Legislative Joint Auditing-Educational Institutions
Video
Transcript
1 document
Machine transcript
May contain errors. Verify important quotations against the official video.
About transcript accuracy
- Source
- SliQ live captions
- Model
- SliQ live ASR
- Processing date
- October 2, 2026
We're so thankful for you to be here today. Thank you for serving on this committee. Uh, before we get started, let's, let's open in prayer and welcome everybody to this meeting. If you'll join me as we, as we start. Thank you Lord for the day. Thank you for this beautiful day. Thank you for the chance to, uh, to represent the people that are in our community in our backyard. Hopefully we represent you above all with everything we say, we do, we think is pleasing and honoring to you. Thank you for the, the ability, uh, for our, our staff to work hard also alongside of us to um to serve
the great people of Arkansas. We appreciate everything we get to do and, and maybe honor all you do, Jesus and I pray. Members with that in mind, that's our heart, that's our goal here. Thank you for serving on audit committee and um uh with co-chair Duke, it's just such a joy to um to serve in this way. Uh, we were reminded this week, um, uh, speaking to different schools across, um, I'm sorry, a few weeks ago speaking to schools as they were wrapping up graduation, uh, the start of our, our preamble and our
constitution, we the great people, we, the people of Arkansas grateful to the God Almighty for the rights and privileges to choose our own form of government. Um, do ordain this constitution. That's what we get to do 151 years later, so we don't take this lightly. So thank you again for giving your time to do this today. So with that, uh, co-chair, would you like to say anything? OK, all right, let's roll. Uh, moving to the agenda first on is to call the order. Second is to adoption of minutes, so we take a motion to
adopt minutes. I see a first and a 2nd, all in favor to adopt minutes, say aye. And oppose like sign, motion is moving forward. OK, 2nd on the agenda and under C is review of reports. We'll pass that to
Speaker 10
1:58
Mr. Fink and our staff. Thank you, Mr. Chair, and good afternoon. Today there are 161 educational audit reports to review. Of the 161 reports, 28 have reportable findings. The current
standing committee guidelines is to invite entity officials for deferred audit reports, reports with repeat findings and reports of school districts currently classified as fiscal distress. There were no deferred audit reports from the December 2024 meeting, and there are currently no school districts classified as fiscal distress. There were 7 reports with repeat findings, and I will identify those uh when we get to them. Um, the 1st 3 reports uh for the committee
to review, uh, we're certified to the governmental bonding Board and referred to the applicable prosecuting attorney and attorney general. We will, we will begin with the university of Arkansas systems report. There were 6, there were 6 findings noted in the report. They were all a result of the UA system's internal audit division that were required to be reported to the PAAG. Instead of reading each finding, I will provide a summary of the issues noted. At UAMS internal audit noted a
loss of $67,000 due to a prepayment of services to a supplier that went out of business before services were rendered. Additionally, there were issues noted related to a travel reimbursement of $673 that was a duplicate payment. There were 2 findings noted at UAPB internal audit identified a potential loss totaling $138,000 related to multiple, multiple salary overpayments due to inadequate internal controls and untimely business processes.
As of October 17, 2024, UAPB had recouped $45,000 of the $138,000 in overpayments. The second finding was related to check fraud in UAPB's student athlete academic services program, checks for invoices were originally made out to students in the SAAS program, but we're altered and cleared the bank in the name of the program director. The program director was terminated in April 2020. 4 and $7000 in accrued leave
time was withheld from his final paycheck. Subsequently, in August 2024, UAPB received a cashier's check for the remaining amount due. At the University of Arkansas Pulaski Technical College. Internal audit identified a loss totaling a little less than $17,000 related to multiple salary overpayments due to inadequate internal controls and untimely business processes. As of October 2024, uh, the
university had recouped $8100 of the $16,869 in overpayments. There were 2 findings noted at the University of Arkansas Fayetteville. The first internal audit finding was related to automated clearing house payments. Internal audit was notified by the university management of a potential loss of $193,000 due to unauthorized charges, changes to a supplier's ACH information. The review conducted by internal audit was for the period January
through April of 2024. Management filed a report with the university police department and worked with the financial institution to recoup the funds. The university was able to recruit $98,000 from the financial institution. And the supplier issued a letter stating that the university was not responsible for the remaining amount of the loss. And the second finding was related to a fraudulent check that was inadvertently approved through the positive pay
exception process, resulting in a loss of $11,000. This concludes the findings for UA system management has provided a response to each finding as noted in the synopsis, although system officials were not required to be here because they did not have a repeat finding. They are present to answer any questions the committee may have. Thank you, Mr. Fink, uh, members, you've heard
the description from the UA system, um, as you heard, they are here and available if there are any
questions, uh, so do we have any questions?
OK, we'd like you to come up, please. All right, members who has questions RIC representative Beatty, you're recognized. Thank
Representative Howard M. Beaty, Jr.
Unverified
6:39
you, Mr. Chair. I, I guess my question just go to the um Um, the salary overpayments and the issues that led led to the overpayments. And my question is, I see that you recouped some
of the money, uh, but are these individuals, let's just go through each one of them at the UAPB, uh, is there a payment plan in For these employees are they are they are continue to be employed and are they repaying out of, out of payroll and what's the estimate for um recouping all those funds, my name is
Tara Smith
Unverified
7:08
Tara Smith. I'm with the UA systems Office and serve as a CFO there. I do have campus specific representatives so they
Speaker 21
7:14
can answer to the specifics of your question and if it's OK, Carla, if you want to join me from the
CFO from UAPB and she'll be able to answer those questions. And then UAPTC is the other one with that similar finding if you have a similar question
for. them and they can come up. Thank you. Please identify yourself for
Senator Jamie Scott
Unverified
7:37
the record and you'll be recognized. Carl Martin, University of Arkansas Pine Bluff. Thank you very much for your question, uh, some of the individuals um do have payment plans that are set up. Some of them have been turned over to the collections agency that we work with on our campus um for contact and making sure that they set up either a
payment arrangement with them or a payment arrangement with the institution directly so we are working very closely with those to get the money is recouped and back
Representative Howard M. Beaty, Jr.
Unverified
8:03
to the campus. Just to follow up. I, I know it, it council that legislative council, we, we've heard some issues relate maybe with, with, with other accounting problems there at UAPB where are these a carryover from some of the, the changes that that you've implemented that will prevent this from happening in the future. So I think um the way we have
Speaker 30
8:23
addressed this particular issue is we've strengthened our
Senator Jamie Scott
Unverified
8:26
training with our departments so when an individual is terminated, it's not necessarily terminated directly through HR, but the department in which the employee originated and so working to make sure that these individuals are terminated in a timely fashion so that there isn't a possibility of overpayment has been how we have handled this particular
Chair
Unverified
8:48
Represent Mayberry, he recognized. Thank you. Several
Representative Julie Mayberry
Unverified
8:53
different questions, but I'll, I'll stick to one. For right now. So, uh, uh, you're,
your UAPB, correct? OK, just making sure, um, the checks that were fraudulently made to this person. Um, so it was in the student's name, so I'm curious if the students have been notified
that their name was involved in this, um, would they have been? Were these checks ever expected to go to them or do they?
No, at all that their name was
Senator Jamie Scott
Unverified
9:30
a part of any of this. Yes, to several of those questions. So first, the students would do work as a part of a program and the individual who was documenting their time would then initiate a payment request for them, the individual would alter the checks what the what the checks have been received, so the students were anticipating a payment but not receiving them. Those students have received all payments in which they were due, um, and the
individual responsible was immediately terminated. Is that kind of how it
Representative Julie Mayberry
Unverified
10:00
came up, is that the students were saying we're not getting our check, we're working and we're not getting our check, and that's how it was discovered then, and then when we
Senator Jamie Scott
Unverified
10:10
would go back and say, well, check X was issued to you on Y day and so forth and so on and then when we cross reference that check number with what was actually cleared in the bank we noticed that the check had been altered from what we produced to what was actually trans uh transacted at the bank. How many students?
Speaker 42
10:29
I don't remember that's OK. I'll let someone else and then I'll get back in
the queue. Members, any other questions? Yes, Representative Long, he recognized. Thank you, Mr.
Representative Wayne Long
Unverified
10:38
Chairman. A moment ago you mentioned the Some of the people who had been turned over to collections. I'm assuming they're no longer with the university. The ones that were turned over to collections, correct. OK, just want to make sure it wasn't
Speaker 49
10:49
really clear. Thank you. Sorry. All right, so you
Representative Wayne Long
Unverified
10:51
know the further questions. Thank you for your time today. Without
objection, these We did, we did have a question
of, of the total and we're we're getting the total there was a question of, of the total amount uh in question on today's reports. For UAPB, but we'll get back on that for the committee, but without seeing uh any other questions, this will be considered without objection reviewed. Just so you have a system. Oh, we've got more questions here.
Representative Hope Duke
Unverified
11:30
Uh, thank you. Um, so my question is on UAMS. Did you on the 6,767,500. Has, has that
been recovered? Any of it? Please identify yourself and you'll be
Speaker 59
11:48
recognized. Amanda OK, Amanda George, I'm the CFO for UAMS, um, we have turned that over to our legal counsel and our pursuing a legal action
against the company and it has not been recovered so far. All right, members, any other further questions
Representative Howard M. Beaty, Jr.
