street funds being spent properly we
Josie Vasquez
Unverified
49:40
vaquez here to answer questions to get it right
hi my name is josie vasquez and i brought
Speaker 215
49:50
council with me elizabeth mccullum Elizabeth McCollum.
Josie Vasquez
Unverified
49:54
All right. You all are recognized to speak. On the first finding, the city did hire a CPA the end of 2023.
We are using their software now. She actually oversees, she does all our 941, she does pretty much everything, I just do payroll. I believe on some of the things, one of the reasons why the bank reconciliation wasn't following correctly is because some of the checks were kind of, they never were cashed, so they were just lingering there. So, some of the checks were still showing some of the previous, on the upcoming months or whatever. But other than that, we did hire, we're using
a new program now. I think 2024 they're working on that now and so far she said that looks good. So, I think the new program and by her helping us, it's going to help with that. Are there any questions? Without objection, we'll
Speaker 115
50:51
file the report. Thank you so much. Thank you. We'll
Speaker 13
51:04
skip down to item number six on page six.
Speaker 14
51:08
We have the Compton Water Association 2023, which is a private report. We
Speaker 11
51:14
have not received proper responses on this findings. And staff recommends that we defer this report. Without objection,
Speaker 228
51:27
I'll file this report. Oh, defer it. Excuse me, defer, I'm sorry, we'll defer this report.
Speaker 244
51:34
Continuing on page six, we have the Humnope Water Department 2024, another private report.
Speaker 11
51:42
We also have not received proper responses for this finding. Staff recommends that we defer this, oh, we did receive that one? Okay,
Speaker 14
51:50
we have received one this week. Staff recommends we file this report. Thank
Speaker 228
52:01
you, Charlie. Without objection, we will file this
Speaker 244
52:08
report. Continuing on page six, we have the Outside Kings and Rural Water Association.
Speaker 11
52:15
We have not received proper response for this one. Staff recommends that we defer
Speaker 228
52:23
this one. Without objection, we'll file this report. Defer it. Excuse me,
Speaker 13
52:29
defer. Starting on page seven and eight, we have one report that has been certified to the bond board
Speaker 14
52:35
and referred to the prosecuting attorney in the AG's office. It's the city
Speaker 11
52:41
of Dumas, 2022, the finance director. The payroll preparer received an extra salary payment of over $1,100 in December of '22.
After multiple requests for documentation, the payroll preparer provided a stipend agreement signed by the mayor authorizing the additional payment. However, we were unable to determine if this agreement was approved by the council. On page eight, under the police chief, the city failed to establish proper internal control related to bond and fine payments. The discrepancies included payments being receipted and voided by the same individual, who also was responsible for preparing the bank deposits and taking the deposits to the bank.
It appears that the lack of internal controls resulted in over $2,400 in cash receipts not being deposited or detected in a timely manner. This report has been referred to the prosecuting attorney and the attorney general and filed with the bond board. Staff recommends we defer if there are no questions.
Speaker 115
53:42
Without objection, we'll defer this report. File. Say that again. You need to file this. Excuse me, file this report. I thought you said defer.
Speaker 28
53:53
I'm sorry. That's okay. We have 11 reports that were referred to the
Speaker 11
53:59
prosecuting attorney in the AG's office. Starting on pages nine through 11, we have the Searcy County Fair Association, review of selected transactions January 1 of 2019 through December 31st of 22. We
Speaker 28
54:12
have staff member Michelle Ashley here to present this report. Thank you.
Representative Nicole Clowney
Unverified
54:18
This report is issued pursuant to a request from the 20th Judicial District Prosecuting
Attorney to review transactions related to facility rental fees of the Searcy County Fair Association. The review was conducted primarily for the period January 1 of 2019 through December 31st of 2022. Searcy County Fair Association is a non-profit corporation governed by a five-member Executive Board of Directors. The association sponsors the annual Searcy County Fair and other events such as pageants and livestock shows. During the review period, funding consisted primarily of facility rental fees, event proceeds, donations, and state grants.
Audit's comparison of rental dates noted on calendars with bank deposits that indicated rental fees revealed approximately $2,123 in undeposited funds for the years 2019 through 2021. In addition, due to inadequate records, staff was unable to determine when the facility was rented during 2022. However, deposit slips indicated that $1,132 was deposited during the year for rental fees.
Several internal control deficiencies contributed to the unaccounted for funds. Audit recommended that the association strengthen internal controls regarding the receding, collecting, and depositing of funds, and that the board adopt written facility rental policies, including the amount of rental fees to be charged. As you can see in the appendix of the report, the association has developed a plan of correction for obtaining rental payments and tracking at the Searcy County Fairgrounds. This report has been forwarded to the 20th Judicial District Prosecuting Attorney and the Attorney General.
