Legislative Joint Auditing-Educational Institutions
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Unknown speaker
0:00
Representative Long today. Thank you.
All right. Thank you all for being here. We're going to get started. I need a motion to adopt the minutes. A motion by Senator Sullivan. Do we need a second? I do need a second. A second
by Representative Long. All in favor? Motion passes. And we are going to begin with the review of
Speaker 6
1:03
the reports. Mr. Fink. Thank you, Madam Chair, and good afternoon. Today, there are 47 educational
Senator Fredrick J. Love
Unverified
1:08
audit reports to review. Of the 47 reports, 26 had no findings, and those are listed on the last page of the synopsis. As a reminder, the current standing committee guidelines is to invite entity officials for deferred audit reports and reports with repeat findings. There were three audit reports that were deferred from the July meeting. We were going to begin with Brinkley, but I think their superintendent's stuck in traffic trying to get here, and so I am going to skip that one and
go to Deer, Mount Judy. Finding one, our examination of bank reconciliations and investments revealed the following. The district's operating bank account as of June 30, 2024, had an unreconciled variance. Staff identified $5,500 in errors, leaving an unexplained variance of $1,200. The district's activity fund bank account as of June 30, 2024, had an unreconciled variance of
$1,100. The district's scholarship fund bank account was unreconciled during the 2024 fiscal year and revenues and disbursements of the account were not recorded in the financial statements. Additionally, the bank account was not properly classified on the general ledger. Bank reconciliations were not reviewed and approved by entity personnel during the 2024 fiscal year and interest revenue on the district's CDs totaling $13,000 and $2,600 were not recorded in the financial statements for
the fiscal years 2024 and 2023 respectively. Finding two was a repeat finding. Our examination of payroll expenditures for 12 employees revealed the following. Accumulated sick leave records were not properly maintained by district personnel as required by Arkansas code. The district could not provide proper documentation to support the payment of unused sick leave totaling $880. One employee was not paid in accordance with their contract and stipend resulting in an underpayment of $1,000. One employee's contract did not agree to the approved salary schedule,
resulting in an underpayment. A similar finding was issued in the prior year audit. Finding three, during our examination of capital assets, we noted the following discrepancies. The district did not establish procedures to ensure disposal of surplus or obsolete equipment was properly removed from the capital assets listing. Four equipment assets with a cost exceeding $1,000 were not added to the district's capital assets listing, and discrepancies identified in the previous audit were not corrected in the current year, including one equipment asset with
a cost exceeding $1,000 was not added to the district's capital asset listing, and five assets were misclassified as building assets. Finding four, during our examination of the May 2024 bank statement, we noted seven payments totaling $14,000 were made electronically without board approval or an approved resolution in non-compliance with ADE Commissioner's Memo
Speaker 9
4:23
and Arkansas Code. This concludes the findings for Dearmount Judy School District.
Members, we do have some representatives from the district here. If you all have any questions, take a minute to look over the findings and um we'll bring them up to the table if uh if those folks from dear mount judy want to come and join us at the end of the table and identify yourself for the record and we'll see if the members have any questions appreciate y'all coming up here and seen us all?
Joshua Lawrence
Unverified
5:04
Good morning. My name is Joshua Lawrence. I'm the superintendent at Deer Mountain
Judy. I think if you can push that button in front of you and make sure that we've got the microphone on. Can you hear me now? Okay. Okay. Pull it a little
Joshua Lawrence
Unverified
5:23
closer to you maybe? Is that better? Yes, that's better. Thank you so much. Awesome. My name is Joshua Lawrence. I'm the superintendent at Deer Mount Judy, and this is my board president, Mr.
Justin Gilmore. All right. Thank you all for being here. Do you have any, I know you have your response here. I'll just give you an opportunity if you have anything else in addition that you want to say to the committee.
Joshua Lawrence
Unverified
5:41
Yes, ma'am. Thank you. Committee members, I entered this role as a new superintendent
Speaker 24
5:46
this year, starting July 1, and my bookkeeper also entered her role this year as a new bookkeeper for the district on May 6th. After reviewing these findings, we are currently doing internal audits to implement the policies and procedures to correct these actions that have been done previously. All right, thank you
Senator love did you have a question? No, okay.
Okay. I'm sorry. I saw your hand on the microphone. I thought maybe you did members Are there any follow-up questions or anything that you have for the for them? Senator Sullivan you're
Senator Dan Sullivan
Unverified
6:32
recognized If I remember correctly, this was the issue about travel from the
Chair
Unverified
6:35
last meeting you were here am I on the wrong meeting I apologize no sir no yeah I think
so it was what not with the superintendent travel is not it I apologize thank
you so I have one quick question so these issues of the unreconciled statements that was previous administration and you guys have taken steps to ensure that they are going to be reconciled in the future? Yes, ma'am.
Speaker 24
7:10
We've partnered with APSRC, and at the beginning of the school year, we've worked diligently
with them, and we have reconciled the operating account, the activity account, and the scholarship account along with our CDs. They were initially placed under activity accounts, and they have been reclassified appropriately as
Speaker 38
7:31
other investment accounts. Okay, thank you.
Senator Fredrick J. Love
Unverified
7:33
Senator Love, do you now have a question? I do now. So under the repeat finding number two of
the 12 employees revealed the following, the accumulated sick leave, how have you reconciled this?
Speaker 24
7:51
We are currently in the process of reconciling this. My bookkeeper has gone with training working with APSRC as well to review our employee leave banks. We've implemented processes so that employee leave is accurately documented through a paper trail and brought into the central office where I am the last signature before approval. And it goes to formally, we have actually removed a central office staff member who was over this where the mistakes were made.
And so we're actually looking at finding a new person. But until then, my bookkeeper has been working diligently to bring that. So once we have that all reconciled and ready to amend and change, we will take it to the board as the previous superintendent had issued for their response. Okay. All right.
Senator Fredrick J. Love
Unverified
8:42
Thank you. Thank you, Mr. Chair. Mr. Chair. Thank
you. Members, are there any other questions? Seeing no questions, we will file the report without objection.
So filed. Thank you all for joining us, and thank you
for giving your answers, and we look forward to not seeing you next year.
Senator Fredrick J. Love
Unverified
9:11
you'll have a nice clean report. Thank you. The next audit that was previously deferred was the Brinkley School District. If you'll turn back to page one on your synopsis. Finding one, the district's internal control system did not prevent or detect material errors in the financial accounting records. Errors
included principal and interest miscoded of $84,000, revenue not recorded of $81,000, revenue duplicated of $43,000, and then in the other aggregate funds, expenditures duplicated of $267,000, revenue not recorded of $150,000, and unrecorded accounts payable of $13,000. The financial statements were subsequently corrected during audit field work. Finding two is a repeat finding.
We noted the following issues with payroll. The district did not provide timesheets for three employees, totaling $6,100. The salary of four employees tested did not agree with the salary schedules. A similar finding was issued in the prior year audit. And finding three was also a repeat finding. The district's bank account was unreconciled during the 2024 fiscal year, with unexplained variances ranging from $516,000 to $158,000.
