Legislative Joint Auditing-Counties and Municipalities
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I want to call this meeting to order, but before we get started, I'd like Representative Jack Ledeman to lead us in a word of prayer, please. Father, Lord, thank you for
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this country and the state that we live in, the freedoms that we have, and
Representative Jack Ladyman
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the people that we have that work so hard to protect that region. I pray for the cities and the counties today. They have a tough job. I pray for those that are working in that area to help the citizens of the local community to support them.
and give them strength on what they did last in
the same process. Thank you. I want to welcome everybody to the first meeting past this last session that we're having of cities and counties and municipalities. I'm looking forward
to working with everybody that's here. My name is Matt Stone. I'm the co-chair along with Representative Richard Womack, And then my vice chair will be Senator Mark Johnson.
And then we also have Representative Cameron Cooper, who is the vice co-chair of the House. With that being said, I just
wanted to make a couple of remarks. When we get started, I know we cover a lot of ground at every meeting. So we need to be judicious in moving forward so we can get out here at a reasonable time. I want every legislature to be able to ask every question that they want to ask and not be throttled back in any way. But with that being said, I'd also ask that everybody be mindful of the other legislators that may want to ask questions themselves.
Also, members of the public, when you have an opportunity to come set at the end of the table, it's easy to start chasing rabbits and get long-winded. If you have something to say, I would encourage you to come on point so we can cover ground so we have a lot of people that want to
speak. With that being said, Mr. Archer? First
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item on the agenda is the minutes. All right, the minutes. I
think you all had an opportunity to look at the minutes. Does anybody have any questions?
Got a motion? Second? Second? Any discussion? All in favor say aye. Any opposed? Saying none, the motion passes. Mr. Archer? Yes, agenda item
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C is update on the city of Gilmore. I thought I'd update y'all real quickly because this is a new committee, new year. The December meeting, the city of Gilmore was in
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violation of Act 709 of 21, which is a repayment of misuse funds from the street fund.
We submitted a letter in January to the state treasurer to withhold their funds, And currently we have not heard from Gilmore, so that is currently the state. Their state highway revenues are being withheld until they pay that debt in full. Item number
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D would be the update on the delinquent private reports. Also in the December meeting, we had voted, the committee had voted to send the city of Dermott,
the city of Black Rock, and the town of Russell letters to withhold their term back because they had not responded to the request of providing their 2022 audit which was due June 30th of 24. Immediately after the meeting, we heard from all three. They provided us with signed engagement letters. So all three are currently within the guidelines as set out by this committee. So their turn back is not being withheld.
Going on to agenda E, City of Old Trough, I mean the town of Old Trough was also recommended in December for a substantial non-compliance for Municipal Accounting Code. There are a set of accounting codes set out in Arkansas Code Annotated 1459-101 through 119. And 117 of that group states that if you're in substantial non-compliance with those codes, this committee has a process to
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go through that could eventually end up with withhealing of turn back.
We visited, we notified City of Oiltrop of
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this on December 10th. We paid them a visit as part of the process on April 14th. And they are in, the records are much improved and they are now back in substantial compliance with the codes. Therefore, their record, their turn back will not be withheld. No, those are just updates. Okay.
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You can do the F there, just recognize me for the reports. All right, Mr. Archer, we're
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going to refer to item F, review of reports. Thank you, Mr.
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Chair. If you'll refer to your synopsis and your list that were provided to the members today, we have 12 reports deferred from the December meeting, starting on page one through three. We have Searcy County.
Searcy County was deferred because we did
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not receive a response from the airport commission chairman before the last meeting. We have since received an adequate response dated March 25th of '25. Staff recommends that we file this report if there are
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no questions. Without objection, we will file this report.
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Continuing under deferred reports, on page four, we have the Midway Public Water Authority. We were waiting on a response from them from
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the prior meeting and we have not received that response, so staff recommends that we defer that report. So we can contact them again and see if we can get a response.
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With that objection, we'll file this report? Deferred, deferred. We'll defer this report.
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Thank you, sir. Continuing on page three, we have the Searcy Utility Water Utility for 24.
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This was a private report, it was also deferred with a lack of proper response. But we have since received a proper response. Staff
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Without objection, we'll file this report. Continuing on page four under previously
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deferred report, I have the town of Banks, the recorder treasurer Levi was invited to the meeting today. We were contacted by them, and they have some, due to healthy reasons, she's unable to attend.