Unverified
12:11
for any of the UFA system? Uh, see Representative Beatty? Well, I, I just think maybe we need an answer from, um, Arkansas Pulaski Tech. Since we had UAPB at the table, maybe they should come to the table as
well. All right, thank you, Miss. George. You're invited to the table, please identify yourself for the record.
Representative Howard M. Beaty, Jr.
Unverified
12:34
Rita Fleming, CFO for You're, you're recognized. And my, my question is the same that that I ask of UAPB, uh, the status of the remaining payments with these folks on, on a payment plan, uh, the collectability of the remaining balance. Do you anticipate collecting all of those funds back. Are they on payment plans to, to pay those out or or what's the. What's the status? Uh, this particular person is on a payment plan, but she's not
Speaker 68
13:06
making payments, so we had filed with the, uh, state income tax debt set off program and so if she's due a tax refund that will come to us to abate that. We did reset up a payment plan with her for lower payments in hopes that she would make those payments on a consistent basis, but she's, she's made Uh, one payment, uh, which was recently on that and we met back with her back in um I believe it
was February to set that up. So she's not making consistent payments and due to the size of the debt. I do not believe it's going to be entirely collectible, but we will continue to pursue it and collect as much as possible, and we do contact her. I send her, um, information, emails and calls every so often. just to remind her that she had set this agreement up with UAPTC and she needs to honor it. So is she no longer an employee of the institution? No, sir. OK.
Members, any other questions for any of the UFA system? All right, thank you for
being here today. Without objection, those will be reviewed and filed. We'll pass it back
Speaker 10
14:26
to staff to continue on. OK. Uh, the next report, which was certified to the governmental bonding board is Atkins School District. Uh, a district employee solicited funds on behalf of the district to sponsor awards for student athletes, district officials discovered that the employee had collected donations of $1800. However, the funds
were not deposited into a district account and the student athletes did not receive any awards. Law enforcement was notified on March 8th, 2024, and the employee resigned on March 13, 2024, and pled guilty to theft of property on April 24th of 2024. As of uh March 4th, 2025, the district had
Speaker 82
15:05
recovered $1400 and this concludes the findings for Atkins School District. All right, members, you've heard
the reports, um, do we, do we have anyone from Atkins School District here
today. members, any questions on this report? This is, this is not a repeat finding, that's, that's important to note, right,
you've seen and heard the report, you've, you've seen their response, um, without objection, this would be um filed, moving forward, OK? The next report, which
Speaker 10
15:40
was certified to the governmental bonding Board is Mountain Pine School District, one of the findings noted is a
repeat finding. Finding one analysis of credit card charges made by the superintendent revealed improper questionable charges totaling $838 as follows. $280 for a toast toaster oven and ice maker, not located at the district $274 for candy and snacks, $206 for ammunition, not compatible with firearms used by resource officers, $77 for personal shopping club
membership upgrade and room service fees. In addition, the following questionable charges made by the superintendent totaling a little over $2100 were paid for utilizing United Way activity funds, $1000 for hygiene. Products, $572 for kitchen utensils, $189 for a tabletop ice maker, $166 for towels, $88 for snacks and breakfast bars and $82 for cleaning supplies. According to district officials, some of the items could be
accounted for. However, the majority could not be located. Finding 2, we were made aware that district officials believe fuel located at the bus shop had been placed in personal vehicles and examination of fuel purchases. s fuel logs, and other documentation revealed the following. District personnel periodically review the fuel levels in the underground fuel tanks. When reviewing district records, we noted 10 instances in which the actual level was less than the amount that should have been in the tanks according to the fuel
logs. The total amount of unaccounted for fuel was 612 gallons. Therefore, it appears that fuel was obtained from district pumps without being recorded in the fuel logs. We compared fuel usage. During our audit year with fuel usage in the 1st 5 months of the following school year. The average amount of diesel used each month remain consistent. However, the average amount of unleaded gasoline use decreased significantly from 525 gallons
to 284 gallons per month, which could indicate that district fuel was placed in non-district vehicles prior to June 30, 2024. And the last finding was a repeat finding, a review of activity funds maintained by. The high school media specialists revealed that all funds collected were not properly receipted at the time of collection. As a result, we were unable to determine if all funds collected were deposited. A similar finding was noted in the prior audit. This concludes the findings from Mountain Pine School District, District
officials are present to answer any questions the committee may have. Thank you, Mr.
Fink. Uh, would Can we please have the uh the district please come to the tech and introduce yourself for the record. Superintendent
Speaker 92
18:45
Mountain Pine. OK, I'm sorry, what was your last name?
No, Knowles. Knowles, thank you. Thomas Gould, school president. Thomas. All right, um, you've heard the report, and these are repeat
findings. Uh, I, I, I believe, Ms. Knowles, that you are a new superintendent to the district post these findings. OK, would you care to just kind of recap maybe some of
your responses that you have on in, and feel free to go and order on the 1st 1st finding.
Speaker 99
19:21
Yes sir, um. The first of all, I would like to say that, um, this has also been turned over as as an ethics violation to the ethics committee. This all of this has to do with 3 employees who are no longer employed at the district and um The credit card charges we've tightened internal controls. We have, uh, there were not sufficient processes in place so we have put protocols in place
uh for districts or for district personnel to use credit cards in the future and so we started that actually. I came on board actually in May of last year and we begin that in July, um. Then there are only 3 as far as the diesel and gas, there are only 3 district employees who are authorized to use the pumps. It also takes 3 keys to use the diesel and gas pumps. We believe that these findings from these findings, we believe that this was actually
um put in those other vehicles by school personnel not authorized to use them, um. And then um No personal vehicles are fueled at the district and not allowed and those only 3 people have the keys to the pumps to be able to, to fill vehicles. Um, and then the, uh, as far as receiving money, that employee is also no longer here, and that's a carryover finding because the year before she was collecting money for um
For uh sales for one fund and then she was also overseeing another fund in that same finding ended in the next year and so, um, that is what we have done to correct the findings. As far as the firearms, um, We have a police department at Mountain Pine, and we have a chief of police and um we do not purchase any ammo through school funds, they, the school does not
have the 99 millimeter guns that the officers carry are their own personal guns and they qualify paying for their own ammunition. We do not purchase firearms, so the MO had to do with firearms. We don't have and we only have particular firearms anyway at the school, so these were for hunting rifles and things like that that the the ammo was purchased for, so none of those were, we don't have any guns that those would be
Speaker 102
21:54
used for. Thank you for that and just looking at the first finding,
um. The toaster ovens and the ice makers, some of these things have not
Speaker 99
22:09
been recovered, um they have not, um. Uh We believe that um Well, the personal shopping club membership upgrades, these were for conferences that one of the three members we are one of these 3 employees or past employees attended um and then the hygiene products and kitchen
utensils and all of that, um, those are items that are, are that that is money that is provided to the school districts in Garland County from United Way and that money is to be used for local students in our District and we believe that this, this was sent to another state. To For for I don't know for what personal
Speaker 107
22:53
use, I suppose. OK. Representative Beatty, you recognize? Thank
Representative Howard M. Beaty, Jr.
Unverified
23:00
you, Mr. Chair. Just clarification, you said, you
know, on finding one that the 3 employees were no longer involved. Are these the same employees that you're, you're you mentioned with the fuel card and the keys that those 3
Speaker 102
23:15
employees are former employees as well. Those
are all the same three employees. That, thank you. Representative
Representative Julie Mayberry
Unverified
23:26
just looking for a little um more clarification, so, because it says the response on finding number 2 about the gas, um, Before,
when this took place, possibly where there still only 3
employees who had keys, or is that what you've done in response to it. That is what I've
Speaker 99
23:48
done in response to it. So, um, There were several keys out. So the first thing I did was change the keys or changed the locks on the pumps and then provided the 3 keys to the transportation, uh, director, the, um, Maintenance person and then the assistant
transportation director because those two are the ones that feel, uh, our vehicles with fuel one for for lawn mowers or buses or whatever it will be and so we have one extra key in district office in case somebody would lose a key, but just 3 people have
Representative Julie Mayberry
Unverified
24:24
keys and several people had keys in prior years and then it says it takes 3 keys in order to access the pumps,
and I guess I'm just curious, is it? take all three of those people with their own key, like I'm
thinking high sci-fi, you know, we all have to get together and put our key in and it's
Speaker 99
24:43
the magic code and it opens. No one of those people has 3 keys, but it does take all three keys to open the pumps. So, so I, I guess I should say there were 9 keys total. Gotcha. OK. I didn't know if
Representative Julie Mayberry
Unverified
24:56
they all had to be together to witness the fact that. We're using the gas right now just clarifying some of the words there. Thank you. Representative painter, you're recognized.
Representative Stetson Painter
Unverified
25:09
Thank you, Mr. Chair. Um, two questions. One is, this is repeat findings. So how long has this been going on?
That you are aware of, and painter, I think just the 3rd finding was a repeat. OK,
Speaker 98
25:21
yes, the one that was the repeat was the candy sales. That individual was the same individual, so she was
Speaker 99
25:27
over candy sales for one club one year and the next year she was over prom, so she had a similar Uh, you know, similar situation that she didn't receive money properly and do that and so we
have tightened protocols in that area as well of how funds are received and then we do an annual tier 2 training with any employee who handles money or collects funds for fundraisers or or any other uh use. Thank you for that and my last question
Speaker 119
25:55
is I understanding some of these findings the superintendent has been labeled, but, uh,
Representative Stetson Painter
Unverified
25:59
who are the other two employees like a bus Barnes superintendent who, who. The superintendent. That uh, his
Speaker 99
26:07
wife, the special ed supervisor and um.