As of June 30, 2024, there was an unreconciled variance of almost $52,000. A similar finding was issued in the prior year audit, and that concludes the findings for Brinkley School District. Thank
you, members. We do have representatives from the Brinkley School District, correct? Yes. Superintendent Brenda
Poole, and the board president, Ryan Medford, if you all would join us at the end of the table, and if the members have any questions.
Just be sure to identify yourself when you get down there at the end, and we sure appreciate you coming up here. Give you a moment if you have a statement that you'd like to make, and then we'll take questions from the members. good afternoon make sure you got tardiness thank you make sure to identify yourself for the record please uh superintendent dr brenda pool thank you dr pool all right board president ryan medford
thank you mr medford if you have a statement
Speaker 54
11:33
that you'd like to make or if you want to go ahead and take
Speaker 55
11:38
questions i know i can make a statement thank you upon taking my um
Speaker 54
11:44
post at the brinkley school district superintendent in uh 2018 when i got in the seat two
Speaker 55
11:49
weeks in We did do an analysis of the finances, and we found that we did have unreconciled bank statements that had been going on long before I got there. We had gone back as far as 2015 and had found the bank statements had like $112,000 variance.
And as we progressed into probably like the second month of my being in that position, they actually came in and put us in early intervention services. And we started working with the Department of Education with Cindy Smith at the time and Donna Atkins. And they worked with us on that, trying to clear up those variances. And I'm telling you, even beyond past 2015, they continued to find checks that had not been cleared.
And so we got to a point, even staying in early intervention services for three years, we were not able to continue to go back and find those variances. And so when I took the seat, there was also a new bookkeeper that also took the seat at that time. And so, like I said, it has gone on for years. And it's still, even though she made some clerical errors, some of those errors were actually still back. They're historical problems that we have not been able to find.
Over the years, we also have contracted with ASPRC with Hazel Burnett, who used to work in the ADE finance department. And she was trying to help us to locate those variances as well. And since then, we've worked with AppScan. We worked with Celia. We did all we can to go back as far as we can and try to reconcile those books from years back.
And so even, like I said, it went beyond 2015 in our findings. And what they told us to do is start working on it incrementally to try to get it done because we have to keep moving forward with the stuff that we needed to do. And like I said, as far as the interest being accumulated last year and not properly recorded, my business manager at the time did reach out to AppScan and different places like that to try to get some help
because it was new to us about those bonds because that's where that interest was coming from was from those bonds. And so the money was deposited, and so she reached out. No one could help us, and we have still been reaching out as of last year, and we went to Ms. Sharon Shuklet at the department at AAEA, and she helped us to be able to figure out how to get that interest recorded like we're supposed to in e-financing. So we've cleared that part of that up, and we have been moving forward,
clearing checks, making sure everything is the way it's supposed to be going as far as the business manager and I signing off, sitting down, talking about those things. But we still have those variances and things from way back that we cannot clear up. And we've hired multiple people to try to come in to help us clear up. The Department of Education has tried to help us as well. And we still have that old stuff sitting out there. There was times where we have sent out letters to different companies saying,
hey, we noticed that this check had not been cashed. What's going on here? Even with our own employees, we noticed that some of them were holding checks, and so we put a 90-day time limit. You must cash them within 90 days. So we've tried various things in order to try to clear up these findings. And so even the person that's working with us now has said, look, this is over me. I can't find it. The app scan, Mrs. Donna Comer, we've talked. I said, hey, we need to be able to start from scratch somewhere and move forward.
And we know that there are some risks with that, but at this point we don't know where they are because some of this was way back before that, and my board is aware that I've tried to keep them abreast of all these things. And so, like I say, some of the things that are happening, yes, the new business manager, the person who took the seat with me, she made some clerical errors, but she tried to clear them up as she went through. and she was also in a mentor program as well so we're doing all we can to get this here
reconciled and cleaned up and put internal controls in place because I sign off on everything I know when there's not a balanced book and we're like okay where is that let's go back and check this month let's check this but let's check this and even have had the accounts payable person to pull all the checks and um with the office that's our size it's just we're really it's more manpower work than the people we have in position. Thank you.
Mr. Medford, did you want to add anything?
No, ma'am. Okay, thank you. We do have several people have questions. I'm going to
Representative Howard M. Beaty, Jr.
Unverified
17:08
start with Representative Beatty. You're recognized. Thank you, Madam Chair. I guess my question is, maybe a little bit for staff, on repeat three, where you've got the unreconciled variants of 51.966, Is that the same amount that was from the previous year, or
Representative Howard M. Beaty, Jr.
Unverified
17:27
is fluctuated. Good. I mean, just based on that comment there, that you said this started in 2018,
that number wouldn't fluctuate. It would stay the same if there were unreconciled differences. And you should note, if you had an
outdated or a check that was, you know, backdated that came through the account and cleared or something along those lines, So I'm not buying the issue that this is a problem that stems back from 2018 and something you've continually had to battle. It sounds like it is a continuation of a problem of somebody not understanding debits and credits and how to
post those. And the issues I have is any time you see repeat, and on here you've got a couple of repeat violations,
and I understand where you've gone to seek your help, But you need to seek help somewhere else and get
this reconciled and get this taken care of. If it were the same issue stemming from 2018 forward, that number would not change. It might change a little bit, but for the most part, it would be the same number because those were old accounting issues. And so I guess my position on the committee is a repeat is not acceptable.
And I don't know if staff knows how long this has been a repeat violation, if it's been a repeat violation since 2018 or even prior to that. But it's time to get that taken care of. I understand. And if
the folks that you've gone out and relied on and talked to couldn't come up with an issue, there ought to be an accounting entry or something for unreconcilable differences that you
can make to get your book straight and to move forward from that point on. So I would encourage you to seek proper accounting help and services that could help you get this in order.
Speaker 54
19:18
Right, and with my last email exchange with Nona Comer, ADE AppScan, we talked about that. And she said that she would help us locate someone who is an expert in bank reconciliations because if the help that we have been going to cannot help us, then that's where we are. looking
Speaker 55
19:39
for someone who is able to help us. And my
Representative Howard M. Beaty, Jr.
Unverified
19:44
understanding, staff, is that this would be a variance that was in the district's favor
with maybe more money, you know, a positive variance versus a negative variance on the district. So throughout the
Speaker 62
19:59
year it fluctuated both ways? Yeah, exactly. Proves the point that
Representative Howard M. Beaty, Jr.
Unverified
20:03
it's an accounting issue and a problem that you have, and it's not something that's systemic that's been carried on since 2018. that's all i've got
Senator Fredrick J. Love
Unverified
20:14
thank you um senator love you're recognized thank you
madam chair now i'm gonna kind of pick up where representative baity was so because i'm trying to understand the
variances what what goes into and i'm asking uh mr fink what goes into the variances
Speaker 68
20:31
it could be various issues i mean if you notice
Senator Fredrick J. Love
Unverified
20:39
on that first finding I mean there was stuff that impacted cash so they didn't record revenue at all in some instances which would have impacted your cash you could have old outstanding checks that are still on your books that have cleared so they should not be there anymore you could have duplicate entries
so if you're entering expenditures multiple times that would also impact your cash and so it's a variety of issues you would see on a bank reconciliation but then also entries into your general ledger. Do you
have a follow-up, Senator Love? Yeah, let me get back in the queue. Let
me think about this. Thank you. Representative Mayberry, you're recognized.