Staff recommends that we defer this report to give her time to
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we'll defer this report. Town of Jacksonport, do we have anybody present from Jacksonport? Okay, town of Jacksonport was also deferred because we have a repeat finding. and they weren't able to make the December meeting, and it
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doesn't look like anybody's present here today. Staff recommends we defer this one as well.
- Question? - Okay, yes ma'am. - Yes, Representative Dalby.
Representative Carol Dalby
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- What, I mean, they didn't come in December, and they got noticed to be
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here today, is that correct? - Yes ma'am,
Representative Carol Dalby
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that's correct. - What else can we do to make sure that they're here in July? because December to now has been a long time to get ready to come.
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So, do we need to subpoena them? - They, I talked to, staff talked to Ms. Dodson
and they confirmed they were coming. So I'm assuming something has happened. Normally, I mean, we can do, you know, there's no real true written protocol, but normally there's about three deferrals before we go to the subpoena process for the Friday meeting. Okay, thank you. Thank you. This would be number
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two. Yes, Senator Caldwell. Thank you, Mr. Chair. For those that don't know it, I've got a four inch scar on my throat. My version of the story is my wife cut my throat,
but I had surgery and it affected my voice for a while. I wanna back up on Jackson board because that is in my district, and since December they've had a major tornado up there. And that may be what has caused them not to be here. And I would ask you all to be leaning in one more time. Thank you for the
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update, Senator Caldwell, that's good information. Okay, continuing with reports previously deferred on page five.
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We have Prairie County 2023, under the county
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judge, circuit clerk and treasurer. The quorum court is required to approve by ordinance an annual budget for all operating funds. County officials are required to operate within and manage the approved budget in accordance to Arkansas code. Although the annual budget was approved as required, Anticipated revenues for the general fund were overstated due to inadequate beginning cash balances,
inflated transfers in, and a lack of management oversight, which resulted in overspending. As of December 31st of 2023, the general fund fund balance was $124,000. But due to continued overspending, it had declined to just over $60,000 as of June 25th of 2024. Also to defray expenses and supplement revenue in the general fund, the county began transferring the county sales and use tax, which was previously deposited in the road fund, to the general fund.
Although these transfers were allowable, they resulted in a decrease of the road fund cash balance from just over $403,000 as of December 31st of '23 to $211,000 as of June 25th of '24. This was a repeat finding from the previous report. I believe we have the county judge, Lawrence Holloway, and county and
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circuit clerk, Galen Hale, here to answer questions. Would you all please
come down to the table, please?
Yes. Would you all please state your name and position for the record, please, before we begin? I'm Galen
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Hale, the Prairie Circuit and County Clerk. Lawrence Holloway, Prairie County Judge. Thank
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you. Hasn't been any open remarks. Do you all have any open
remarks? I don't have any. Not any. Does anybody have any questions on that?
Are there any questions from the committee, Senator Kroll? In
Senator Steve Crowell
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other issues, it talks about two unauthorized withdrawals totaling $12,054. What were those withdrawals? I had gotten some information from the Deputy Treasurer. Our
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Treasurer resigned in August of this year, but Brittany Kosurik is the- Ma'am, can you bring that
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microphone just a little closer? Oh, yes, yes, I'm
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sorry. We're having trouble hearing you. Can you hear me now? Yes, better. I'm sorry.
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As I was speaking, Tamara Dabney, which was our presiding treasurer, she resigned in August of 2024, so I got information from Brittany Kosurik. She is the, well, Tabitha Gates is the treasurer, but Brittany was her chief deputy while she was in
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some information on the checks that she provided. Okay, it looks like September of 2023, she said the bank informed
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us of a suspicious check and I have the check number of 45270 for $2,216.37.
sent. It had been forged with someone else's name and address and we asked them to return it and the money was put back in the account, in our account. After speaking with farmers and merchants, they suggested we sign up for positive pay, which allowed them to go and look over the checks that will clear the account and have an opportunity to return them if needed. Tamara Dabney, the former treasurer, signed up for positive pay on September the 21st of 2023. In November of 2023, we had a similar situation, and that check number was 46142 for $9,838.37 that was forged to a different
name and address on one of our checks, and we were able to catch it in positive pay. The bank in Florida, where it was being deposited, also notified us. These funds were returned to us as well, and she has stated that they check positive pay each day to help prevent situations like this from happening, and that was a wake-up call for their office to be more diligent in their bank account
Senator Steve Crowell
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practices. Yes, Senator Kroll. So did, were the physical checks missing or were these checks that were made up and just...