The media specialist. Got you. Thank you. Thank you, Mr. Chair. Any
Representative Wayne Long
Unverified
26:22
other questions, members? Yes, Representative Long, you recognized. And thank you, Mr. Chair. Uh, I was wondering, uh, has this
Speaker 92
26:28
been turned over to the prosecutor, It has been turned over to the prosecuting attorney and also there was $49,000 in prior
Speaker 99
26:34
year that was taken care of and so the ethics violations have all been taken care of. This has been turned over to the prosecuting attorney and I
believe, um, Uh, when we got a letter, we knew that when we got our audit um packet. Is that correct, Mr.
Fink. That's correct. All right, members, Representative, uh, uh,
Senator Fredrick J. Love
Unverified
26:59
Senator Love recognized. Thank you, Mr. Chair. I just need something just clarification for this committee, uh, when we say we certify the bond board certified to the bond board. What is, what is that specifically mean? Does that mean we're turning
Speaker 9
27:13
over to the prosecuting attorney. If, if something is certified to the bond board, so yes,
Speaker 10
27:21
it is referred to the PA and the AG still, but there's also another piece to this, um, so if it's, if it's certified to the bomb board, they provide coverage for actual losses sustained uh by its members through fraudulent or dishonest acts committed by an entity official or employee, are we saying that the bond
Senator Fredrick J. Love
Unverified
27:43
board then I guess for. the funds that the district is missing right here this listed. They, they, uh, the district
Speaker 134
27:50
was reimbursed for those funds. It'll have to be reviewed by
Speaker 10
27:54
the bomb board, and then, uh, their board will make a determination. OK, all right, thank you. Thank you, Mr. Chair. And co-chair Duke,
Speaker 136
28:03
you recognized? Thank you, Mr. Chair. Thank you both for being
Representative Hope Duke
Unverified
28:08
here. I do have a couple of questions for both of you. Um, I understand, uh, is
it? Knowles. Yes, ma'am. OK, thank you. You
came on board in May, if correct, if it's last year. So could you just speak a little bit about your experience before? Were you
in the district? Did you come from a different district? Um, I came from Earl
Speaker 92
28:28
school district, which was a school district and physical distress and I was there for 5 years. Thank you. Um,
Representative Hope Duke
Unverified
28:35
just kind of curious to see where, where you were. Obviously you're taking over where there's some problems that were here in place. Can you also tell me if all the
employees that maybe have been identified in part of these problems are any of them remaining with the district?
No, ma'am. OK, thank you. And um, I'm sorry, I didn't catch your last name. gold, gold, OK, thank
you. Um, can you tell me how long you have served on the board, because I'm assuming you were there during these things? Yes, ma'am,
Speaker 140
29:03
this is my 15th year on the school board right now.
Representative Hope Duke
Unverified
29:06
um so in that time period. What do you think as far as the board being able to help give
that accountability for her as she moves forward in this role on some of these areas, particularly I think we see oftentimes a lot of problems with the activity funds in school districts for small numbers, but it, but sometimes it gets bigger numbers because there could be a lot of money in those activity funds, but in your role as a school board member, what have you seen or been able to do to try and help prevent this from happening in the future,
Speaker 143
29:37
any of these items we've always, we've always get a monthly statement to. of our Of our funds and everything and we've always, can you hear me? Is it on? OK.
Uh, we, it's uh something that we've always looked at our budget every year, every, every month, and, um. We at the time, we didn't see, we see credit card statements, but we didn't see what, what everything was purchased on the credit cards. So now we've asked that every time we see your credit card, we wanna know what's
Speaker 99
30:06
been on that credit card. May I, if I, if I can, um, I
Speaker 92
30:11
believe the board was a little bit in the dark because the superintendent was, it was an Amazon account.
Speaker 99
30:18
And in an Amazon account, you can either have pay by invoice or pay by credit card and so the individual, the superintendent. Had the invoices only directly coming to him and only the board would see the credit card receipts and that The items that were paid for by invoice would go directly to him on his personal email account and so they had no knowledge of that because they only thought everything was being paid for by
credit card. We have remedied that. We have since taken care of that and um. that is, it's been a, a tough process. Sure, thank you. So do you feel as
Representative Hope Duke
Unverified
30:59
the board president as a a long member on that. So thank you for your service. That's a big time commitment. Um, do you feel like that you are more empowered and better able to any of these pieces be able to to catch some of those pieces in the future. I mean, I know it's hard, but do you feel like that you've got adequate training that you have better resources
at your disposal to be able to help your superintendent and trust but verify what's going
Speaker 143
31:24
on. With our new superintendent, we've had some work sessions and so we've been getting more involved with, with our new superintendent, previous one we never really did any work sessions, so there's something for us new to us so it's helped us realize what we should have seen before and, and, and it catching now. So with this new super tent we've got now, we've, we've Step forward what we needed to be doing. Great. Thank you.
Senator Fredrick J. Love
Unverified
31:50
Senator Love, you're cast. Thank you, Mr. Chair, and just, just a question now, since you've been a school board member. Do you undergo any type of training? Is there a school board training? Yes sir, there is. OK, is,
Speaker 143
32:07
is, is so many hours that we have to. Serve every year, uh, uh, I don't know how much the new, new board members, they have so many 9 hours. OK, so
Senator Fredrick J. Love
Unverified
32:17
in the, in the 9 hours does, did, did that
training cover any of any of this kind of to prevent. No. Not that
we that I've seen. OK, all right. That's, that's what I needed to know, so I, I think Mr. Chair, we need to possibly review what we're, what we're asking school board members to be trained on because this fiscal piece is probably one of the more important pieces in that they need to be able to oversee and and have some insight to this so I thank you for that that answer, Mr. Gould, and I think that's something that we need to look into so
that our school board members can be more aware of what's going on fiscally with between the super. superintendent. Thank you. I love we were just discussing that with
staff and we've made note of that. OK, thank you. Any other members
questions? All right, seeing Nunn, thank you for being here today. We do challenge y'all to rise above in the new phase of mountain, uh, excuse me, Mountain Pine School District, but thank you for being here today, uh,
without objection, this will be reviewed and filed. Thank you. Thank you.
Speaker 10
33:23
All right, uh, Mr. Fink, back to you. Thank you, Mr. Chair. The next 3 reports were referred to the uh prosecuting attorney and attorney general, um, the first one was Fouke School District. Uh, they did not have a repeat finding and this is not a deferred report, so no one is here from the district, uh, a review of reimbursements to the superintendent revealed disbursements totaling $3600 that appear constitutionally suspect under Arkansas Constitution and violate
district policy. Additionally, we were unable to verify a legit school business purpose for these expenses, $2800 in mileage reimbursements for non-school trips and $800 for airfare and travel insurance toward the superintendent and 4 students on a summer college tour. And finding two unallowable costs paid from the child nutrition program totaling $843 were detected for the audit year. These costs were comprised of $843 in salary payments that
should have been recorded in the district's general fund, and that concludes the findings for Fu
School District. Thank you, Mr. Fink. Uh, without objection, Fau School District because of not repeatable offense will be reviewed and filed, moving forward.
Speaker 93
34:36
OK. I'm sorry, do we have questions on that? Uh, Representative
Representative Julie Mayberry
Unverified
34:44
Mayberry. So I'm trying to, I, I read the response and I'm just trying to understand is the the superintendent claiming
that the expenditures for mileage were to go visit a sick student.
Yes Um, multiple times, one time, over and over again. Were they ever and, and, and there's no way that they
could be considered school-related. So it ends
Speaker 10
35:07
up adding up to over $2800 so they went multiple times, yeah, a lot of times. Um, I think it was just one student,
Representative Julie Mayberry
Unverified
35:15
it wasn't multiple students or It was one student. Um OK.
I get Any time that they were ever bringing school work up to them? Do we know
Speaker 10
35:38
what they were in the hospital for. So yeah, the student had a pretty serious injury due to um a I think a vehicle accident and what we would have preferred to see in a situation like this to, to try to, because we're questioning this is what we're doing, um, is if he would have had school board approval
beforehand in doing this, that would have helped us make a determination that, hey, this, the school board as those charged with governance, made a decision that this was Something that does serve a school business purpose for us due to just the number of times and we're not used to seeing this at all the other audits that we do on schools, um, it stuck out to us is a bit unusual and so we thought it should be questioned. OK. So the number of times,
Representative Julie Mayberry
Unverified
36:24
maybe if it had just been 1 or 2 times
that I, I, I don't know, I'm just trying to find the line.
I'm just sitting here thinking of a superintendent who, you know, there, there's someone who obviously was in a car accident I don't know if it was school related on school campus or if it was just whatever, wanting to check on the student. And You know, to me, kudos to a superintendent who wants to check on on a student, but how do we make sure that we're following the law, I guess is the question. I'm not sure if you wanted a
Speaker 10
36:59
response to that question or not, um, but if it's over, so there's certain, if it's over $500 if we have an issue that ends up being over $500 and we question it and we think it's something that is constitutionally suspect due to legal research that we've done, reliance on AG's opinions, um, just our experience on school district, uh, expenditures, if it's over $500 then we will refer it to the PA and the AG.