Speaker 20
56:09
Without objection, we'll file this report. Continuing
Speaker 244
56:16
on page 12, under Reports Filed to the Prosecuting Attorney and
Speaker 14
56:21
the AG's Office, We have Craighead County 2024 under the county
Speaker 11
56:26
judge. The county discovered that an employee's payroll direct deposit had been fraudulently diverted to another bank account after the employee contacted the county about not receiving her payroll direct deposit. It was determined that on March 10th, 2025, the county made the direct deposit change
after receiving a fraudulent email and authorization form from the county employee's email account. However, the county did not verify the authenticity of this request. This transaction resulted in a $1,363 loss to the county. If there are any questions staff recommends we
Speaker 228
57:04
file. Without objection, we'll file this
Speaker 212
57:09
report. Continuing on page 12 under Wachita County, 2023.
Speaker 11
57:14
And the county judge, the county dispersed funds totaling $55,900 in apparent conflict of Arkansas Constitution, Article 12, Section 5, as interpreted by Attorney General's opinion, 1992-99. 55,000 more than the amount stipulated in the executed contract for services with the Wachita Partnership for Economic Development, Inc. $900 for sponsorships and advertisement. Continuing on page 13, under the Sheriff, a review of disbursements from the Sheriff's
Communication Facilities and Equipment Fund revealed the following. Six disbursements totaling almost $2,400 with no supporting documentation or documented business purpose. Four disbursements totaling over $56,000 that appeared to be for allowable to business purposes, but did not have adequate supporting documentation. Under
Speaker 11
58:16
the sheriff collector received almost $3,600 more in salary payments
than the amount appropriated by ordinance in noncompliance with Arkansas code. This amount included over $1,900 for sheriff duties and over $1,600 for tax collector duties. Due to the lack of Quorum Court approval, we could not verify the validity of the pay increases. The staff recommends we file this report. Without a objection, we'll file this report. Page 14 through 15, we have the Shannon
Speaker 14
58:50
Hills Water, Sewer and Fire Department,
2023 private CPA report. During the audit, it was
Speaker 11
58:58
discovered that the office manager had misappropriated funds by submitting false invoices and writing checks to themselves using a signature stamp found in the office. It was noted that the entity lacked adequate internal controls over cash and check handling processes. Specifically, there is no surrogation of duties between the individual responsible for writing checks, recording transactions, and reconciling accounts.
We also note that a stamp for signatures was being misused in the office and that the bank accounts were not being reconciled in a timely manner, nor reviewed by management or government body. The misappropriations result in the overstatement of expenses of almost $8,700 as of the report date. Adjustments have been made to the financial statements to reclassify this misstatement. As of June 10th, 2025, the former employee, Rebecca Horn,
has been charged and arrested for theft and forgery by the Shannon Hills Police Department. The investigation is still ongoing, and the case is yet to be fully resolved. Staff recommends we
Speaker 228
1:00:08
file this report, no question. Without
Speaker 212
1:00:13
objection, we'll file this report. Continuing on page 16, under the town of Fountain
Speaker 11
1:00:20
Lake 2024-23. Under the mayor and record of treasurer, restricted street fund money is towing $86,000
were improper dispersed for street work in a private community, non-compliance with Arkansas code. This transaction also appears to be in conflict with Article 12,
Speaker 212
1:00:38
Section 5 of the Arkansas Constitution as interpreted by Attorney General of
Speaker 11
1:00:46
Opinion, 2022. I will, staff would like to note that the city passed resolution 01-2025 authorizing the general fund to pay back street fund.
So they're in compliance with 277-207 now. They're just dealing with the Article 12 Section 5. Staff recommends we file this report for any questions. Without objection, we'll
Speaker 13
1:01:14
file this report. Continuing on page 16 of the city of
Speaker 11
1:01:18
Mayflower, 2024, under the mayor, a review of funds collected at the community center revealed pre-numbered receipts were not issued for all funds received in noncompliance with the Arkansas Code.
In addition, during 2024, the mayor collected three checks totaling $750 from the community center for rental fees. According to the mayor, these checks were locked in his office and never deposited. In a council meeting on February 13th, 2025, a council member recommended that these checks not be deposited due to the length of time they had been outstanding. The mayor provided a schedule of events held at the community center. However, without receipts being issued,
Speaker 28
1:02:00
we were unable to determine the amount of rental fees that
Speaker 11
1:02:07
should have been collected. Staff recommends we
Speaker 212
1:02:15
file this report if there are no questions. Without objection, we'll file this report. Skipping down
Speaker 11
1:02:21
to number 17, on page 19, we have a dire water and sewer department, 2024, it's a private report.
The deposits per the proof of cash could not be, did not agree with the deposits per the journal. Five customer adjustments were not properly authorized, and disbursements paid to employees other than payroll were not adequately documented. We have not received adequate responses for these findings. The staff recommends we defer these. Without objection, Will would defer? Continuing
Speaker 244
1:02:57
on page 19 with the Reno Water Department 2024, also a private report.