Representative Julie Mayberry
Unverified
21:30
Thank you, Madam Chair. I was just wondering if someone from ADE can come up and just share some thoughts on things that you've tried or
that might still be available to try and help them reconcile. Thank you. And if
you would identify yourself for the record, please.
Speaker 82
22:02
Greg Rogers, Department of Education. So, yeah, so as she said
Speaker 85
22:06
in her response that she has been working with APSCAN, APSCAN is the e-finance branch for ADE that does that. Part of the problem, I think, as she referenced before, is that it starts in -- they identified it back in 2018, so it is a thing that keeps continuing on year to year to year until you go back to '18. Then you have to clear '18, then you have to clear '19, then you have to clear '20. So that takes time to go in through each one of those as well as trying to get that current
month done is also because during that time, you also have checks that are written, checks are outstanding, so the variance is going to change until you can go back to that first initial year where you identified it and try to go forward. That's hard because you're trying to go back, so it does take some time, but in working with AppScan, that's what they've been trying to do, but as she said, my AppScan field reps or bookkeepers, former people who have been working in the district like that or just trained like that, so something that can get to that level.
Dona probably has been saying we need to get with AAEA or APSRC or someone that has more time and more capabilities to get back to those prior years to get that carried forward, to
Speaker 54
23:19
get the rent cleared out. And if I may answer, too, to what he's saying, like he was saying, going back from clearing out 2018, 2013, that's what I was talking about when I said we have to go back and we were noticing things as far as 2015 and we noticed some things prior to 2015, those eventually have to be cleared out.
So you would see a fluctuation in
Speaker 55
23:40
the amount because we're clearing out some of them. And then if that person is making some clerical errors along the way, then it's still going to keep it fluctuating. But some of it is still way back because we've had people in looking at it and they cannot find. So they're checking behind us and looking at that, and they cannot find. And if they caught something that my bookkeeper did, they say, okay, this here is right here. You need to go back and record this. You deposited the money, but you forgot to record it in e-finance.
And so it is a process of trying to keep up with old stuff and clear those out and working forward with the
Representative Julie Mayberry
Unverified
24:22
new stuff. Just a follow-up. So you're telling me that there is one more layer of help maybe that can be brought in to assist to get this cleared up so that they're not here again next time around? I think
Speaker 85
24:37
it's going to continue to be a working process, and we hope it gets cleared up. But that's where our physical services support branch they will have can work with that.
But then if it's something that needs to be there on a day-to-day basis, then it may be having to look for a third-party person that might can sit with her bookkeeper each day. And because the bookkeeper also has day-to-day activities they're doing right now. But having somebody that can just spend some time to go back and look at those old records is
going to take some time. All right. Thank you.
Representative Wayne Long
Unverified
25:10
Representative Long, you're recognized. Thank you, Madam Chair. My question was really for staff. Representative Beatty mentioned a moment ago about basically a process to zero out
and be able to see from that point forward, you know, has the underlying problem been corrected? You know, that's really what I want to know. It's like, are they doing it correctly now, and it's just a matter of working back to fix things in the past, or is it just a perpetuation of the same problem? So what
Speaker 68
25:40
we would hope to see, I mean, this isn't just school districts. this is any audit engagement that we do, what we'd hope to
Senator Fredrick J. Love
Unverified
25:47
see is we get to a point where we
have a certain balance that's unexplained or unreconciled. And then that balance would stay the same, theoretically, if all the entries are being made correctly each month. And so the fact that there is fluctuation says that it's more than just one issue in the past. Because if we go back to 2022, um, they didn't have near this variance, uh, on their bank reconciliation as they do now. Um, correct. Okay. Thank you. Senator love.
Chair
Unverified
26:26
You still have a question? Yes. Uh, two
things. Mr. Rogers, could you come back
Senator Fredrick J. Love
Unverified
26:33
and join us at the table? But here's my question to the superintendent though because as mr fink explains um as as you're going through this process i guess the number one thing because i haven't been on this committee long but the same things kind of happen in other committees for cities and
Speaker 99
26:57
counties as as your bookkeeper have they been
trained appropriately accurately at that time i
Speaker 54
27:03
i actually have a new business manager as of last august and the previous business manager had been there like i said since 2018 she and i took the positions at the same time and she had gone through uh cast vote training and all of that and so okay and so your current
Senator Fredrick J. Love
Unverified
27:24
bookkeeper has just been here for yes this would not
So this didn't occur under your current bookkeeping?
No. Okay. All right. That's a good thing. My second question, though, to Mr. Rogers, because we keep saying how we can kind of, if we could, potentially start at kind of ground zero. What is the harm in doing that? What would be the advantage of doing that? What would
be the harm in doing that? So say, for instance, if we're saying that we have this variance that is irreconcilable or unreconcilable,
what would be the pros and cons of, like, starting from ground zero so that we could? I don't think
Speaker 91
28:19
you want to write off anything that is, because I think like what audit has identified,
Speaker 85
28:25
there's revenues that have been recorded, things that have not been put into the system that should have been, checks that have been outstanding. So it's never going to be as simple as just saying this is back debt. I mean, it's going to have to be re-researched and looked at,
and then it's going to have to be a request that's going to have to be made to ADE and leg audit to let them know that these are irrecycable, I can't even say it today. Unreconcilable.
Speaker 110
28:53
They can't figure out what it is. It's not. Yeah. Okay. With them reconciled. Well,
Senator Fredrick J. Love
Unverified
28:57
no, no, I mean, but that's what I needed to understand because, I mean, it's not as simple as just saying, hey, we need to start at ground zero. And
Speaker 109
29:04
that's what I was saying earlier is that not only are you having to work on the stuff that's in
Speaker 85
29:10
the past, but also your month-to-month, your daily stuff that's going on in this current year.
So you've got to make sure that all your current revenues are being done, All your current checks are being taken off when they're cashed, when they're knocked out. Standing checks are checked, as well as trying to figure out what last year was causing that variance to get everything caught up. So it's not going to be a one-time, you can't write it off. You have to figure out where it is and why that caused that to go forward on that. You never want to start with zero because then starting at zero makes those current going forward books off, too, because you still have all that stuff back there.
Senator Fredrick J. Love
Unverified
29:45
And in these variances are, you said there are like payments that have been made that maybe checks that not have been cashed, things that,
Speaker 85
29:54
I mean. I think like in the audit report, you're saying it's a lot of different things. It's revenues that might have been not recorded, could have been recorded in the wrong place, outstanding checks, or duplicate enrollment, duplicate payments made to school, recorded in there is duplicate payments or duplicate revenue. So there's a lot of stuff that has to be cleaned up.
Speaker 54
30:15
And this is what, if I may say something, that's what we've been looking at,
Speaker 55
30:21
like unclear checks, posted deposit, bank errors, and continue to look at the historical posting mistakes as well. And so those are areas that we have been working in to try to get
Senator Fredrick J. Love
Unverified
30:33
this resolved. So, Dr. Poole, do you feel like your current business manager is the person that can bring you out of this? I guess that's what I'm trying to kind of get confidence in.