Representative Julie Mayberry
Unverified
37:29
Anyone else from the school visit the student. Do
Speaker 163
37:33
you know? Not that I'm aware of on the student on the school's
Representative Julie Mayberry
Unverified
37:38
just, you know, to me, just way on the outside and the information I have here, I don't know anything about the super, I don't even know who the superintendent is. I
don't know the student. I just kind of think. You know, where, where is the line there, um, because I would like to know that a superintendent cares enough about students to visit them in
the hospital. Like that to me is a really sweet quality. Um, but where is the line when it crosses over and maybe getting approval from the school board, making it more apparent, would, would help and maybe cutting down the numbers and sometimes when you visit it's on your own dime. Is that kind of, kind of the maybe uh. It sounds like Mayberry maybe this is another note for the training
section as well with the school board approval because that would alleviate a lot of the concern that I think
staff is describing. Do you agree, Mr. Fink? Just thinking
Speaker 37
38:34
out loud. Never really thought about it before, but thank you. Duke, you
Representative Hope Duke
Unverified
38:40
recognized. Thank you, Mr. Chair. So Representative Maybury kind of along the lines of what you're talking here, in my opinion, just looking at that, I, I would think that I
agree it's noble, and we've had those circumstances and being as far away as I am, if someone's down here at Children's, that's, that's a significant trip. But with that kind of number, I would expect that you should be getting permission from your school board, if you're doing it
on a school board and particularly just so the school knows where you are, right? Because if you're, if you're making that kind of trip that's that kind of mileage, either you're doing a whole lot of times if you're gone from the district that much, that should be something. So I, I think if, if To their point of having that, I think that accountability is for the taxpayers of the dime. I love the intent as well and the heart, but you need your board needs to know where you are
and your staff needs to know where you are, and I think that that would help with that communication there on that piece. I do have a
question on the airfare piece of this as well. On that travel insurance, so that's the superintendent as well. Is that correct? Yes, that's correct. And so they took A trip of a college tours of universities that required them to fly. Is that correct? That's correct. Do you know where they went? Is that part of the University of Tennessee in Knoxville. And these were the students that were Flying and the superintendent was traveling with them.
That's my understanding. And there this school is not here though because this is just a So the superintendent's traveling with them. They went to Tennessee. The school paid for the travel insurance. On that. Was he related to any of the members that were going on the trip? Not to my knowledge. OK. Um, is that, do you know if that's the norm in a district or that district to I would say no. It's not the norm it seems highly unusual to
me too and maybe was a school board? Was there approval on this
Speaker 163
40:38
one? I don't believe so, no, not that we could
Representative Hope Duke
Unverified
40:41
find. OK. And is that superintendent still with that district? OK. Representative Painter, thank you, um.
Representative Stetson Painter
Unverified
40:51
I guess to, I have a question for staff. When a report, reports are referred
to the prosecuting attorney or attorney general, is there a time frame?
Speaker 10
41:05
So usually, so we have a, uh, we follow up with them, we have a contact within our office that we provide to them in our letter that we send to make sure that they follow up, but we also, every single year we do a PA, uh, disposition report for the whole committee on, on a Friday. Um, I think that's coming up maybe next month possibly, um, and so at that time, every audit that we've referred, we will have some sort of. follow up
Uh, related to it. And if we haven't received a follow up, it'll
Speaker 82
41:38
stay on that list until we hear something back from the prosecutor. Also
Representative Stetson Painter
Unverified
41:43
too is um I would be curious too to see if there was other adults on that airfare trip as well. I would be a little bit, um. Probably shocked if the superintendency only adult with those 4 students. Flying and traveling there. As much stuff that goes on. So if we could find out that, that would be great. Thank you, Senator Love.
Senator Fredrick J. Love
Unverified
42:08
Um, Mr. Chair, is, is just a practice of this committee when, when you have an initial finding, does that mean that you all do not ask for superintendents to be in front of you. Is that, is that
the practices related to initial findings versus repeat uh findings and all that when they that as well. OK, when they repeat
Senator Fredrick J. Love
Unverified
42:27
findings, that's when you request somebody because I'm, I'm, I'm, I'm, I'm listening to the questions and I'm, I'm having the same questions, uh, because I, I think. We, we have questions for the
fiscal piece, but we also have questions on like what is what is actually going on. So could we, could we not have the superintendent come next month to actually clear up this because. I'm concerned. I think I hear, I hear the committee saying that they're concerned that we're trying to protect children. I, I'm just, I'm curious why I superintendent. It's traveling now. I don't know the makeup of the school. I don't know, you know, I don't, I just, I'm just curious. I mean,
I don't, I'm thinking about Little Rock School District, but Little Rock School District is much bigger than. 1000 kids, so I don't know if, if the superintendent is a butcher, the baker, and the undertaker, you know, so
he might be wearing I think that's a great point. Yes, we can request them to be here next month's meeting. Also I think it's important to
note that this has been referred to the prosecuting attorney. And so just because it's an initial initial finding doesn't mean that it hasn't been. It has been referred to the prosecuting attorney for further review as well. OK. All right, thank you. Represent.
Representative Stetson Painter
Unverified
43:46
Real quick. It's, is there a definitions, I guess, for what is classified as a school trip and then what is a non-school trip. I don't know that
Speaker 10
43:57
there's a A specific um definition for that, I have to go back and look in their school policy to see if there's something within their policy that designates, um, because $2800 for a non-school trip just For the See, and I just didn't know if
Representative Stetson Painter
Unverified
44:17
that's a definition that they use or what that may be.
Speaker 10
44:20
That, that was something that we were questioning when we looked at the expenditure as a as a non-school purpose under the Constitution as well as looking through AG's opinions, um, our legal staff looking over it. That's why we question that as a non-school trip, but there is a definition or some kind
Representative Stetson Painter
Unverified
44:38
of language that specifies a what a school trip is. I, not to my knowledge, like a
specific definition, no sir. I'm just trying to understand the criteria that you guys were looking at. And justifying, you know, hey, there's questions about this that doesn't seem
Senator Fredrick J. Love
Unverified
44:59
adding up. So, so I guess on the same line as
representative painter, so Why did you all classified as a nun school trip? did you classify it as a non-school trip because Like, what did you all think because what I, what I heard was that the superintendent was
traveling back and forth and there was a student attached to that. I would think that even though I mean, I, I would think that was a n that that was a school trip. I mean, it was related to a student if they were actually in the hospital when he was getting school work or whatever. I mean, I'm, I'm just trying to, I'm, I'm curious. You are, you are classified it as a non-school
Speaker 193
45:42
trip, correct? We are questioning it as a non-business trip. OK, I got you. Alright, OK, thank
you. All right, thank you, and I'm gonna, I'm gonna confirm with, with our staff, the motion from Senator, is that an official
motion that we need to vote on to bring them to next month's meeting. How does that work? Um, rule wise. Yeah, any committee
Speaker 10
46:05
member can choose to defer if it's the will of the committee to defer, then we can do that finding or just defer the whole report to the next meeting so that we can invite entity officials, are you good with
Senator Fredrick J. Love
Unverified
46:20
that? Yeah, I'll make a motion to defer the the report to the next, um, to the next uh meeting as well
as is bring the superintendent requested the superintendent attend. OK, you've heard the motion. We've got
a second from from Representative Painter. Any discussion? All right, all in favor of the motion to with say a pose
like sign. All right, motion carries. All right, we'll move forward to the next school district, Mr. Fink, OK. Uh, the next report,
Speaker 10
46:45
which was referred to the prosecuting attorney and attorney general is
OCL the school district, um, they also have 3 repeat findings. Finding one was a repeat. The district did not have adequate internal controls relating to use of credit cards, our examination of 3 credit card accounts for 1 month revealed the following questionable transactions, $37,000 without any form of approval or authorization indicated, uh, $10,000 without adequate supporting documentation. Therefore, the the validity of these transactions could not be determined.
And $2800 for hotels in amounts over the IRS per diem rate. In addition, the majority of payments were made via auto draft and not recorded in a timely manner. A similar finding was reported in the previous audit. Finding 2 was also a repeat finding during our examination of the March, uh, bank statement, we noted 5 payments totaling $42,000 were made electronically without board approval or an approved resolution in noncompliance with ADE commissioner's memo and Arkansas. Upon review, many bills were
paid via auto draft and we're not recorded in the general ledger until year-end closing. Similar finding was reported in the previous audit. Finding 3 was a repeat finding, um, the district's bank accounts were unreconciled by $256,000 at June 30th of 2024, ALA staff identified $82,000 of the unreconciled variants, leaving an unexplained variance of $174,000 a similar finding was reported in the previous audit. Uh, finding for
Uh, the district failed to accurately record deposit with paying agent, account balances and transactions in the general fund and other aggregate funds, uh, I won't read each bullet, but you can see those there of what that entailed, and then, uh, finding 5, which was the last finding, uh, the district could not provide documentation that bids were obtained for the purchase of the superintendent's vehicle as required by Arkansas code, um, district officials are present to answer any questions the committee may have.