Speaker 11
1:03:03
Non-payroll disbursements to employees were not adequately dispersed. We were unable to agree the deposits for the proof of cash for the year with deposits per the journal. We also have not received proper responses for these findings. Staff recommends we defer this report.
Speaker 88
1:03:22
Without objection, we will defer this report. Continue
Speaker 244
1:03:28
on page 19, the City of Summit Water and Wastewater. There are actually two separate
Speaker 11
1:03:34
reports issued by private CPA here for 23 and 22.
The findings are real similar, so I'll kind of combine them. Of the five customer adjustments selected in 23, three of them had proper approval documented, two of them did not. For 22, all five of the adjustments were not properly documented, properly approved, excuse me. And the cash and receipt composition for deposits did not match the receipt information for any of the 10 deposits tested, and that was the same for 23 and 22.
We have not received responses from either one of these reports. Staff recommends that we defer to allow proper responses.
Speaker 228
1:04:16
Without objection, we will defer to allow for proper responses.
Speaker 13
1:04:25
We have eight reports with repeat findings starting on page 20, we have the city of Searcy. District Court Clerk Linda
Speaker 11
1:04:33
Wiseman was requested to be here today. She called and said she had a conflict. Staff recommends we defer this report to allow her to be here.
Speaker 228
1:04:42
Without objection, we will defer this report.
Speaker 212
1:04:47
On page 20, we have the town of Edmondson 2024
Speaker 11
1:04:52
under the recorder treasurer. Bank reconciliations were not provided for the General, Street, Fire, Weaver Manor, Act 833, and ARPA funds in non-compliance to Arkansas code. So repeat finding the prior two engagements. Cash receipts journals for the street and general and street funds were not properly classified and
posted. The cash receipts and disbursement journals for the ARPA fund were not properly posted in noncompliance for code. This is a repeat finding. Court of Treasurer Hayward Shaw, Jr., is here to
answer questions today. Mr. Shaw, would you state
Speaker 256
1:05:31
your name and your position for the record, please? Hayward Shaw, Jr., Court of Treasurer, Evans-Arkansas. All right. You may proceed. On the bank reconciliations, well, we're doing it on the computer now with a CSA software.
And on the cash receipts, it's being noted what funding from just like municipal special vehicle registration, stuff like that being read on there. And on the APRA bank account, it's been closed. So, that's he of itself. Are there any questions? This one. Hang on just a minute.
Speaker 258
1:06:24
I apologize. That's okay. Okay, for Arnie. All
Speaker 61
1:06:28
right, if there's no questions, we will accept this report. with that file this report without objection you're
Speaker 178
1:06:35
excused thank you all right thank you
Speaker 14
1:06:42
uh with your your permission we need to back up to item 17 18 19 and 20. that'd be fine the the uh four water departments uh engagements that we deferred those were actually we do have
responses for those. We received them late, but they are being referred to
Speaker 11
1:07:06
the prosecuting attorney. Staff recommends that we file all four of those reports.
Speaker 20
1:07:11
I apologize. Without objection, we will
Speaker 13
1:07:21
file those reports. Okay. Back on page 21, we have the town of Garner, December 31st, 24 and 23. Under
Speaker 11
1:07:30
the recorder treasurer, fixed asset listings were established but not updated to include all purchases as required by Arkansas code.
Speaker 14
1:07:39
In addition, the fixed asset policy has not been adopted by the governing body. This is a repeat finding. Do we have someone here from the city of Garner? Okay. Clerk treasurer Carla Johnson was requested to be here. She did, I see now, she
Speaker 11
1:07:53
did call and ask for a deferral. We recommend that we defer this report. Without a objection, we'll defer this report. Continuing
Speaker 14
1:08:04
on page 21 with the city of Grady, under the mayor, 2024, under the mayor.
Speaker 11
1:08:12
An audit of Grady problem procedures report has not been obtained for the Grady water and sewer system since 2017, as required by Arkansas code. The city signed an engagement letter on September 13th, 2024, for the years 23 and 22. However, the city has not received the report as of report date. A similar finding was issued in the previous four reports. I believe we have Mayor Charles Knight here to answer questions. Mayor, would you state your
name and position for the record, please?
Charles Knight, Mayor, City of Grady. Proceed, please. We,
Speaker 265
1:08:47
Cersei and Associates, was who we originally hired out of Monticello. And during our, they told us in the beginning that they may or may not get to us. And it was recommended by our auditor that we contact them at the completion of the audit because they hadn't, at that time, they sent us a resignation letter and said, well, we kind of told you in the beginning. We've since hired Alan Miner, a different CPA, on September 3rd.
Speaker 263
1:09:18
And so, we're looking forward to him getting started. Are
Speaker 125
1:09:23
there any questions? Senator Johnson. Thank you, Mr. Chairman.