Speaker 103
30:46
Here's what I'm going to say. She is new, and we
Speaker 54
30:52
have been working with AppScan, and we have been working with others to try to get this resolved. And even people who have been in it longer than we have are yet to be able
Speaker 115
31:04
to figure it out. Okay. But I'm just saying moving forward.
Speaker 55
31:09
I'm saying moving forward. She's doing a good job going in and making sure that we are clearing checks, checking the deposits. We have accounts payable that's also stepped in to go behind it,
making sure that she's looking at all the checks that have been cleared. So we're trying to do this as a team to say, okay, you deposit this. And looking at those, because they send them out electronically now, making sure you're posting all the revenue, making sure we're putting things in the right place, making sure we're clearing the checks, going through the bank, checking the bank statements online to make sure that whatever we're clearing, we actually have, it has processed through. So we're trying to work through all those pieces.
Okay. All right. Thank you. Representative Beatty,
Representative Howard M. Beaty, Jr.
Unverified
32:00
you're recognized. Thank you, Madam Chair. Again, a question for staff. How many accounts are we talking about here that were unreconciled? Just an estimate on those
Speaker 120
32:11
numbers. I'm going to try to get that information from you,
Representative Howard M. Beaty, Jr.
Unverified
32:14
from our staff. Do you know how many accounts do you have
Speaker 54
32:19
that these problems are isolated in? It's basically the general account, and it was the account with the construction, with the bond.
The bond money was deposited, but the business manager at the time could not figure out exactly where to go. We knew it didn't need to be in a separate account, but how to link it to the district as well as how to record that
Representative Howard M. Beaty, Jr.
Unverified
32:45
interest on there. So that's where this last one came in from. And, again, focusing on finding
three, where you've got these variants raised from a negative $516,245 to the $158,878 positive.
With that variance, what dollar amount are we talking about in total as far as assets, as far as that variance rolling in? I mean, are we talking significant funds or I'm trying to look at their total assets as far as what the cash. I'm assuming these are the cash, the bank accounts. Yes, I'll try to get that answer
Speaker 124
33:23
for you as well. I don't have that audit report sitting right in
Representative Howard M. Beaty, Jr.
Unverified
33:26
front of me. Well, my deal is I guess I was trying to look at it from a materiality standpoint. these variances were material to the district and to the presentation of
their statements if someone wanted to
Speaker 125
33:39
look at those. Yes, understood. On this
Senator Fredrick J. Love
Unverified
33:42
one specifically, as far as their errors on their special revenue fund and their other aggregate fund, that was a material weakness that we identified in our audit report. So a reader of the statement would have seen that that was a material issue okay well again what you've
Representative Howard M. Beaty, Jr.
Unverified
34:00
been doing since 2018 ain't working so it's time to find something that'll work so I'm just gonna state
that again from the committee repeat something's been going on that long it's time to get it fixed and I'd encourage you to do that before your next time coming to this committee thank
Senator Fredrick J. Love
Unverified
34:25
you Senator love you recognized my final question is this because i think um the one thing i really do want to ask though is you don't have any money missing is that we do not okay mr fink you're asking me that same question not that i'm
aware of okay all right so that's that's a positive for me that's a positive but i do Representative Beatty is right, but you said that you have a new business mentor. Is that not correct? Yes, that's correct. All right, so then if we actually see this next year, it will only be a variance where it's going to kind of be. That's the plan. We're working on it. That might be the plan. We're
Speaker 55
35:11
working on it. Okay, okay. So that's what we're doing.
And we actually last year did contract with someone else who's still helping us as of right now, and she's been digging and digging and digging, and she told us, listen, see, can we figure out how to zero it out, and you all start up. She hasn't been able to, and she's an experienced
Senator Fredrick J. Love
Unverified
35:35
business person. Okay. All right, well, if you have a new business manager, Dr. Poole, I mean, that's a good start, but I would like to underscore kind of some of what Representative Beatty said
because it will be – I mean, I do understand that you have a new business manager, so I'll
Representative Wayne Long
Unverified
35:57
just leave it at that. Thank you. Representative Long, you're recognized. Thank you, Madam Chairman. Superintendent, I was wondering these other people that you've
dealt with in the past, were any
Speaker 54
36:07
of them like CPAs or have they all been just kind of bookkeeper type people? No, they've been school district type people. I mean, at the ADE, at APSCAN, the people who's assigned to help us with school finance.
Speaker 145
36:22
But given that they've not been able to help,
Representative Wayne Long
Unverified
36:25
I'm thinking it won't be cheap, but it'd probably be money ahead to hire an outside CPA type person that probably could get to the bottom of it for you. That way you won't be back here next year because we really just can't let this continue to
rock on without some sort of solution. Thank you. Okay. Now, I'll just say
Speaker 53
36:46
one time that me and her had a conversation yesterday about this, and that was my exact was we need to go with somebody different.
We need to hire somebody different. There's a firm. There's somebody out there that can help us. So that's the revenue we're looking to
take. All right. I have a
couple of questions before. I don't know. Senator Love, are you? Okay. So my first question, just could you remind me how long you've been with the district? Since 2018. Okay. And you also referenced that you had reached out to somebody about getting an expert to help you with this. When did you do that?
Speaker 55
37:28
Ms. Comer, it was around, let's see. We tried to do a journal entry to clear out some things, and that's when the conversation started. It was late July, 1st of August, sometime in August, when she and I went to talking because they were talking first with my business manager and my accounts payable. And then we was like, we have to do something because it's not getting any better, And we're doing what we can this year with this new business manager.
And so she was telling me the pitfalls and everything that could happen if we did that. And so she was supposed to try to help us locate somebody who has expertise in bank reconciliations. So I guess
my statement, I guess, would be my understanding is your district's around 389
students, roughly, right? So at the end of the day, you're the superintendent, and the buck stops with you. That's right. And I have some small rural districts, and they've had to fight to survive
and have had challenges in my area. But at the end of the day, the superintendent, if you don't have business managers and so forth who are able to step up, it's your job to know that information. It's your job to be as well-versed as a business manager in that. And sometimes in small districts, you have to wear many hats. But I also know large districts or superintendents have – they want to make sure because they know they're the ones who end up coming down here and testifying, right, that they need to know that. And after seven years, I would think that would be something that you would have a real good grasp of because I wouldn't want to keep coming down here and talking to this committee and explaining, you know, what's going on and why we can't do it.
Because what it looks like to me is sometimes it's just the dailies, the things that should be expected by your staff, but primarily by you to make sure that it's getting done. And if they're not doing it, that's what happens when you're the boss, is you are the one who has to make sure that it's getting done. So I hope in this next year that your school board holds you accountable and that you hold yourself accountable so that you're not back here having these conversations again. I mean, you may have the variance, but it shouldn't be fluctuating.
We shouldn't have all these unreconciled statements. We shouldn't have some of those things that should be this year taken care of because you know. So I don't know if any other members have any questions. Seeing none, without objection, we'll file this report. Thank you. Thank you both. Appreciate you. The next report
Senator Fredrick J. Love
Unverified
40:09
is Pine Bluff School District. I did want to answer one question that Representative Beatty had
concerning how many bank accounts that Brinkley had. It was one checking account, one savings account, and two CDs. Okay, Pine Bluff School District was deferred from the previous meeting. Finding one, a review of activity funds collected and receded at the high school, revealed receipts exceeded bank deposits by $3,600, $3,500 in cash receipts, and $87 in receipts for which the method of payment could not be determined. The high school administrative assistant was custodian of these undeposited funds.