Thank you for being here. If you'll identify yourself
Speaker 203
49:21
for the records. Uh, my name is Charles Wilster. I'm
Speaker 204
49:26
the interim superintendent. Hi, I'm Rebecca Worsham. I'm the attorney
for the school district. Thank you for being here today. Um, just like we've done in the others, you, you've heard the, the 5 repeat findings, um, if you care
to in order, maybe give some uh commentary on, on the responses, please. Yes, sir. I'm responding to number one, the district would
Speaker 205
49:47
take extremely careful about the, if you wouldn't
mind uh pulling the microphone a little closer so we can hear. Thank you. Thank you, Mr. Watcher. I think they both did
Speaker 206
49:57
it go, uh. er All right, thank you. Again, I'm the
Speaker 208
50:10
inner superintendent. I came in July 1 of 24, uh, my contract in June the 30th, uh.
Speaker 209
50:18
The district stopped all the auto draft. We, uh Make sure that we ask all our car holder to return their cars to the administrative office and they have to check those out and then uh get a bulletproof if we need, uh, if it owe a certain amount of money, so we, we're taking care of that action as well. Uh, the The other one is the, the credit card. We've gotten, we've got taken care of.
The brand number 5, which is the district bank account, I reconciled for $256,000. The district
Speaker 208
50:56
has reconciled a bank statement. through June 30th we identify those variants. And at this point, we are awaiting the direction of the uh the state on how to proceed in making those adjustments. Thank you, Mr. Webster, and I, I think I want
to highlight, I think it's, it's finding 3. This
may be what you're referencing, but just for clarity, so it's um we had 256,000 of, of unreconciled. You found 82,000 of it. There's still 174,000. Is this the figure you're you're referencing there, OK, so you did find the 174 and you're waiting for the state to to what what
was the finding, where, where was it? Um We have an outside consultant,
Speaker 209
51:42
Ms. Suzanne Marshall. She's not here today, but we did find the documentation we needed to present to the state.
Speaker 208
51:52
I'm not sure what those variants were, but we
did present it. But what specifically what, where were the dollars? was it spent on Uh, equipment on She didn't
Speaker 202
52:02
give me any details as to what they were spent,
right. All right, members, any questions? Representative Beatty, a question for staff said that documentation presented
Representative Howard M. Beaty, Jr.
Unverified
52:11
here. Does your office reviewed that and have you received that information and reviewed it. So I know our staff
Speaker 10
52:18
has followed up uh with the district and then
we, when we do the next audit, we will follow up again on this finding to see where the uh bank reconciliation is at June 30th of 2025. And so we should obtain that information at that time I mean, the reason I'm
Representative Howard M. Beaty, Jr.
Unverified
52:37
asking is if the districts had had issues and, and, and they're providing some information, maybe they're also looking for a little reassurance back from audit that hey, you, you kind of got. interact together now and, and you're following the process, so maybe a more timely response from audit back to the district
would. would maybe make the process easier next time for the school district as well as for audit team. Thank you, Representative Beatty. Senator Wallace,
you recognized? Thank you, Mr. Chair and members, Mr. Webster
Representative Howard M. Beaty, Jr.
Unverified
53:06
took over a rough situation, uh, less than a year ago and has worked hard and his staff has worked hard to, um, Get everything right again, and, uh, they're doing a good job right now. Thank you, Senator. members, any other questions? Representative Duke.
Representative Hope Duke
Unverified
53:24
Thank you, Mr. Chair. Do you all have any members of your board here
Speaker 204
53:32
have any members today. The board president contacted me, uh, this morning. He was not able to get off work, so that's why he is not here and
Representative Hope Duke
Unverified
53:41
I, I understand that since they are, um, basically volunteers, right? Um, so I do understand that dilemma. So has the board structure um changed any over this time period? Has there been any additional, uh, maybe support or training so that they
are better informed and able to help guide um the super interns or superintendent and And such along the
Speaker 209
54:03
way. They have, uh, went to pretty much every training that that um
Speaker 208
54:07
have been provided for them. Uh, during the summer, during the fall, so they have went through extensive training. We're in the process, uh, hopefully this year we can do training within house. Do, do they, do you think, and I know it's kind of hard
Representative Hope Duke
Unverified
54:21
to, to maybe put words in other people's mouth, but do you feel
like that they are better equipped than they were when you took over a year ago. They are. They ask you
a lot do they ask you lots of questions? Good.
I'm glad to hear that. Thank you. Mr. Webster, would you mind sharing, uh, were you at a different school
Speaker 208
54:44
district before your time at Osceola? No, I was in Osceola as the school director of school uh student services.
Great. Thank you for being there, providing leadership for this next step forward, members, any other questions? All right, see
none. Thanks for being here today and uh this report will be filed without objection, Mr. Chair. Thank
Speaker 10
55:06
you. All right, Mr. Fink, moving forward. The final report that was referred to the prosecuting attorney and attorney general is a Western Yale County School District. They had two findings, finding one, a review of payroll records revealed the district failed to record an employee's resignation timely resulting in an overpayment of $900 and finding to the district did not have adequate internal controls relating to the use of credit
cards, our examination of one credit card account for 3 months revealed the following questionable transactions, $27,000 without any form of approval. authoration authorization indicated and $4600 without adequate supporting documentation. Therefore, we could not determine the validity of the transactions, and that concludes the findings for
Speaker 82
55:44
Western Yale County School District. Members, any questions or comments with this with
this report? So no, this will be reviewed and, and uh filed. All right,
Speaker 10
55:58
Mr. Fink, moving forward. The next 5 reports contain repeat findings. Uh, the first is Northwest Arkansas Community College instead of the instead of reading the finding in full, I will provide a brief summary. We noted key errors related to financial reporting due to lack of management oversight and turnover of key accounting personnel, the errors that we noted were corrected by college personnel during audit field work, key errors. We noted on the statement of net position, the statement of revenues, expenses, and changes in that position, the statement
of cash flows and the notes of the financial statements. A similar finding was noted in the previous 3 audits. Officials from the college are present to answer any questions the committee may have.
Thank you, Mr. Fink. We'll go ahead and invite, uh, officials from the university here. From
the community college. If you will identify yourself
Speaker 233
57:01
for the record. Thank you. Hello, thank you for inviting us. I'm Anya Peterson Frye, vice president of Finance Administration, and I joined the college in June of 2024. Thank you,
Speaker 235
57:15
Mr. I'm Catherine Donner. I am the executive director of accounting slash controller. I took that position on as interim in. August of 23 and was made permanent in November of 23.
Speaker 238
57:32
Alex Vasquez here as executive director for government relations for the college and um Just here to support our great
Speaker 239
57:38
finance team. Thank you, Mr. Vasquez. Thank you for
being here today. Uh, just like we've done
with previous reports if you care to, um, Any opening remarks or responses to some of these findings. I'll, I'll, thank you, thank you,
Speaker 238
57:50
chair. I'll uh make just a couple of opening remarks. Um, I've been in my role just 6 months with the college, have a long history though with the college, previously served on the board of trust of trustees,
as well as the um foundation board over the last 20 years, uh, but have been honored to be able to join the college here recently, including my first legislative session, uh, this past spring, uh, so I appreciate the opportunity to be here and represent the Um, a couple of things that are noted and I think the responses of first of all, we appreciate the work, the, the opportunity to to work closely with the auditors uh we got a good working relationship with them, so we really appreciate that. Uh, mentioning just two things, you'll see kind of thematically
I think in the responses. One is a workday, um, there was a rough start, frankly with implementing Workday itself back beginning in 2020 and then uh student workday beginning in 2022, and as part of the learning process here, I learned that those two systems don't necessarily uh very seamlessly interact with one another, so there were some real challenges there, but, uh, we do have um a lot more experience now with Workday and student work day and that implementation, the integration of those two, you
know, under our new leadership, we think we really have turned the corner and we'll have a better path forward. So that's a positive. Um, also, obviously we have a new CFO and uh um uh Miss Donor knew in her role as controller, but with some experience at the college as well, and we think, you know, under their new leadership, we have better management and controls in place, uh, that will hopefully just continue to help us move forward in a in a more positive way. So just in the 6 months
I've been there, I know that all these issues have been discussed and worked on very aggressively and so we are looking for a brighter day ahead. Thank you,
Mr. Vasquez. I think just my, my opening question just my eyes just naturally go to the accounts payable overstated by $8 million. Can we just highlight that real fast and what was the situation there? Sorry, how's that? OK. Uh, we
Speaker 244
1:00:07
had some misclassifications predominantly due to, um, timing
Speaker 245
1:00:13
Issues on um You said accounts payable, um, accounts payable uh was related to uh misclassification of grant payments or grant receivables and payables, um, not being applied properly. Therefore, it was showing as, um, Payable
The unplayed payments for showing as payable rather than reducing the receivables. Um So that um It Made the um It made the um payables over, overstated. Because of a timing error? Um, sorry, no, the timing error was um related to the revenues, um.