Senator Mark Johnson
Unverified
1:09:29
Mayor, so it's almost a year after you hired them that they said you couldn't do it. Is that, am I
Speaker 269
1:09:36
reading those dates correctly? Well, no, it's not almost a year. I'm not really sure the
Speaker 265
1:09:42
date we actually hired Searcy and Associates. It had
Senator Mark Johnson
Unverified
1:09:45
been months, though. Okay. Again, I realize people bite off more than they can chew sometimes,
but I've just, this puts, you know, we expect these professionals to follow through to the extent possible with their contractual obligations, but you've got it worked out going forward. Yes, sir. All right. Thank you, Mayor. Thank you, Mr. Chairman. Any other questions? Without objection,
we'll file this report. You may be dismissed. On page
Speaker 13
1:10:19
22, we have the City of Portland, 2024.
Speaker 11
1:10:23
Is anybody here from the City of Portland? Okay. Mayor Thomas Frazier requested to defer this report. His family's
Speaker 14
1:10:32
having some medical problems, so we recommend we defer this report. Without objection, we'll
Speaker 212
1:10:42
defer this report. Continuing on page 22, we have the town of
Speaker 11
1:10:48
Powhatan, 2024, under the mayor. General fund disbursed was exceeded the budget by over $17,000 or 67% non-compliance to the Arkansas Code.
This is a repeat finding. We have Mayor Eric Smith here to
answer questions. Mayor, would you state your name and position
Speaker 274
1:11:06
for the record, please? Eric Smith, Mayor of Powhatan. You may proceed. What happened, we were remodeling our community building and we got a rural development grant in 23. And this was a carry over when the contractor turned his final payment in and we paid him. We just over sat
Speaker 276
1:11:25
on our part and we took measures to take care of this for this year.
Are there any questions? Without objection, we will file this report. Thank
Speaker 244
1:11:45
you for your testimony. Thank you. On page
Speaker 13
1:11:48
22 and 23, we have two reports. For the 11th Judicial District East, for 23 and 22,
Speaker 11
1:11:55
we have the same fine in both. The Circuit Court Fine Collection account had an unidentified bank balance in 23 of over $33,000.
In 22 and 21, the balances were 31,000 and over 29,000 respectively. This is a repeat finding from the previous six reports. I believe we have
Speaker 14
1:12:12
Prosecuting Attorney Tim Blair here to answer questions today. Would
Speaker 75
1:12:18
you state your name and position for the
Speaker 279
1:12:21
record, please? Yes, sir. Tim Blair, prosecuting attorney for 11th East Judicial District. You may proceed. What this is, is this is an account where we, as the prosecuting attorney, collect fines and fees and restitution from the circuit court cases.
We took on that responsibility roughly in 2007. It was done by a hand ledger until 2016 when we converted it over to electronic bookkeeping. Because of that, when it was converted over in 2016, there's about $12,000 that we don't know where that money goes because of the ledger. That money is set there since 2016.
The rest of this money is restitution that goes to individuals. Some of this, we just haven't been able to find them. The people have moved or the businesses have gone out of business and we haven't been able to track them. Some of these on going through, we've been able to find and we've been able to correct. On the first part of this, the $12,000, we are preparing an order for the circuit court.
to have that money transfer transferred to county general so that it can be taken off our books. The rest of it, we're just continuing efforts to find those people. Are there any questions? Senator
Speaker 125
1:13:56
Johnson. Thank you, Mr. Chairman. Mr. Blair,
Senator Mark Johnson
Unverified
1:13:59
I don't know it would be the appropriate thing, but is this the kind of thing that ends up going to the auditor for the great Arkansas treasure hunt? I mean, obviously, we want to get it to the people that deserve it and are supposed to get it.
But I'm not sure that's either you or the county's responsibility to try to figure that out. I mean, in some cases, more work than there is money there. Yes, sir. On
Speaker 279
1:14:28
the first part of that, that $12,000, we don't know because there's not records. And that's why we're asking that money to go to county general. That was there when you first took it over. Yes, sir. That's been there since 2016, okay? The rest of that money, we're going to continue to try to find those people.
But after a period of time, we are going to ask that it be moved to
Senator Mark Johnson
Unverified
1:14:54
the treasurer's office. The county treasurer's office? No, no, the state treasurer's office. But that's something that the auditor takes care of, is it not, Mr. Archer? Not the legislative office, the office of the state auditor. Correct, yes, correct. And that's the Arkansas treasurer hunt thing where there's funds- They have procedures in their office to receive that money, that is correct. Right, and more importantly, the mechanism and staff to do it. So is it something we can, I guess that's just something we would leave in your hands, Mr. Clear.
Yes, sir. But you've accounted for it, and that's an important thing. Thank you. Thank
you, Mr. Chair. I just recommend we file
Speaker 13
1:15:43
both reports. With that, we'll file the report. May I have an excuse? Yeah, yeah, I'm sorry, you're excused, please. On page
Speaker 14
1:15:49
23, we have two water department private reports for the Wilmer Water and Sewer Department, one for 2023 and one for 2022.