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The physical checks, where she included the checks. I have a copy
Senator Steve Crowell
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of both checks. So somebody got into the office and grabbed the checks, the physical checks? It was
they weren't counterfeit checks, they were checks that came out of y'all's office?
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Yeah, because they were taberned down these checks. I
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have copies of the checks. Can I add a little background here? We have staff here, but our
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understanding is that they were intercepted in the mail and altered, which is, as y'all know, is a very common practice, unfortunately.
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Are there any other questions? Representative Dalby.
Representative Carol Dalby
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Thank you, Mr. Chair. Judge, how long have you been the county judge
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for Prairie County? Two and a half years. Two and a half
Representative Carol Dalby
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years. Because if I understood what Mr. Archer said, that this is
the second time this has been found, that the revenues, the expenditures were exceeding their revenues. And have y'all, what have y'all done to make sure that that doesn't happen? I mean, I read what it,
You're taking money out of the road fund, the general fund, and those kinds of things. But what else are you doing to keep those expenses in line so that you're not overexpending the people's tax dollars? Can
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I speak on that? Sure. Okay. We have tremendously cut down on all expenses, and the sheriff was
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able to cut his budget by a million dollars. So we're in a lot better standing than we were before.
And, you know, I had to have a salary cut from my office and just anything. I mean, we're just working on bare, minimal, exactly what we need. Are there any other questions?
Saying none, without objection, we'll file this report. And y'all are excused. Thank you. Yes, ma'am. Mr. Archer.
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Continuing on page six, we have six water and sewer private audits
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that were deferred from the previous report for lack of responses. We have received responses on all six of these, so staff recommends that we file these
reports. Without objection, we will file these reports,
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saying none. Okay, starting on page seven, we have four reports that were certified to
the bond board and the PA and referred to the PA and AG's office. Beginning on page seven, we have the city of Fairfield Bay under the mayor and recorder treasurer, on October 7th of 23, the conference center director collected and received $12,210 in cash from a private organization holding an event at the conference center. The cash was stored in a money box and placed in the desk drawer at the conference center. On the afternoon of October 10th of '23, the mayor retrieved the box and delivered it to
the recorder treasurer at City Hall, who counted $11,210. The recorder treasurer then took the cash home and deposited it the next morning. The cash was neither deposited timely nor properly secured while in the custody of various city employees. Because detailed documentation of the original cash count was not maintained, we were unable to determine if the $1,000 discrepancy was the result of error or theft. The city filed a police report on October 18th, 2023, and as of the report date, no charges have been filed.
Continuing under the mayor and recorder treasurer, the city paid $4,800 to employee for six weeks, 240 hours of wages, while the employee was out of the country. According to the city's vacation policy, the employee was not eligible for vacation leave at the time of the absences. Timesheets submitted for payment were approved by the mayor, with notations indicating that the employee was working from home, a total of 163 hours. Normal working hours for this time period total 240.
According to the mayor and the city's personnel policy, however, no deductions were made for hours not worked. Furthermore, the number of hours reported on timesheets did not appear to be reasonable under the circumstances. Should be noted that the city does not have a work from home policy. The recorder treasurer did not sign two of the three payroll checks in question. And the timesheets contained notes indicating that these payments were not in accordance with city policy.