The payables was related to uh uh. application or
Speaker 235
1:01:12
lack of application of grant payment. All right, I'm, I'm not
feeling a lot of confidence in the answer, to be frank. It's fine. I'm very um. It's, it's fine. And, and if we need to come back to it. as we think through it, we can, but um that, that just kind of sticks
out compared to all the other line items, um. And so Let's come back. Let's come back
Representative Hope Duke
Unverified
1:01:42
to it, Miss Stoner. That's fine. Members, any other questions? Representative Duke? Uh, thank you, Mr. Chair. Um, so my understanding, these are
repeat findings. And so, I just kind of a More of an overall question since this has obviously been a problem in some capacity, the last couple of audits. What are y'all doing differently now than what you were doing in the
previous audit when you had this finding, and has it been more than one repeat finding or is
Representative Julie Mayberry
Unverified
1:02:13
this these are repeat findings, however, they are
Speaker 245
1:02:16
not. The same causes in many cases. The prior audit, um, in FY 21. The audit, um, stated that the cash reconciliations were not done, uh, this, uh, was due to the um the implementation of Workday, the staff at that time did not use the ERP workday to perform reconciliations, and they
basically had not been done, um, and so when I came on in October 22 as general ledger manager, I was tasked with catching up the cash reconciliations, which I did. Um, so in FY 22, um. The fact that many of these reconciliations had not been done. There was a 200% turnover in staff and the accounting department, uh, things were very far behind. That
Cleanup was still being performed for this FY23 period and during the audit period and the implementation of student workday. And the misclassification of some of the clearing accounts set up by the implementation team for student workday caused many of the um Liability and asset accounts to be ran through the wrong type. The Implementation team was not
accounting knowledgeable and they sort of worked in a silo, so, um, we have since pulled in and are much more involved in any setup, any accounts that are added, um. And we have um also in the implementation of student workday, uh, it does not allow for deferring revenue for future periods. That was part of the overstatement of um some of the um the part of the
Overstatement Hang on, let me Yeah, part of the overstatement of accounts payable, the vast majority of it was because I booked. fall of 24 registrations that were um going into work day I looked to them as unearned revenue, which is a liability, and the auditor had us reclassify that to accounts receivable. OK, thank
Representative Hope Duke
Unverified
1:04:39
you. So do you, it sounds from what a little bit I'm gleaning here. There's some maybe issues and understanding
your systems with workday. So what have you all done to make sure that people are trained and more confident in what they're doing with Workday and steps that you're taking to alleviate this problem, so you won't have another repeat finding. So you know, nobody wants to come down here, right? So, um, what are y'all doing to make sure that You know, that's going to get cleaned up better. And I'm sure legislative audits given some guide guidance on that as well. Yes, thank, thank you
Speaker 144
1:05:08
for the question and the year that I have been with NWAC, we have
Speaker 233
1:05:18
very actively worked at revisiting the reconfigurations that we had in NWAC. None of the people who were involved at the installation or implementation of Workday are still at the college, so it's difficult to know what their thought process or questions were at the time, but we have gone back and had an in-depth review of of financial configurations. We're looking at our reporting structure and have created new reports that allow us to more Closely follow our data throughout the year. We have implemented additional security
measures as well as new training as employees come on board and are really working closely with Workday or a meeting actually with our new workday consultants. These are not the ones who helped us with the implementation, um, on a weekly basis to ensure that we can adjust configurations as we find problems. I think one of the things that comes up and again, we thank our auditors for that. It sometimes we don't know there's a problem. Till something happens and then it's like, oh, we didn't realize in this case that our new ERP system was putting the dollars
over here and then we manually shift it and then we can make our configuration corrections. So I think we've spent a lot of the last two years working on that. I feel very confident in our current team and the direction that we're heading, we also have now a workday implementer, so to speak, within our IT team internally, and that is what he does 100% of the time working with student services. on student workday because of of course how our funds come in and is noted in the response, one of the initial problems was we used Banner and we switched to
Student Workday, and the revenues were being counted twice in the workday system, once in banner and then again. So I think we have a very good process in place. We have a good IT personnel in place, the IT team also changed over during this time and so we now have a new CIO. We have folks who are focused just on workday, and we have a very good consulting team who is helping us. ify these problems and we've worked closely with the auditors for 24 where our goal is to not have these repeat findings
happen again. Any other questions? Well, uh, thank you for being here today and, and I, I would say that it does sound like you
have a lot of change over and new team members and, and, um, you know, one acceptable answer might have been that um my good friend Mr. Grant Hodges was to blame for some of these issues. Um, a former employee of, of NWAC. I'm kidding, he's a good man, um, but thank you for being here. We look forward to, um, a brighter future and with that, with that objection, this report
will be filed. Thank you. All right, Mr. Fink,
Speaker 10
1:07:59
moving forward. Um, the next report with a repeat finding was Southern Arkansas University, uh, the repeat was finding one, the university's internal control system did not attach or prevent material misstatements in the statement of cash flows, specifically cash flows from operating activities and cash flows from non-capital financing activities were understated and overstated by 4.6 million. The
financial statements were subs subsequently corrected by university personnel during the audit. Field work, a similar finding was noted in the prior report. Finding too As presented on the statement of net position, the university reported a negative current cash balance of 2.1 million at June 30, 2023, due in part to a delay in federal student aid reporting and drawdowns, the university is required to comply with statutes and federal regulations as they pertain to the university's administration of the student
financial aid programs. Due to lack of management oversight and adequate personnel, the university failed to accurately and timely report ell and direct loan information to the US Department of Education. Thus not allowing federal student aid funds to be drawn down. Failure to submit disbursement records within their required time frame may result in rejection of all or part of the reported disbursement. The university reported accounts receivable of $11.1 million related to Pell and direct loans
at June 30, 2023. As of June 30, 2024, 8.9 million of the accounts receivable balance at June 30, 2023 remained outstanding. Uh, we Um, and the, the kind of the breakdown by award year is there on your synopsis. The US Department of Education conducted a program review at the university in February of 2022. And as of our report date, the final determination letter
had not been issued, university officials are present to answer any questions the committee may have. Thank Mr. Fink. Southern
Arkansas University, you're, you're recognized or called to the table. If you'll identify yourself for the record, thank you. Shaan
Speaker 253
1:10:14
Reed, uh, vice president for finance. Thank you, Ms. Reed.
Um, if you care to respond to some of these findings and I think the, the main thing that we'd like to hear is, is just like with, with other reports, um, kind of best
practices and things that we're, we're doing
Speaker 254
1:10:31
moving forward. OK, on both, uh, the first finding, um, With the misstatement of cash flow statement. Um So we have
Speaker 253
1:10:39
hired an an additional accountant, uh, during that time period, we, for the year 22, the prior year audit, uh, we sent the response letter in in November and the audit began in March, so that was a little short timeline we usually can make that work, um, but in that short timeline we
had a data breach which took about a month of processing out of our hands and we also were down one accountant who was out with um cancer, so we, um, Have not had a data breach since and we've also hired an additional accountant, so, um, those, those things are being addressed. Uh, the second finding, uh, was with, um. The financial aid and accounts receivable. Um, I'm happy to say that currently that amount is down to less than $500,000 and
so those things have been addressed as well.
Thank you, Mrs. Reeds. Member, any questions?
All right, see none of this will be filed without objection. Thank you. Mr. Fink.
Speaker 10
1:11:49
The next report, uh, with, uh, a repeat finding is Hope Academy of Northwest Arkansas. I will provide a summary of the finding. We noted material errors in the financial
statements related to cash receivables, payables, revenues, and expenditures, the financial statements were subsequently corrected during audit field work. Additionally, we noted issues related to bank reconciliations, receding credit card purchases, employee leave records, journal. and non-payroll disbursements, a similar finding was reported in the previous year. Charter school officials are present to answer any questions the committee may have. All right, we'll invite Hope Academy.
Speaker 257
1:12:37
Please identify yourself for record. Doug Hess, superintendent of Hope Academy of Northwest
Arkansas. Like it has am I saying that right? I'm OK. Thank you, Mr. Hess. Um, you are identified if you'll care to uh opening
statements about some of these findings and, and in your response. I thank
Speaker 257
1:12:56
you for the work that you do as part of the committee. I had the honor of being here last year, uh, with these findings, and that was because the 2223 school year audit, um, was towards the end
of the 2324 school year audit and so most of these findings are repeated. Because we hadn't really had time to change them because of that, uh, fiscal that year, um, I can report, however, that since uh the initial 2223, uh, visit here. We have corrected some of our practices we now have dual signatures for our checks. We have further um employed APSRC as a school finance person to act as an FTE,
um, handling our school finance side, um. We have implemented paper receipt systems we've, um, uh, we have created or done through our banking system, a new method of credit card, um, documentation, and we feel like we've answered most if not all of the um have here Um, we've also taken care of the employee, uh, leave records that
we have for this school year as well, so we, we feel like we've addressed all of them and we'll be happy uh to have no findings in the next, uh, audit. Hopefully. Thank you, Mr. Senator Sullivan,
you recognized? So you indicated that you had 2
Senator Dan Sullivan
Unverified
1:14:29
audits kind of back to back. What was the time lapse between them? Yes sir, the 2223
Speaker 259
1:14:33
audit, I believe, um. I came here about this time last year, I believe. So I'm asking what was the time lapse between
Senator Dan Sullivan
Unverified
1:14:44
the first one and the 2nd 1 that you didn't have time to correct everything. Oh, this audit was a year. So during that year, you didn't have time to
Speaker 259
1:14:54
correct the error. No, sir. We, we did correct the errors, but the audit information is from
Speaker 257
1:14:59
the 2324 school year, not the 24, 25 school year. Does that mean I thought
Senator Dan Sullivan
Unverified
1:15:04
I heard you say that we had an audit and we had a 2nd audit close to that. So in the second audit we hadn't had time to correct all the
problems in the first audit. Yes, sir. Is that gap. Um,
Speaker 259
1:15:18
the gap between the 2223 audit that was about this time, uh, and the
Speaker 257
1:15:23
ending of the 23, 24 year was about a month. And then we had the audit here recently for the 2324 that's reasonable. Yes, sir. Yes, sir. I apologize. Thank
Speaker 259
1:15:32
you for the clarification on that members, any other questions? Representative Duke? Thank you, Mr.