Speaker 11
1:15:57
Both of these we have not received proper responses on, staff recommends we defer both.
Speaker 178
1:16:03
Without rejection, we'll defer both. Starting
Speaker 13
1:16:09
on pages 24 through 38, we have 49 engagements that have resolved findings. Staff will
Speaker 11
1:16:15
give you a few moments to look through those if there are any questions. Staff recommends we file them all.
Speaker 22
1:16:38
Without objection, we'll file these reports. Pages 39
Speaker 11
1:17:08
through 44, there are 152 reports with no findings.
Staff recommends we file these
Speaker 292
1:17:34
reports. I'll give you a moment to review.
Speaker 61
1:17:40
Without objection, we'll file these reports. Mr. Chair, I have a motion, actually
Senator Dave Wallace
Unverified
1:17:45
I have two motions regarding the
Okay. I mean, I think we've already been on that and voted, so what do we hope to accomplish? We've already voted on it. Well,
Senator Dave Wallace
Unverified
1:18:02
I thought we voted on reports. I didn't realize we were voting on the, uh. Well, I'm
going to say, just through legislative courtesy, if you have something you want to recommend or say, then I'm willing to
Senator Dave Wallace
Unverified
1:18:16
listen. I'm sorry, I appreciate it. Um, I'd like to make two motions and I'd
like to have open for discussion afterwards
if we could. Okay. Okay, my first motion is if a city is on the 2022 delinquent list, their turn back will be reinstated once the 2022 audit is completed or the city has submitted a letter of engagement with the CPA to compete the 2022 audit by a date before December 31st, 2025. The city must also complete their 2023 audit by December 31st, 2025 as well.
A second motion would be if a city is on the 23 delinquent list, they have until December 31st, 2025, to complete the 2023 audit. Yes,
Speaker 300
1:19:03
I'd recommend that. All right, I think
Speaker 301
1:19:07
we just need to do the motions one at a
time. All right, sir. We have a motion on the first one that you read, do we have a second? Second. Second? Second. All right, is there any discussion on the first motion?
Senator Dave Wallace
Unverified
1:19:27
I have discussion. All right, go ahead. Members, one thing I want to ask you to consider is when we do this, when we consider this motion, what harm are we doing to the state by allowing these small cities, basically another 110 days to complete their action? Most of these towns are $400 or less, with rare exception.
You mayors are making maybe $100 a month, and it's just a lot tougher if you don't have a big staff. Jimmy Gadsway and I sponsored this bill, and it's a good bill. If I had do-overs, I'd go back and I'd put the date 31 December until, Except what we did, but obviously I don't have do-overs.
But what harm do we do by extending them that courtesy of another 31 days? I know there's a Tennessee and we get frustrated sometimes with our small towns because we tell them and we tell them and we tell them. But what harm do we do to the state by allowing this motion? And with that, I'll stand by for your questions. Senator Johnson. Thank you, Mr. Chairman.
Senator Mark Johnson
Unverified
1:21:00
Senator Wallace, I feel your pain. Any of us that have been on this committee for any length of time know exactly what you're talking about. The only question I have, and this might be one for Ms. White, but do we, since you and Representative Gassaway did a bill and we all passed it and it's now the law, and it's in statute, do we have this, does this tie our hands and allow us to have the discretion to give an extension like this
as you're stating in your motion? And the morality and the goodwill of it, I don't question at all. But if the law says we must do X and we do Y, then we're technically in violation of our oath. I just want to know specifically what the statute requires of us and, more importantly, maybe that does not allow us to do. Again, that might be a question for Ms. White. All right.
I think Senator Gilmore has a question.
And after that, Ms. White, I'd like for you to come to the table, please,
Senator Ben Gilmore
Unverified
1:22:10
and speak to it. Senator Gilmore. Yes, thank you, Mr. Chair. And I agree with my colleague, Senator Johnson. I, too, want to hear that because that was going to be part of my question because I think it's important that we understand that. Since we're on discussion, I've spoken to Senator Wallace about this, and I've spoken to the chairs of audit previously. I, too, have concern about these small cities. I have some in my district. I've talked to my mayors. They understand how I feel about this.
I do think it's unacceptable that they've allowed this to linger in the way that it has. I also am aware that there are circumstances at times beyond people's control. And given the issues related to being a mayor of a small community with limited resources and the hardships that exist with that, I do believe in grace, we're all in need of it, and so that's not lost on me. I will say coming into this meeting, I think I was far more aligned on this issue of giving that grace.
Because I do think that in some regard, I think there's mayors that are trying. I also believe there are some that aren't trying. I think there's some communities, they just do not care. And I find that despicable. I think if we operated in the same way, I think the people of the great state of Arkansas would stand up and be very angry about it. And so I think in some regard, we have an obligation to stand up for the citizens and the taxpayers of these communities. But again, I know cities that are trying to do what's right.