Staff recommends that we file these reports if
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objection, we'll file these reports. Continuing under reports certified to the bond board and referred to the PA and AG on page 8 through 14. We have the city of Helena, West Helena, for the year 2023. Under the mayor, treasurer, and city clerk, nine unauthorized disbursements totaling
over $7,300 were made from the city's bank accounts between May and July of 23. The bank discovered five of these withdrawals and returned $3,300 to the city in June of 23, and over $1,500 in July of 23. The city did not dispute the remaining four withdrawals and therefore were unable to recover the 2477. Continuing under the Mayor, Treasurer, and City Clerk, a review of credit card transactions selected for
testing and identified below revealed that supporting documentation was not provided for the following at the time of payment in non-compliance with Arkansas code. 22 of the 80 transactions totaling over $9,500 for the city clerk and 10 of 10 transactions totaling $4,600 for the mayor made during the four month period reviewed in 23. Five of 48 transactions totaling $3,600 for the city clerk and
eight of eight transactions totaling over $1,000 for the mayor made during the two month period reviewed in 24. Subsequent to fieldwork, the city provided some documentation not previously available. However, some transactions remain undocumented. Therefore,
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the validity of these transactions could not be determined. Continuing on
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page nine, during disbursement testing, we noted the following issues. The city received a donation of $50,000 from a nonprofit organization
to assist with purchasing an animal shelter building. The building was subsequently repossessed due to the city not paying the remainder balance owed. The city paid over $7,500 to two vendors before work was complete in conflict of Arkansas Constitution, Article 12, Section 5, which prohibits city from loaning credit to any individual. Continuing under the mayor, treasuring clerk, the city failed to make payments totaling over $91,000 as
specified in five financed purchase agreements. The annual payment of over $32,500 was not made for police body cameras. Three of 12 payments totaling over $24,500 were not made for articulated truck. Three of 12 payments totaling over $12,000 was not made on a used dozer. Two of 12 payments totaling over $12,200 was not made on a dozer. And five of 12 payments totaling over $99,000 was not made on an excavator.
Similar finding was noted in the previous report. According to city officials, both dozers have been repossessed, the articulated truck and the excavator will be repossessed. Then you're on page 10, Arkansas Code requires the city council to approve an annual budget, which is an appropriation of funds for operations. City management is to function within this appropriation. However, the city failed to expend funds within the appropriation due to a lack of management oversight,
resulting in street fund and landfill fund expenditures exceeding appropriations by over $424,000 and over $524,000 respectively. Also, general fund and street fund budgeted revenues exceeded actual revenues by over $388,000 and over $205,000, respectively. The effect of this overspending constitutes a controlled efficiency in the process of maintaining city expenditures within appropriations and
a threat to efficiency stable operations of the city. As a result of overspending, the general fund, street fund and landfill fund had a deficit fund balance of 173,000, 192,000, 238,000 respectively at December 31st, 2023. Another factor contributing to the deficit was various accounts payable in the general fund totaling over a million dollars, including the following.
Over $633,000 for payroll taxes. $140,000 for housing of city prisoners at the county jail. 263,000 to various vendors. In addition to the general deficit fund balance, failure to pay retirement system payments in '24 result in a loss of city general government turn back received from the state. Also, as of the report date, remittance to the IRS have not occurred since August of '23.
Furthermore, the city's ability to pay its debts may lead to late payment fees, overdraft, bank overdraft charges, utility shutoff notices, repossessions, and some vendors requiring cash payments on delivery. Continuing on page 11, we noted the following issues related to the city landfill. The supervisor prepared and approved his own time sheet and was paid over $26,500 for overtime.
The supervisor and scale operator, who are spouses, occupied a RV connected to city utilities. Compensation related to these personal use of city services was neither calculated nor reported on the W-2 form. Continuing on page 12, under the mayor and A&P director. The city made the following payments, totaling $3,950 for related party transactions without authorizing ordinances in the parent
conflict with Arkansas code, $250 to a business owned by A&P commission member for catering services, $1,700 to a spouse of an employee for Christmas parade decorations and services. A similar finding was noted in the prior two reports. Continuing on page 12, under the Mayor and Treasurer, Arkansas Code requires city management to maintain an adequate accounting system to ensure proper safeguarding of assets.
we noted a lack of adequate controls over journal entries were not reviewed or approved by the employee other than the preparer. These deficiencies were due to a lack of management oversight and could lead to misappropriation of city assets. Similar findings issued in the prior report. Continuing on page 13, street fund expenditures exceeded appropriations by over $424,000 in noncompliance with Arkansas code. A similar finding was issued in the prior report.
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I believe Treasurer Derrick Turner is here today
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to answer questions. Mr. Turner, will you state your name and position for the record, please? My name is Derrick Turner, and I'm a city treasurer. Do you have an opening statement? No,
sir. Are there any questions from the committee?
Representative Cameron Cooper
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Representative Cooper, you're recognized. Thank you, sir, for being here. You don't have a copy of this in front of you, do you? Of the what? You don't have a copy of this report in front of you, is that correct? Yes, I have the. Okay. I'm looking at the withdrawals from the bank. The bank discovered five of these withdrawals and returned $3,304 to the city in June 2023 and $1,551 in July 23.