Chair. Thank you for being here. Um, so were you
Representative Hope Duke
Unverified
1:15:45
the superintendent through all of these years of the audits? No, ma'am.
Speaker 258
1:15:49
I was just the superintendent of Spring of 20. Spring of 2324 and then this current year,
Speaker 257
1:15:55
yeah, OK, and so, and I, this may have
Representative Hope Duke
Unverified
1:15:58
just been, it just caught me with the word. It may not be in your intent to say that, but you just said you, when you first opened that you think you've gotten word of some of these corrected. So do, was that just a Just my word you didn't kind of
mean to use or do you feel like you've got these all corrected to the best of your knowledge, but not just
Speaker 265
1:16:22
some. Let's go with all. I probably shouldn't have said some, yeah, because you have
Representative Hope Duke
Unverified
1:16:26
because this is the 2nd time and you have had the year and there's a a lot of these seem to me, um, Should have been able to be corrected a lot more, a little more quickly with, and I think it should be with urgency so that we don't see you again the next time, right? So, so you do feel confident that it's.
Yes ma'am, I do. OK, great, thank you, ma'am. Members, any other questions? See Don, thank you for being here, Mr. Hess. This without objection will be filed.
Speaker 10
1:17:01
Move forward, Mr. Fink. The next report with repeat findings is KIP Delta Public Schools, um, and I'll just try to give a brief overview
real fast, sorry, um, members, we have 2 more districts that have findings, uh, repeat findings that will be called to the table total, then, then what we'll try to move
faster on the back end, so stick with me. We've got 2
Speaker 10
1:17:24
more districts ahead. Mr. Fink, sorry. Um, Kip Delta had 8 repeat findings related to maintaining adequate supporting documentation to support cash receipts and disbursements, preparation of bank reconciliations, lack of review or approval of disbursements in the education stabilization fund program, lack of proper supporting documentation for payroll expenditures in the Title I and education stabilization fund programs and
in inadequate property records related to the education stabilization Fund program. Um, additionally, the audit noted findings related to the lack of adequate documentation for contributions received, issues related to policies and procedures and allocation of Title I funds, charter school officials are present to answer any questions the committee may have. Thank you, Mr. Fink. Uh, Kip
Delta, you're called the table. Please identify yourself for the record.
Speaker 275
1:18:38
Uh, good afternoon, uh, George Cotton, the chairman of the KIP Delta School Board. Martha Madden, the finance director
Speaker 277
1:18:45
at Kip Delta. And Kevin Smith, executive director of Kip Delta.
Kevin Smith
Unverified
1:18:48
Thank you for being here today. And Ms. Madden, what, what did
you say your role was? I'm sorry, finance director. Thank you. Um, thank you for being here
and, and this is for my education. I, I know just a little bit about KIPP Delta. Used to be a private school, is that correct? And now is a
Kevin Smith
Unverified
1:19:10
public school. Will you help me understand that timing and change? Um, yes, sir, Mr. Chairman, um, it's, uh, it's always been a public school, public charter is one of the
first public charter schools established in Arkansas. OK, thank you for that. OK. Just like we've done, um, you've heard the findings and reports, um,
Kevin Smith
Unverified
1:19:29
feel free to add your commentary. Thank you. Thank you, Mr. Chairman, madam, uh, Madam Chairman, chairwoman and members of the committee, uh, again, my name is Kevin Smith and um. Uh, executive director of Kip
Delta, uh, much like that your former uh school, we had a, a 2023 audit that was uh worse than this one. And that we were here on December because it took a long time to get they were delayed in getting the audit to you, uh, probably broke a lot of records. Uh, and then this audit that you're looking at ended in June of 24. The leadership team you're looking at, uh, got, got
here in the fall of 24 October, November. Uh, a major leadership change was made including Chairman Cotton, who has been on the board, became our chairman and he, um, uh, uh, Representative Duke was the board member who asked a lot of questions, um, and was, was right and uh and became chairman. And then, uh Uh, so this ends then, but to your other question and what have you done since then?
I'll try to be brief and say that that most of the recommendations on here have been addressed and are in place. Uh, with the exception of 2. And one of those. Uh, it would be asset inventory. And we are due to be completed on that by July, the end of July for 2 years of inventory that we were not. Uh, in compliance on in 23 or 24. So that's been a heavy lift and it, and, and we're almost
there, but we're not quite. The other one is what's called the variance, which is The, uh, amount of unaccounted for money or funds in the 23 audit, I believe it was 4.2 million. Now, uh, and in this audit it's down to 1 point just over 1 million. As of today it's down to 350,000. And what that means is not necessarily missing money but non-documented, not accurately documented money. So there hasn't been any indication that
we've seen, which I think is one reason the auditors didn't recommend this to a prosecutor of any criminal wrongdoing, but a lack of documentation are completed documentation is probably a better way to say it. And so what has uh Ms. Madden here and the fun we have a new finance team, some of whom aren't here but. Uh, are part of the team. And Arkansas Public School Resource Center is also somebody we contracted with as well, been a big part of this has been
going back, clawing back and trying to rebuild that documentation to remove that variance which shows up on e-finance. So Um We made a lot of progress, but $350,000 is still a lot. Uh, we're pretty confident that we'll get there also by the end of this fiscal year, June 30th is, is our deadline on that and the end of July for we hope for the inventory and we've made a lot of progress already but. Uh, we've also asked the, uh, the audit, the legislative audit to do our audit for fiscal year
25, and I hope y'all, I don't know if you proved that. Did you prove that earlier today maybe? I hope. Um, and we've taken an awful lot of other uh measures, um, in addition to that, and we're working closely with the Department of Education. And our mission is really to restore confidence in the Department of Education, uh, the legislature and locally in our ability to manage. The finances as well as the school in general.
questions. Appreciate that and we, we are
well aware of your requests and is being viewed favorably, so I'll say that, um, members, any question? Oh,
I'm sorry, sorry, did Mr. Cotton did OK, there's any questions? All right, see none. Mr. Cotton, did you have something you? No, I don't.
Speaker 275
1:23:39
Thank you for the opportunity and I on behalf of the board and uh going back to Senator Duke's point earlier about commitment. Uh, I'm here quite frankly because I want you
to know that the board takes very seriously. I said that the last time I was here, the last time I was here was, I was interim chair. I'm chair of the board now, uh, this board is excited about the new team that's in place. I've been cheer for, gosh, 4 months, 5 months, I lose track, uh, but we're having regular meetings we get regular updates and I. I told you the last time we were here that I felt we had been sleeping the switch that is not the case now. This board is paying very close attention. We have a finance team and a superintendent executive director in place that's not
only keeping us informed, but I guarantee you the next time we come before you, not only will you not see the findings, but I think you'll see the improvement in the confidence and in KIPP schools that we were known for, so thank you for the opportunity,
Representative Hope Duke
Unverified
1:24:34
co-chair Duke. Thank you, Mr. Chair. I just wanted to say that I appreciate the, uh, y'all being here. I remember from last time, and I also want to just thank you because I have my questions sometimes and it's really nice whenever you answer my questions before I ask them. And so, I really do appreciate that and just so you've been forthcoming
with um the information as well without us having to ask the information. So I do really appreciate that.
Thank you. Thank you for being here, members without further questions, I will say, Mr. Smith, if you'll see our staff after the meeting, he'll give you an update on your request. After the meeting, but without further questions, without objection, uh, this, this report will be filed. Thank you.
Speaker 7
1:25:10
Thank you. Thank you. The final report with
Speaker 10
1:25:13
the repeat finding is strong School District, uh, finding one was a repeat during our examination of payroll records and we noted the
following documentation could be provided showing board approval of an amended salary schedule utilized for 5 employees as contracts and pay rates for substitute bus routes 2 employees received a $5000 stipend that was not included on the salary schedule subsequent to audit testing and amended additional duty schedule was provided. However, there was no evidence that the board approved the schedule. 3 employees received overpayments uh due to errors in calculating overtime hours, uh, pay rates and employee leave balances, and we identified
compensation for personal services to individuals, uh, without an employee contract or a contract addendum in noncompliance with Arkansas code, a similar finding was noted in the previous uh report finding two, the minutes of the school board. Did not indicate the review of the previous year audit report nor the accompanying comments and recommendations and action taken as required by Arkansas code. School district officials are present to answer any questions the committee may have. All right, we'll invite the school district to the table, please.
Speaker 288
1:26:27
If you identify yourself for the record. I'm Amy Sanchez, the superintendent. I'm Cindy Smith,
school board president. Thank you for being here. I appreciate that just, just like we've
done, uh, in the opening comments and maybe some things that you've worked on in the past to help with these findings. Um,
Speaker 288
1:26:54
this is my 2nd full year as a superintendent, um, and so I
Speaker 290
1:26:59
am learning along the way, and I appreciate any questions that need to be asked. Um, we've provided corrective actions. I can, um, elaborate as far as number one, the minutes of the school board did not indicate review of the year audit report, um, as a new superintendent last year, I did do it in closed session, um, but we did not get that into the minutes and vote on corrective actions, um, we have plans, June 10th, uh, open session to discuss all of the
formal findings from this, um, this audit. Uh, 2, examination of payroll records. A lot of this had to do with the fact that, um, we decided later in the year, I believe it was in October to um provide raises for classified, and we provided the budget, 3 different budgets, um, and one of them included that classified raises would be given, and the salaries were approved at that time, um, not individually noted on the minutes and so we know
better. Um, to go in and any time that we give or provide a raise to anyone. We have each individual uh spelled out and in the minutes. Um, That goes to the, um, the $5000 we have, we had school improvement specialists that handled a lot of the HR and federal program coordinators. last year, um, as they were training for those positions for
this year. We, um, offered them a $5000 raise, um, to take over that responsibility. So our HR person had a $5000 raise to take over that and then, um, The federal program coordinator. We have noted, um, the substitute bus routes on our 25, 26 calendar in our working to, um, amend the 24, 25, um, salary scale.