And so with those, I would like to see them get some grace. But as I have come to understand, there may be some things that prevent us from doing that. So I'm going to sit here and I'm going to listen to legal counsel. I'm going to listen to their interpretation of this. And maybe I can get some clarity because I do want to support Senator Wallace in this effort. And I do want to hold cities accountable for their bad actions. So, Ms. White, it's up to you at this point. Ms. White, yeah, please proceed. Thank you, Mr. Chair.
Speaker 93
1:24:16
Thank you, Senator Gilmore. Emily White, Legislative Audit.
14.234.120 gives this governing body discretion to decide to notify the treasurer of those delinquent reports. But once you decide to notify the treasurer that those reports are delinquent, the onus and the burden on the treasurer's office is a mandate. There's no discretion at that point. The way that I read subsection C of this code section, it says that they shall hold their funds in escrow
until the most recent fiscal year end reports have been filed. And that's what it says verbatim. Most recent fiscal year end have been filed. Now, as an attorney, I focus on the plain language of the statute without having had opportunity to
Speaker 94
1:25:08
know what Senator Wallace and Representative Gassaway's mindset was when this legislation was drafted or when you all voted
Speaker 93
1:25:17
to pass it. However, I can tell you without any ambiguity that that code section says until the most recent fiscal year, reports have been filed.
Speaker 94
1:25:29
In legislative audits' mind, that has always been the end of 2024. And so we are at a turning point here. I can't stand before you because my obligation is to you and to legislative audit and tell you that I think that it's wise to act in direct conflict with how I interpret this code section and how you all can read it for yourself. I think that Mr. Archer
Speaker 93
1:25:52
put it in your packet. So to go back and undo what you all did in July, I cannot advocate for that because in July you made a very clear decision with a motion and a second and pass,
and that was to defer or to refer all of this to the Treasurer's Office. So now to go back and undo that when
Speaker 94
1:26:11
that was done, I'm not convinced that you can do that based on
the plain reading of this code section. Ms. White, has the Attorney General
Speaker 93
1:26:20
weighed in on this in any capacity? My understanding, Mr. Chair, is that the Attorney General's Office has communicated with
Speaker 307
1:26:26
our co-chair, Senator Petty, about this issue and expressed a similar concern to Senator Petty. All right,
Senator Gilmore, you're recognized for a question.
Senator Ben Gilmore
Unverified
1:26:35
I hate to put him on the spot, but heavy is the head that wears the crown. Mr. Co-Chair of
Speaker 309
1:26:46
Audit, could he come speak to that? Senator Petty, would you state your name and position for the
Senator Jim Petty
Unverified
1:26:52
record, please? Thank you, Mr. Chair. Jim Petty, State Senator, District 29. And what Ms. White said is exactly true. The Attorney General's Office has said that they, and we have had conversations with others as well,
but they had a conversation with Emily, and they are on the same page with them in terms of the reading of the law as it is written and the action that you took and what you can and can't do at this point. So they, I mean, I'm not speaking for them. I'm just relaying what they conveyed to me. They're not here today, but they are on the same
Speaker 311
1:27:27
page as legislative audit in that area. Senator Wallace. Thank you, Mr. Chair.
Senator Dave Wallace
Unverified
1:27:36
And I've always had a lot of respect and always will for Ms. White. She's one of my favorite folks. I've always been told that we as lawmakers, that if 51 of us agree in the House or if 18 of us agree in the Senate, we can pretty much do what we want to do. When this bill was written and I carried it, I had some information and now I have more and you all have more as well.
And I'm saying that as legislators, if the majority of us want to do something, we can
do it. And then we'll let the bureaucracy figure it out. Thank you. Senator. All right. My comment would be I would agree that 18 senators can do what they do want to do in regards to their Senate rules and how they proceed. But I don't think 18 senators can override law. But I was thinking about a good question you asked. What harm does it do? I think everybody here has compassion for everybody that's in trouble.
I mean, we're all human beings and we want to help humanity. But I was thinking what harm does it do? It does two things. They've already had a year extension plus an additional two months. I have no confidence that if they get another extension that they're going to be able to perform. But I think the harm that it will do is that we're going to override or attempt to override state law. And I don't think this committee can override state law. But with that being said, we have a motion and a second. If there's not any other discussion, Senator Johnson.
Senator Mark Johnson
Unverified
1:29:14
Thank you, Mr. Chairman. Thank you. We're very succinct in. I'm sorry, I think Representative Dalby. I didn't see. You
Senator Mark Johnson
Unverified
1:29:25
quick, Carol. I agree with my friend Senator Wallace. Eighteen senators and 51 House members can do what they want to when we're in session. When we're not in session, as far as the statutes are concerned, we're just citizens living under the law. And if the governor calls us in tomorrow for a special session and puts on the call the change that Senator Wallace put forth, I'd be very tempted to vote for it.