I will note that Pine Bluff is included on the deferred audits in this synopsis. In the previous synopsis, we did note that that was sent to the PA and the AG. Finding two was a repeat finding. A test of the Education Stabilization Fund disbursements revealed that 165 equipment items purchased, and this was one invoice, with a cost greater than $1,000 each, was not recorded in the district's equipment subsidiary ledger.
The total cost of the equipment was $303,000. The subsidiary ledger was subsequently corrected by the district during audit field work. A similar finding was reported in the previous audit. That concludes the findings for Pine Bluff School District, and they do have their superintendent here to answer any
Speaker 153
41:35
questions the committee may have. All right. Thank you, Mr. Fink. If you all could join
us at the end of the table, I expect there may be a few questions from the members.
If you can hit that microphone and identify yourself. Appreciate it. Good
Speaker 155
41:55
afternoon. Jennifer Barbary, superintendent, Pine Bluff School District. My board president could not be with us today. He had to work, so forgive him. Thank you. Do you have
a statement or anything you'd like to say to the
Speaker 155
42:07
committee to get started? Yes, ma'am. Thank you. Thank you, board, for this opportunity to speak about this. I will say this is actually my first official audit for Pine Bluff School District as the superintendent, so it was quite disappointing that I had to come before you.
Previously, I've been here twice for Pine Bluff School District under other people's audits, so when I said last year that I didn't want to come back, I really meant it, and so we've worked very hard to do some things to correct these. I will say first, the first finding specifically was a miskept of the receipts. The receipts were written, and when we found out that the money was missing, we immediately began an internal investigation.
It was actually the auditors that brought this to our attention. And so when we investigated the situation, the principal from that year, the administrator from that building from that year, no longer works in the district um the administrative assistant stated that um that person did not take the money but we couldn't find the money and so this was something that uh when we looked back to see why we missed it on the district side it was the receipt books were turned in but the receipt numbers were not turned in in numerical order so the the receipts were there but when the money was
deposited not all those receipts were turned in in numerical order since then well immediately we reassigned that administrative assistant she no longer does that work anymore I can't say that she did it because I'm not a criminal investigator but I do know that we had to do a better job of training our bookkeepers and our business manager I mean at each at each campus and so last year we I did not hire back any of the bookkeepers at any campus we made them reapply for their positions
and take a bookkeeper assessment prior to being hired in those positions and we now have a training that everyone has to go through as part of being a handler of money for the district that was something to correct this and then and that person obviously no longer handles money for the district and doesn't work for the district anymore. As far as the repeat finding, this was very irritating because fixed assets were a big deal prior to me taking the role of superintendent.
Pine Bluff School District, as you know, if you don't, I want everyone to be aware, Pine Bluff School District annexed Dalloway into Pine Bluff School District. And so through that annexation process, two years in a row, we found that there were thousands of pieces of equipment that were never logged in the fixed asset log because they were part of Dalloway School District and there was no Dalloway School District anymore so we couldn't even find their fixed asset log. So we employed a person to specifically handle fixed assets as a stipend position. That person was in our business
office but we stipend that that position as well to work after hours to begin logging everything from Dalloway School District into the fixed asset log on the e-finance side as well as that person deleting we deleted over 2,000 things that were never never part of I mean they were so old they were never part of anything in the district as well so we thought we had cleaned up very very well all of our fixed assets when this happened this was a purchase of the panels we used COVID
money for learning the learning loss money to purchase new panels for every classroom in the district and they were all on that they were all appropriately tagged they were appropriately coded which was something that was not done in the past. Everything was done accurately. Our technology inventory, and that's how we were able to identify everything, it was all inventoried. It just never, those code numbers, we never inventoried completely to the e-finance side. So when you asked earlier about the different things, you know, we have different systems,
and so, but the one main system that we have to comply with is through the Arkansas Department a bed and that's power power source which also has e-finance under there and so in the e-finance system those numbers just hadn't been transferred over we had them in our system just not in that system and so as soon as it was brought to our attention while the auditor was still on site before she closed out we were able to put all those in the e-finance system but because it was with federal money and it was over a thousand dollars for the each piece of equipment it was
considered a federal finding so quite disappointing but we did it and we fixed it and we have now and we use an outsource company um that now has been in the district and they have gone through every campus identified everything that was over a thousand dollars to make sure that it was tagged appropriately and that we have it all done so i'll eat my words again and say i don't plan on being here again next year for this finding thank you i appreciate
that detailed information now you answered my question before I asked it, so I do appreciate that. Members, do we have any questions?
Senator Fredrick J. Love
Unverified
47:08
Senator Love? So, I'm just saying for the finding number two, you said that is now corrected. Yes, sir.
Speaker 158
47:15
It was corrected before the auditors left. Okay. All right. Thank you. Members, any
other questions? Seeing none, without objection, we'll file this report. Thank you for coming here and appreciate your diligence and work, and we plan not to see you next next year. I hope so. Thank you, guys.
Senator Fredrick J. Love
Unverified
47:39
The next eight reports were referred to the prosecuting attorney and attorney general. None of these reports had repeat findings. None of these reports were deferred from the previous meeting, so there are no officials here to answer questions. If you do have a question, I'll do my best to answer it. Batesville School District finding one the district purchased a refrigerator for six hundred dollars from the wife of the superintendent who held the position prior to march 2024 without approval from the board and
the commissioner of education as required by arkansas code finding two the following exceptions were noted while reviewing capital outlay expenditures bids and or quotes were not obtained for the purchase of two outdoor playgrounds and cabinets in the amounts of $143,000 and $48,000 as required by Arkansas Code. Performance bonds were not obtained for the construction of bus transportation offices and a fuel tank project in the amounts of $64,000 and $67,000 as required by Arkansas Code, and bids were not properly solicited
by publishing in a local newspaper or trade journal for the construction of bus transportation offices and purchase of gravel in the amounts of $64,000 and $52,000 as required by Arkansas Code, and that concludes the findings for Batesville School District. Members, are
Speaker 34
49:03
there any questions? Senator Love. I just have one. Were the
Senator Fredrick J. Love
Unverified
49:08
employees, were these new employees?
I'm going to tell you the basis for my question, because I guess on the procurement law, you
would probably know this. So I'm just trying to see if they actually have a new superintendent. Now the superintendent that was there at the time of these findings, um, resigned around March of 2024 and the board, um, uh, uh, hired a new superintendent. And so this was actually under a previous administration. Okay. All right. Thank you. And I should have mentioned this was our So previously, before this FY24 audit cycle, we were not the auditor for Batesville.
When they hired the new superintendent, he asked us to do the audit. So did the board of trustees. And so we started doing that in FY24. So I would expect on some of these issues, like as far as the state compliance issues, we look at those pretty closely. we go over with the district, you know, all the issues that we found. And so I would hope that that would be improved when we go back to look at it again in the FY25 audit.