To allow them to allow it to show what our practices were. Um, The bus drivers got a raise as well. And so the substitute bus drivers received. That by day amount, um. The 3 employees receiving overpayment, the 1651, um, the payroll clerk entered. Entered it twice, which is why
it came out that much. Uh, the 158 was due to, um, the raise that was given from beginning of year and then that change in October and then the $30 was when, uh, we did not have an absentee slip on a person, and they were indeed absent and they were paid an extra $30 compensation that uh last bullet, um, we had our child nutrition director, um, to be hired. In June and needed that training
before that she was a cafeteria manager, and so we did not go in and put a contract in. Um, And then the 623 was for a custodian who went in and um was changed to a 240 contract. So we have made all those changes. Uh, we have learned from the contract issue. I wanted to give an example, um, our Previous Transportation maintenance
director retired, and his last day was May 16th, and the one that we hired, his contract was to start July 1, we went in and did an additional contract to cover the time in between. So, those are the things that we have done and I feel like um, Moving forward, there is a new superintendent coming in. She has more experience and is, uh, well acquainted with how to, um, manage these issues better. So I foresee, um, the District moving
in a, in a better direction and then Miss Cindy Smith is here, um, she's working very closely with both of us to make sure that everything is done decently and
Chair
Unverified
1:31:14
in order. Sanchez. Representative Beatty recognized. Thank you,
Representative Howard M. Beaty, Jr.
Unverified
1:31:17
Mr. Chair. Just, just a point of clarification where you said that the audit was discussed in closed session. and staff can correct me, but they're very limited things that you can discuss in a closed session. Uh, and the audit findings, I don't believe that they fall
under the, the scope of what you can discuss in a closed session. I think those should be. Open Uh, to the public and discussed in an open meeting. So just a word of caution there and, and going forward, I, I think I would make certain that was done in an open session, not in a closed session, and staff can correct me if that's, if I'm wrong on that. Yes, sir, that is the
plan. Mr. Grady. Any other questions, members? Representative Duke Thank you, Mr. Chair.
Representative Hope Duke
Unverified
1:32:04
Representative Beatty kind of got where, um, the same issue that I was concerned. I was concerned about, um, one, it not being discussed and then finding out that it was discussed in
And, um, executive session, and I do want to make sure that the clarity for you and the board on what your rules are, because it's very limited on what you can do in executive session, um, as a, are you the board president or are you a board member, board president. OK. Do you feel like that you have adequate training and
understanding of what, as far as executive session and FOIA and stuff there goes, but also for just um the issues that you
Speaker 292
1:32:45
guys faced. Yes. We do get adequate training from ASBA and we get training from the co op. we get training from all over the state, so we are well aware of the issues that we need
Representative Hope Duke
Unverified
1:33:00
um, as far as the importance of legislative audits reports for the public, do you feel like
that you were informed, um, or well informed whether it's by the school board association or previous superintendents, what about the importance of going over that. Obviously there was a misunderstanding as far as it needs to be taking place, but the importance of their reports for you all as board members, but also for the people that you represent. Do you, do you feel like before this happened,
Speaker 292
1:33:29
did you understand the importance of that? Yes, we have, we have training like from the state once a year
as it relates to our audits and that was a slip through, but we are well trained as it comes to, you know, being trained for the purpose of audits. I don't like. audits, we have to do them and, and they, they have to be in place and they helped the district run more smoothly when everything in that audit is being accounted for for the taxpayers too for them
Representative Hope Duke
Unverified
1:34:10
to be confident of it and y'all have been here all afternoon, so you've seen the importance of making sure all those I's are dotted and
the T's are crossed and stuff too so thank thank you very much. And any other questions, members? All right, see Nunn, thank you for being here today. We will,
Speaker 10
1:34:31
uh, without objection, uh, consider this report filed. Mr. Pink. The next 17 reports contain findings. These were not referred to the PA or the AG and they did not contain repeat findings, they're the entity
were provided a response for every finding noted Staff recommends that the committee take a moment to look over these and file en masse as reviewed.
Thank you, Mr. Fen. Members, take a quick look at those. Um that does
not require a motion, um, but I do want to make sure people Take a look at those. I'm, I'm examining as well. Um, OK, yeah. Um, members any objection or any questions on these reports?
One more time to look. All right, members, uh, without objection, these will be filed. All right,
no objection. These will be filed. All right, moving
Speaker 10
1:35:29
forward, Mr. Fink. The remaining 133 reports, which are listed on the last few pages of the synopsis consists of audits with no findings. Staff recommends that these reports be filed en masse as reviewed. Thank you, Mr. Fink. All
members, as you see those 133 school districts.
I do want to take a point of personal privilege right here to list a few of mine, call them out. These had no findings, right? These are, these are good actors. Uh, I wanna give a call out to Decatur School District, Farmington School District Fayetteville School District, and Prairie Grove School District, we're doing a great job with no findings. Those happen to be in my district and uh very proud of them, but seriously, it, it is important to note, I know all of you all members also have school districts that
had no findings. Make sure that they are celebrated, um, uh, and that they're so thankful they don't have to come to the table, uh, because of the hard work and the good diligence that they're doing and, and really we do, we've got great school districts that are, are working across the state um in good
manner. So with that, those will be uh filed without objection. And let's see here, there's no new business on our agenda. Any other thing, anything else, Representative Long? Yes, Mr. Chairman. I was wondering, uh, this I'm new on
Representative Wayne Long
Unverified
1:36:45
the committee, so got to forgive my ignorance, but um uh I understand if they don't have repeat findings, they're not required to come. Uh is there any other thing in, in place like
some sort of threshold where you're talking really big bucks that they would automatically have
to come. Um, no, not necessarily. Now there, there is different thresholds for um for consideration on what is um sent to the prosecuting attorney, um, and that's based on, on the legislative audit staff, um, but
not necessarily for coming to the table, um, for, for the findings reports and and
Representative Wayne Long
Unverified
1:37:21
is there any kind of um literature available for the schools to use kind of as a guideline for best practices so they don't just make things up, uh, from uh
Speaker 10
1:37:33
from scratch. Yes, the, the Arkansas Department of Education, um, AAEA, ASBA, and then the school board's policies, um, there's a lot of stuff that they are required to do, stuff that they're required to put on their
website, um, concerning their uh
Speaker 298
1:37:58
fiscal processes. So yes, there Yeah, so one other item that we
Speaker 10
1:38:18
were discussing up here is uh the fact that like if anything that's referred to the PA uh and the AG, um, those are all put on a list and we follow our staff follows up on every single one of them to find out what action or no action that was taken and then that's presented to the full committee meeting on Friday, and I believe that's gonna happen
Speaker 82
1:38:41
next month. All right, members see no other.
Unknown speaker
1:38:49
Uh, business today, we are adjourned. Thank you.
Agenda
A. Call to order by Co-Chairman.
B. Adoption of Minutes of the December 5, 2024 meeting.
C. Review of Reports. Refer to the Synopsis
D. New Business.
E. Adjournment.
LEGISLATIVE JOINT AUDITING COMMITTEE ARKANSAS LEGISLATIVE AUDIT JUNE 5, 2025 STANDING COMMITTEE ON EDUCATIONAL INSTITUTIONS
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - EDUCATIONAL INSTITUTIONS, Jun 5, 2025 | Agenda | 5 | Official source ↗ |
Speakers
Senator Tyler Dees Chair
Unverified
Speaker 10
Representative Howard M. Beaty, Jr.
Unverified
Tara Smith
Unverified
Speaker 21
Senator Jamie Scott
Unverified
Speaker 30
Chair
Unverified
Representative Julie Mayberry
Unverified
Speaker 42
Representative Wayne Long
Unverified
Speaker 49
Representative Hope Duke
Unverified
Speaker 59
Speaker 68
Speaker 82
Speaker 92
Speaker 99
Speaker 102
Speaker 107
Representative Stetson Painter
Unverified
Speaker 98
Speaker 119
Senator Fredrick J. Love
Unverified
Speaker 9
Speaker 134
Speaker 136
Speaker 140
Speaker 143
Speaker 93
Speaker 163
Speaker 37
Speaker 193
Speaker 203
Speaker 204
Speaker 205
Speaker 206
Speaker 208
Speaker 209
Speaker 202
Speaker 219
Speaker 233
Speaker 235
Speaker 238
Speaker 239
Speaker 244
Speaker 245
Speaker 144
Speaker 253
Speaker 254
Speaker 257
Senator Dan Sullivan
Unverified
Speaker 259
Speaker 258
Speaker 265
Speaker 275
Speaker 277
Kevin Smith
Unverified
Speaker 7
Speaker 288
Speaker 290
Speaker 292
Speaker 298