I probably would seriously consider voting for it. I don't know for sure until I see it, but we don't have an authority. We're in an interim, and I just don't think it would be unwise to go against both our in-house counsel, Ms. White, of our committee, as well as the Attorney General's office. This is what the law says in 2027 or earlier. If the governor calls us in, we can fix it, but I just think it would be a bad idea to do this right now.
Thank you. I'm sorry, Representative Dobby. Go ahead. I didn't see
Representative Carol Dalby
Unverified
1:30:24
you a while ago. No problem. Thank you,
Mr. Chair. Senator Johnson said what I was going to say, and I'm in agreement with him, and the law says shall. The law doesn't say may, and so I just don't believe we have the discretion, and I completely agree with the senator, and he said what I was going to say, so thank you. All right.
Senator Ben Gilmore
Unverified
1:30:48
Senator Gilmore. Could I ask the senator to restate the motion?
Because I have a question, I think, to
Senator Dave Wallace
Unverified
1:31:10
his motion. I'm going to restate the first motion because if the first motion fails, there's no need for
Speaker 154
1:31:16
the same. Okay, proceed. The motion is if the city is on the 2022 delinquent list, the return back will be reinstated.
Senator Dave Wallace
Unverified
1:31:23
Thank you, Johnny. Once the 2022 audit is completed, or the city has submitted a letter of engagement with a CPA to complete the 2022 audit by a date before December 31st, 2025. The city must also complete their 2023 audit by December 31, 2025. Senator Gilmore. And I'm
Senator Ben Gilmore
Unverified
1:31:49
glad Ms. White is here. So I understood and hear your motion.
I know oftentimes we make expungements on motions previously made. Would that be more appropriate in this case or not? So the motion that was made in a previous meeting, instead of making another motion to basically alter the one that was passed previously. I see what
Speaker 93
1:32:13
you're saying, Senator Gilmore. And I think based on what I had reviewed back in early August to sort of answer a similar question, this would be like a motion to rescind or reconsider, which I don't think is timely pursuant to the House rules or the Senate rules the way that I interpret them.
There's a timeline on motion to rescind or reconsider, and that timeline has far lapsed where we are now. I think you might have could have reconsidered it in July, and I think normally the House and Senate rules are three days. And I presume the rules
Senator Ben Gilmore
Unverified
1:32:46
of audit don't speak to that. No, sir, they do not. Okay.
Speaker 115
1:32:52
Okay. Thank you. Are there any other questions? Senator, excuse me, Representative Beatty.
Representative Howard M. Beaty, Jr.
Unverified
1:33:01
Thank you, Mr. Chair. I guess my question is, I understand the clear reading of the law and what it states as far as once this committee makes a decision and instructs and informs the auditor as far as transferring the funds. But what language, where's the language that would restrict this committee and this body from taking another action and informing them not to do that? I don't see any restrictive language that prevents that.
I understand what you're saying with what the law says, but I don't see anything that restricts this body from taking that position. They made a decision, this committee, and instructed them and informed them that these audits were late and to hold turn back. But I don't see anything that prevents this committee from taking that issue up where hands are tied and this committee has nothing to do and can't discharge what they think is the best interest of their constituents. So I would challenge someone to show me where the hands of this committee and legislators are tied not to address something that's a concern for our constituency.
And I'd also say if the Attorney General has opined on this, then it should be in written form addressed to this committee and members of this committee instead of just a phone call to the chair if they've taken that position. So I would encourage this committee to use the authority that we've been given by being elected to hold these offices and take care of these small cities and towns. I too, like you, compliance with the law, they've had plenty of time, but I do believe that this is going to cause adverse harm on our smaller communities and cities,
and it's going to create more problems for this committee because you're going to see them utilize other funds and other avenues to take care of the necessary obligations that a city has, and you're going to deal with further issues and problems in this committee that stem from the whole back of turn-back funds. So I'd encourage you to look at this and, again, show grace to these communities because these are some of our smaller communities, and they need all the help they can get. But I would challenge you to show me what law or what rule says we can't take this action.
Senator Jim Petty
Unverified
1:35:24
Senator Petty. And just to answer your question on the attorney general, I tried to get them here today. One is out sick and the others that have worked on this issue are out on other issues. Initially, when we had a meeting earlier with Municipal League and others, we were going to get an opinion. But an opinion is three to six months and so we opted for just look at it and give us your opinion. So I agree with you in writing is better, and so I just wanted to kind of, since you mentioned that.
Speaker 322
1:36:00
Is there any other discussion? Senator, I almost said it again, Representative
Representative Howard M. Beaty, Jr.
Unverified
1:36:08
Beatty. Well, I mean, could Ms. White reply that there's anything she sees out there in law that would prohibit this body from taking this action? Representative Beatty, I
Speaker 93
1:36:18
think this body, of course, has its discretion. But as I said in response to Senator Gilmore's question earlier, I can't advocate that this body- I'm not asking you to advocate.