Speaker 165
50:30
Any other questions, members? Representative Long,
Representative Wayne Long
Unverified
50:34
you're recognized. Thank you, Madam Chairman. Mr. Fink, just from my own knowledge, what's the threshold for when you
have to get bids? You know, these are like $143,000. and at what point are you required to get
Senator Fredrick J. Love
Unverified
50:50
bids to your quotes? So it depends on which law it's under. If it's under Arkansas Code 621-304, that amount changes every year.
But I believe for FY24, it would have been around $24,500 or close to $25,000. And then under the public improvement law, it would be $50,000. Okay, thank you. Any other questions, members? Seeing
none, without objection, we'll file the report. Next report that was referred
Senator Fredrick J. Love
Unverified
51:22
to the PA and the AG is Camden Fairview School District. They had one finding. On July 15th of 2024, the district initiated the payroll direct deposit of $3,600 to a fraudulent bank account
after receiving an email request to change an employee's direct deposit information without verifying the authenticity of the request. The district notified its banking institution but was unable to recover the funds, and that includes findings for Camden and Fairview School District.
Speaker 38
51:54
Members, any questions? Senator Love, you're
Senator Fredrick J. Love
Unverified
51:56
recognized. Mr. Fink, did we not go over this? Did the secretary issue a memo about this?
Or is this? Because I vaguely remember. We did. Yes. Back in 2023, we met, this committee met May 11th and 12th of 2023, and a letter was sent to the Commissioner of Education at that time requesting that DESE send out a commissioner's memo alerting school districts of the cybersecurity risk around changing banking information,
especially for payroll and direct deposits, you know, very similar to this finding. But this is a 24, okay. Yes, and then that alert or that commissioner's memo was actually sent out to the school districts on May 19th, 2023. So anything that we're presenting for FY24 is after that time. Gotcha. Okay, thank you. And Senator Love, to your point, that was a conversation we had
a whole lot, our last meeting and I believe at the end today uh Mr. Fink's gonna have some information for us
on what he found out about all the fraudulent because I'm sure you all have seen we've got a lot of those even in this report again so are there any other questions um okay so I did have um no I didn't I just had a note about
Speaker 68
53:37
the fraudulent funds so without objection we'll file this report seeing none next report is charleston charleston
Senator Fredrick J. Love
Unverified
53:43
school district arkansas code requires public employers to report to arkansas legislative audit a loss of public
funds including theft of property of one thousand dollars or more and as required the district notified ala via email that the district's bus garage was broken into on the night of july 18 2023 and on the weekend of july 22nd july 22nd and 23rd items taken included saws refrigerant drills and impact driver leaf blowers and grinders these items with an estimated total value of 4400 dollars were used for district bus and facility maintenance and the police reports were filed
that includes the finding for charleston members
any questions i have a quick one any any update on whether they ever found anybody and
Senator Fredrick J. Love
Unverified
54:37
recovered anything I don't have an update on that now it would be included in our PA AG disposition report that we present to the full committee on Fridays every year so it will be included in that report all right thank you without objection
will file this report. Next is Isard County Consolidated School District finding one on October 25th the district discovered that an employee's payroll direct deposit totaling $3,100 had been fraudulently diverted and then additionally on November 21st the district processed another payroll check totaling $427 but failed to change the employee's direct deposit information back to the correct bank account. The district notified the financial institution
after both incidents. They were only able to recover $441, resulting in a loss of $3,100. Finding two, the district's operating bank account was unreconciled for the periods of July 2023 through June 2024, with variances ranging from $1,000 to $449,000. During audit field work, ALA staff identified almost $30,000 in errors, leaving an unexplained variance of $548.
Finding three, the district's internal control system did not prevent or detect material errors in the financial statements. Non-bonded debt payments of $186,000 were paid from the debt service fund, which is included in the other aggregate funds. The financial statements were subsequently corrected by adjusting entries. That concludes the findings for Izzard County Consolidated School District. Members, are there any questions?
Chair
Unverified
56:22
Senator Lapp, you're recognized. Okay, so
Senator Fredrick J. Love
Unverified
56:25
I guess this kind of reminds me of what we just dealt with with Brinkley.
Okay, and so this is the first, this is not a repeat finding, is it? It is not a repeat finding. I guess I am a little concerned about this one, though. What is the protocol on this committee? I may want to hold this one and speak to them because I think this is, I guess, the $548, I guess, variance, this is a little concerning, though.
So what is the protocol usually with this? Because we're talking about just filing this report away with?
If the committee wills, we can defer the report
Senator Fredrick J. Love
Unverified
57:23
to the next month. Okay, because you're saying the variances range from $1,057 to $449,000? Yes,
but at June 30, 2024, the variance was $29,000. Our auditors were actually able to identify a lot of the errors
Speaker 168
57:36
that were there, and so there was only $548 left that was unexplained.
I think we've got someone else in the queue. If it's all right, I'll come back to
Representative Howard M. Beaty, Jr.
Unverified
57:53
you. Okay. Representative Beatty, you're recognized. Well, I just kind of want to follow up on what Senator Love was speaking. In the response, they say that the accounts were properly reconciled as of July 1, 24. Is that correct? Is it after you're adjusting entry and they, I guess, wrote off $548 or whatever, were they correct at that point?
Senator Fredrick J. Love
Unverified
58:13
i can't say for sure without looking at their fy25 especially the year-end balance so but i will say anytime that we have a finding we follow up on that finding any very next audit we will look at it extremely closely to make sure it's been corrected and if it hasn't it'll be a repeat finding but but you found
Representative Howard M. Beaty, Jr.
Unverified
58:32
you found the big differences and got them reconciled down to 548 bucks yes sir and then they're saying that they took care of that at that point so i i would hope
I hope we'd go ahead and just let this one go.
Senator Fredrick J. Love
Unverified
58:49
Senator Love, you're recognized. Okay. I guess I do understand that reconciling it down to $548, but when you say you have variances from $1,000 to $57, unless I'm just missing something to all the way almost to a half
a million dollars, am I the only one that's concerned about that? I just want to understand something. Am I missing something? Because that's a half a million dollars.
So, I mean, like, is this common? I'm just trying to understand something. Is this common to go from $1,000 to a half a million and nobody, like? It depends
on the school district. I don't know that I can say it's common amongst all schools. I think there can be fluctuation throughout a year where you have items that you figure out before a year end.
Maybe you weren't as timely as you should have been in reconciling the bank, which can also cause problems at times. And so it's hard for me to say that this is common per se, but we do have bank account reconciliation issues, as you all have seen
over every meeting we've had. Okay, and then for the finding three,
non-bond debt payment of $186,000 were paid from debt service.
So this one should have been paid out of the general fund because it is non-bonded debt, and if you were to look at like the AppScan manual, So what they're going to use to prepare their financials, enter items into their general ledger, it should not have come out of the fund that it did because that fund is specifically for bond-related payments. So did they reimburse that fund? They would have basically, we would have made an entry when we did the audit to show that payment correctly,
out of the correct account, and then we would follow up to make sure that they've – if the other fund was owed, we would
Speaker 168
1:01:03
follow up to make sure that that transfer happened. Okay, so did you make – okay,
Senator Fredrick J. Love
Unverified
1:01:08
so this is what I'm just – in my mind, this is what I'm trying to reconcile. And I guess
I'm going to talk to you, Mr. Fink, just from the standpoint. I think you might understand this. So I'm making a lot of references to the city, county, local, because this is what happens.