Representative Howard M. Beaty, Jr.
Unverified
1:36:31
I'm asking you to cite code that says we
couldn't take this action. No, sir. All right, thank you. Any
Speaker 84
1:36:50
other discussion? All in favor, say aye. Aye. All opposed? No. Can I
Speaker 11
1:36:55
get clarification exactly what we just voted on? It says, if I wrote it down right, it says to restore all everybody on
Speaker 14
1:37:03
the list. All 40 remaining entities that either provide us with a 2022 report or
have provided for the 22 report or an engagement letter that states that they will provide us with a report by December 31st of this year. And he said, and a 23 report, so how are we going? So if they don't do both by the end of the year, then we revisit, right? They're now in, then they're what? So we gotta have
Speaker 84
1:37:35
both of them. I mean, did I misspoke, Senator Wallace?
Well, my first question is, do I need to, that vote I thought was on. We just voted on the
first motion, then we can stop and you can make a
Speaker 84
1:37:47
second. I mean, that was the first motion. That was the first motion. That is correct. And the 23. So by the end of the year, they've got to have both of them in, or they're now in, by this motion, they're now in noncompliance, right? Yes, sir. Okay, got to have both, both
Speaker 328
1:38:05
a quorum in this committee for both? Yes. It was a question, do we have a quorum?
Speaker 148
1:38:19
the second motion. Let's check the quorum right quick.
Speaker 28
1:38:23
There's eight members present, and I think there's 14 on the list, so we do have a
quorum. We do have a quorum. Senator Wallace proceed with your second motion. Yes,
Senator Dave Wallace
Unverified
1:38:37
sir. Mr. Chair, my second motion is if the city is on the 2023 delimit list,
They have until December 31st, 2025, to complete the 2023 audit. Is
Chair
Unverified
1:38:49
there any discussion? You recognize Senator Johnson? Regarding your motion,
Senator Mark Johnson
Unverified
1:38:56
Senator Wallace, the previous thing referred to or having a CPA firm engaged. But this second motion now requires
that that be done, that the audit be completed by the end of this year.
So it's tighter than the previous motion. Is that correct? It's a different year. Yes, because it's a different
Speaker 334
1:39:25
year. Okay, all right, thank you. Is there any
other discussion? All in favor, say aye. Aye. All opposed? No. The ayes have it. The next meeting is October 9th.
Our next meeting is October 9th. With that, we're adjourned.
Agenda
A. Call to Order by Chair
B. Adoption of Minutes of the July 10, 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. Update on Private Reports – Delinquent December 31, 2023, Municipality Reports
F. Discussion of Noncompliance with Municipal Accounting Law - Rockport
G. Discussion of Act 709 of 2021, Repayment of Street Turnback – Lake View – Phillips County
H. Review of Reports (Refer to the Synopsis)
I. The next meeting of the Legislative Joint Auditing Committee will be held on October 9, 2025.
J. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - COUNTIES AND MUNICIPALITIES, Sep 11, 2025 | Agenda | 6 | Official source ↗ |
Speakers
Senator Matt Stone Chair
Unverified
Representative Carol Dalby
Unverified
Speaker 11
Speaker 13
Speaker 14
Speaker 18
Speaker 31
Speaker 36
Senator Mark Johnson
Unverified
Speaker 39
Speaker 41
Speaker 45
Senator John Payton
Unverified
Senator Ben Gilmore
Unverified
Speaker 56
Speaker 63
Speaker 69
Speaker 84
Speaker 87
Speaker 92
Speaker 93
Speaker 94
Speaker 95
Speaker 77
Speaker 118
Speaker 120
Speaker 127
Speaker 21
Speaker 40
Speaker 28
Speaker 141
Senator Stephanie Flowers
Unverified
Speaker 150
Speaker 155
Speaker 153
Josie Vasquez
Unverified
Speaker 117
Speaker 185
Speaker 189
Speaker 194
Speaker 82
Speaker 209
Speaker 214
Speaker 216
Speaker 220
Speaker 212
Speaker 75
Speaker 233
Senator Jane English
Unverified
Speaker 161
Speaker 215
Speaker 115
Speaker 228
Speaker 244
Representative Nicole Clowney
Unverified
Speaker 20
Speaker 88
Speaker 256
Speaker 258
Speaker 61
Speaker 178
Speaker 253
Speaker 265
Speaker 263
Speaker 125
Speaker 269
Speaker 274
Speaker 276
Speaker 279
Speaker 22
Speaker 292
Senator Dave Wallace
Unverified
Speaker 294
Speaker 300
Speaker 301
Speaker 307
Speaker 309
Senator Jim Petty
Unverified
Speaker 311
Speaker 53
Speaker 154
Representative Howard M. Beaty, Jr.
Unverified
Speaker 322
Speaker 326
Speaker 328
Speaker 329
Speaker 148
Chair
Unverified
Speaker 334