So they take the money. Since they don't have it in the general fund, they don't have the money. They spend it out of the street fund. And what
Speaker 68
1:01:38
I'm saying is this kind of – is this – So, no, it's not that – it's not like
Senator Fredrick J. Love
Unverified
1:01:45
that with cities. So then tell me, if you pay out of the non-dit
bonnet funds, if you take the money and pay it somewhere else, I guess, is it reconciled?
I mean, what I'm saying is, does a school district have the money, did they have the money in the general fund, and they just made a mistake and took it out of one fund, or did they not have the money and so they paid it out of a fund? Those are two
totally separate things. Yeah, I'm not looking at the financial statement specifically, but I would say they do have the funds to cover that payment. They just paid it out of the wrong account. They would have made a transfer when we notified them of the error that they made.
We follow up on that to make sure that the school district enters a journal
Speaker 168
1:02:37
entry to correct it. And so they would have had the funds to cover that payment, yes. Okay, so help
Senator Fredrick J. Love
Unverified
1:02:43
me understand, if it's a journal entry, what I'm saying is, I understand what you're saying on paper, but what I'm saying is what actually is happening. Does that mean the money came from
the correct fund and the other fund was reimbursed? Yes. Okay, all right, thank you.
On the bank reconciliation, and this is kind of representative Beatty's question earlier in point, per abscan, the school has a zero variance at May 31st, 2025. Members, any
Speaker 153
1:03:19
other questions? All right. So without objection, are we good to go
ahead and file this report? Okay. Seeing none. go ahead and file the report.
Senator Fredrick J. Love
Unverified
1:03:39
Next is a Marvel school district finding one. Um, the district
discovered that an employee's payroll direct deposit totaling $1,500 was fraudulently diverted. Uh, they did not verify the authenticity of the change request. They notified the financial institution, um, but they did not recover the funds finding two during our examination of payroll records, we noted that one certified employee was overpaid $3,400, and one was underpaid $482 due to clerical errors, and finding three during our examination of education
stabilization fund payroll expenditures, we noted internal control deficiencies that resulted in the district paying almost $18,000 of unallowable salary payments and overpaying one employee $58, and that concludes the findings for Marble School District. Members, do you have any questions? I
have a quick one. When it says, without properly verifying the authenticity of the change request, what is standard? What was the expectation that they should have done there to verify that?
Senator Fredrick J. Love
Unverified
1:04:47
So in that case, they would have relied on an e-mail only, and you don't just want to rely on an e-mail. You want to follow up with a phone call to the individual from the school's actual records of the phone number, not from the phone number on the email. You can also do this practice in person, and we have seen both of these
Speaker 153
1:05:10
items being done at schools now that they keep running into these issues.
All right, members, are there any other questions? All right,
Senator Fredrick J. Love
Unverified
1:05:24
without objection, we will file the report. Next is Maynard School District. The district made payments totaling $8,200 for related party transactions without proper approval in conflict with Arkansas Code, $6,700 paid for plumbing services to a company in which an administrator had financial interest without approval by the board or DESE, and $1,500 paid to an employee for equipment rental without approval by the board.
That concludes the finding for Maynard School District. Members, are there
any questions? All right, I do have a quick one on this one. So the administrator,
they had an interest in it. Is that administrator still employed with the district? Do we know of
Senator Fredrick J. Love
Unverified
1:06:11
any action taken on that? I'm not aware if the district, if the employee was still with the district or not.
I'm assuming they are, but I don't have that information.
I mean, I can understand that they might still be because sometimes
those are just kind of curious because those things can kind of grow on school districts. All right.
If there are no other questions, did you have one, Representative Long?
Speaker 191
1:06:37
Yeah, well, that seems pretty out of the ordinary. I'd kind of
Representative Wayne Long
Unverified
1:06:43
like to hear if the person is still there,
And if not, why are they still there? Because that seems like a blatant
Speaker 193
1:06:56
disregard of good ethics, I guess. Could you, and maybe Desi, are
you going to find out? Okay, do you want to
just come back to this report and go through the others at the end? Yes, I
Senator Fredrick J. Love
Unverified
1:07:17
can try to find out that information for you.
This does happen from time to time, instances like this. In this case, it was the district treasurer. It was the district treasurer's father-in-law's business, and then the husband worked full-time for the business on the plumbing services. As far as the equipment rental, it was a maintenance employee that they rented a tractor from, and they should have gotten school board approval to do that. And in the first instance, they should have gotten school board approval and they should have gotten approval from the commissioner of education because the district treasurer is considered an administrator under Arkansas law.
Did you guys bring this to their attention or did the school board catch any of this?
Senator Fredrick J. Love
Unverified
1:08:12
I'm assuming our auditors found this when they were doing the audit. But we have procedures to look through these laws specifically on every engagement that we do. So I would think it was our auditors who
found it. I mean, unfortunately, I don't think that's uncommon, probably in smaller school districts where you have more limited, maybe, resources. It's not necessarily someone trying to do something wrong.
It may sometimes be someone trying to help, actually.
Senator Fredrick J. Love
Unverified
1:08:36
I would note that this was referred to the prosecuting attorney and the attorney general. anytime we have a finding under the ethics code it automatically gets referred so it would and we will follow up with um the prosecutor and attorney general
or did not take unfortunately i just think sometimes people forget sometimes they're uninformed as well i don't know that always it's someone trying to do something wrong as maybe just not
informed or um ignorant of the of the law hopefully that's the case all right are there any other questions all right without objection
Senator Fredrick J. Love
Unverified
1:09:19
we will file this report the next report is mammoth spring school district on may 2nd 2024 the district promoted the board members son-in-law to high school principal for the 2025 fiscal year with an increase in compensation of 11 000 dollars. Although meeting minutes indicate the board approved this promotion immediately after
the board member resigned approval was not obtained from the commissioner of education as required by Arkansas code. Additionally the minutes of the board meeting held on May 2nd 2024 indicated that the board member was present and participated in the executive session discussion immediately prior to his resignation and non-compliance with Arkansas code. It should be noted that the board member resigned immediately following the board's return from executive session and immediately prior to the approval of his son-in-law's promotion. However, he was
reappointed to his board position before the end of the same meeting. And that concludes the finding for Mammoth Spring
School District. So members, I have several questions and if it's the will of
the committee and you might agree with me I would like to request them to come before the committee next month. Without objection? All right, we're going to defer that until next
Senator Fredrick J. Love
Unverified
1:10:37
month. Thank you. The last report that was referred to the PA and the AG was Viola School District. Finding one, they had $45,000 in credit
card payments that we tested, and we identified improper charges of $1,300. A thousand of that was undocumented charges to various vendors and restaurants, and due to the lack of documentation, we could not determine the validity of these disbursements. They had $264 in unallowable purchases for gifts and staff parties in conflict with Arkansas Constitution as interpreted by the AG. Finding two, the district overpaid a certified employee $7,500 due to clerical errors.
And finding three, the district paid $296,000 for installation of an HVAC system from the Education Stabilization Fund without obtaining a written contract that included the prevailing wage rate provision and weekly certified payrolls were not submitted to the district. That concludes the findings for Viola School District. Members, are there any
questions on this report? Senator Love, you're recognized.
Chair
Unverified
1:11:44
Thank you, Madam Chair. So when
Senator Fredrick J. Love
Unverified
1:11:47
you all went to, I guess, do the audit,
and I'm looking at finding three, there was no written contract for this? So there was a written contract. Because this was education stabilization fund money, there are specific requirements under the Davis-Bacon Act that has to be followed. They did not have a clause that was required to be included in the contract. Okay, they just didn't have the clause,
but they did have a written contract. Yes. Okay, all right. I understand the rest. All right, thank you.
Any other questions? Seeing none, without objection, we'll file
Senator Fredrick J. Love
Unverified
1:12:27
the report. The next 10 reports contain findings that were not referred to a prosecuting attorney, and they did not contain repeat findings. Staff recommends that the committee take a moment to look over these findings and file en masse as reviewed. I do want to make one note. East Arkansas Community College, their representatives are here for the meeting today, And so if you have any questions for them, they're here to answer those questions.
But they did not have to be here, so I want to make that note.
All right, members, if you'll take a quick minute and look over those. Hopefully you've maybe looked over these reports before the meeting. And I'll give you a second and see if we have any questions. All right. Members, do
we have any questions? I want to be respectful and give you plenty
a question for the East Arkansas Community College, if you all don't mind coming to the table. Thank you for joining us, and I appreciate that. And if you could hit the microphone
button and state your name for the record? Sure. Chancellor Kathy Kline of the University of Arkansas, East
Representative Wayne Long
Unverified
1:14:47
Arkansas Community College. All right. Representative Long, do you have a question? Yes, ma'am. Starting with finding two, I wasn't really sure, but is this basically, I was asking Mr. Fink, the deposits were made over and above the insured
amount like FDIC type deal? Yes, sir. Chancellor, how'd that come to happen?
Speaker 204
1:15:23
Which finding two are you specifically referring to? I'm not seeing one relevant to FDIC at the moment. Under finding number two, it's talking about? I don't have the same document. Just thank you. I don't have your summary. I apologize. Oh, the uncollateralized deposits, yes. Banks are required to collateralize your deposits. We can't possibly call every bank every day and say, hey, are things collateralized today? But we did work with that bank to ensure that they are running a new software every night to check collateralizations.
And with Ms. Tara Smith's help, she is also working with all CFOs in the system to check at least monthly to say, every day, are these collateralized? But they can run it on any given day. And if a bank has not properly collateralized it, that finding falls on us. It doesn't fall on the bank. Thank you. Senator Love, you seem like you're trying
to decide if you have a question or not. You're recognized if you do.
Members, any other questions? Thank you. Dr. Klein, is that correct? Yes, ma'am. Thank you. We know you didn't have to be here, so we appreciate your
presence so that you could answer that question. Thank you. Thank you, Madam Chair. All right. Members, I'm not
Senator Fredrick J. Love
Unverified
1:16:56
seeing any other questions on these reports, so without objection, we will file these en masse. The remaining 26 reports listed on the last page have no findings,
and so staff recommends that these reports be filed en masse as
reviewed. And as I said before in previous meetings, take a second, make sure if you have one of
your schools or universities on here that didn't get a finding, if you want to recognize them here, but be sure you make sure you recognize them at home because we all know that's a big deal to have a clean report, and we want to make sure we recognize them. Without objection, we'll file these. Do I have
Senator Fredrick J. Love
Unverified
1:17:32
– do you have some – Senator Love? I want to ask one question about Heber
Springs and them not getting a performance bond.
What does Arkansas Code say about not – because this is a $4 million – I guess it was a $4 million project and they didn't get
a performance bond? That's it. If it's over a certain amount, which I believe is $50,000, and they're doing a construction project, they're required by law to get a performance bond for that construction. And in this instance, they did not. I mean, they did note that I think they used a construction manager on this based on their response to the finding.
so I'm thinking maybe they thought that either the construction manager was going to take care of it or maybe that they did not have to have one but either way they all we
Speaker 168
1:18:27
check for to see is did you have a performance bond or not in accordance with law they did not okay all
right thank you all right okay so um without objection we will file these reports in
mass seeing now we'll file those and before you leave members um mr fink has a quick update on the questions we had about the problems we're having with fraud in our schools on emails and so forth. So he's going to share that data with you
Senator Fredrick J. Love
Unverified
1:19:09
real quick, and if you have any questions, be sure and let us know. Yes, so at the previous meeting in July, there was a request made from committee members concerning unauthorized withdrawals. You saw several of those in the
findings that were listed today for our schools. So what I did is I went in and I summarized the information so for the FY24 audit cycle and this is for known occurrences it could be that something did not get reported to us or that we did not see it when we were doing the audit or they may use a private auditor and didn't report it to us and so there could be those instances but there were 26 schools where we had an unauthorized withdrawal finding of those 26 schools
it was 65 incidents. On average, the number of days between the incident and the discovery was around eight. The total amount of unauthorized withdrawals was $648,000. The total amount recovered was a little over $605,000. And so the actual loss to the school district specifically was $42,353. In most cases, the loss happened because of, and that's kind of
why we put that in those, the findings that we report to the PA and the AG, we say without verifying the authenticity of the requests. In most cases, that is the reason for the loss. It wasn't necessarily because of the time, because as I said, usually it was within eight days uh that they were you know found the incident it's generally because they did not have proper controls in place so i just wanted to provide that to the committee um could you
send that report or that that information out to the members of the committee so they can
take a look at that as well when and the ones
who are not here with us i think had questions on that as well are there any questions for mr fink on that um if you get away from it and there's some more thoughts that you have or more questions you have on this particular issue we know it's
an issue not just here but in our cities and counties and elsewhere um let us know um and mr fink can see if he can find the answers to those questions i'm seeing no more business um i guess we are october yes okay we'll be
meeting in october i don't remember the date at the moment but we do
have that one that we've deferred for sure along with some others so thank you guys for your work today appreciate y'all being here and we'll see you in october meeting is adjourned Thank you.
Agenda
A. Call to order by Co-Chairman.
B. Adoption of Minutes of the July 10, 2025 meeting.
C. Review of Reports. Refer to the Synopsis
D. New Business.
E. Adjournment.
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - EDUCATIONAL INSTITUTIONS, Sep 11, 2025 | Agenda | 3 | Official source ↗ |
Speakers
Representative Hope Duke Chair
Unverified
Speaker 6
Senator Fredrick J. Love
Unverified
Speaker 9
Joshua Lawrence
Unverified
Speaker 24
Senator Dan Sullivan
Unverified
Chair
Unverified
Speaker 38
Speaker 54
Speaker 55
Representative Howard M. Beaty, Jr.
Unverified
Speaker 49
Speaker 62
Speaker 68
Representative Julie Mayberry
Unverified
Speaker 82
Speaker 85
Representative Wayne Long
Unverified
Speaker 99
Speaker 91
Speaker 110
Speaker 109
Speaker 103
Speaker 115
Speaker 120
Speaker 124
Speaker 125
Speaker 145
Speaker 53
Speaker 153
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Speaker 34
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Speaker 204