The city did not dispute the remaining four withdrawals and therefore was unable to recover $2,477. So my question is why did the city not dispute those
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remaining four withdrawals? Mr. Cooper, to my recollection, all of the charges were reported by me. I was doing the bank reconciliations at the time, and I noticed that these checks can be cleared. All of these checks were counterfeit checks, and so I ended up notifying the bank that
we had an issue with some counterfeit checks. They said that they would take care of it, and so it's my assumption that once we verified that the checks were counterfeit checks that they did not belong to the city of Helena West Helena that they would correct the issue but so but I didn't follow up on I just assumed that all that everything had been corrected and we did have a member of ICID police department did beginning an investigation in this matter we had a couple former employees that were
were involved with this issue, and so there was an investigation. But like I said, I kind of just thought that everything had been taken care of.
Representative Cameron Cooper
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You said some former employees were involved with this? Yes, sir. Was further action taken
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on that? Well, we had an investigation, and I don't know what happened subsequent to that. I got some information that the prosecuting attorney didn't want to prosecute him out for whatever reason, I don't know.
But that's all that I know about that situation. But like I said, every check was reported to the bank. And it was just my assumption that everything had been taken care of. Senator Kroll,
you're recognized for a question. Mr.
Senator Steve Crowell
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Archer, wasn't this referred to the Attorney General, so this will be looked at in depth? This has been
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certified to the bond board for the whole reports are, if there's one finding the whole report goes.
But it's been certified to the bond board, referred to the local prosecutor attorney and the Attorney General.
Representative Carol Dalby
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All right. Representative Dalby, did you have a question? I did for Mr. Archer. When were these referred, and have you
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heard anything back from the bond board or from the Attorney General's
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office? They were referred, I believe, this week is how that works. So you'll get, I think, either this, tomorrow at the Friday meeting or the July meeting, the previous prosecuting attorney distribution report will be presented. So this one will be in the next one.
So we look for it next summer, unless we hear back, there were actual action taken. A year from now? That's normally, they do it a year at a time for the prosecutors statewide to answer the distribution report, yes, ma'am. Okay. I think that's correct. Michelle's not in here.
Representative Carol Dalby
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Okay, that's fine. I have lots of questions, but I'm not sure the right people are at the end of the table. It appears
from my reading of all of this that the treasurer, it appears to me, sir, that you're trying to comply with the law
and you're trying to answer as honestly as possible, but it appears that you've got a couple of folks who might be just denying
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any of this and say it's not my fault, not my problem. Is that what's going on
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in Helena West Helena? I can't attest to their feelings and their opinions, but I would say you were accurate in saying that I'm trying to be truthful and give you guys information regarding what's going on in the city, as far as finances are concerned.
Representative Carol Dalby
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Follow up? Yes. Also, on the finding that's talking
about the annual budget and failed to expend the funds within the appropriation and it talks about the $424,000 and the $524,000 and all of those kinds of things and how it's going on and on about that. And it talks about that other things contributing to the deficit, payroll taxes, housing for
city prisoners at the county jail and $263,000 to other vendors and I notice in one of the responses it says we're considering some other funding options that are not fully developed, but
we can't list those here. And my question is why can't they be listed
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this is pretty serious and it looks like at this point y'all are bankrupt. excuse me well the mayor came up with a plan to correct these actions and I'm
not sure what the additional revenues that they're talking about I'm not sure of those but what I can say is that recently the mayor has presented the City Council with a plan to implement increases in sanitation fees to help increase the revenue on that side. The City Council has approved rate increases
in our water and sewer rates so hopefully at some future point they can began to contribute to the city again. They used to give the city payments contributions in lieu of taxes because they don't pay property taxes so they would make contributions to the city of Helena and when they started having financial problems they weren't able to do so. But now hopefully these increasing rates will help them rectify those financial issues and
they will begin to make contributions to the city again. So I'm expecting, hopefully, maybe the sanitation rate increases and the contributions from the water department to help us with our revenue shortfalls. One more follow-up, if I
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may. Sure, but ask your follow-up, but
let me make a comment too, please. I
was going to ask you if you'd like to maybe make a motion to bring this to the full committee on July the 11th, 2025, and we'll have the mayor, the treasurer, the city clerk, and the A&P director, and we'll have everybody there.
Representative Carol Dalby
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34:28
You read my mind, Mr. Chair. That was going to be my next thing after my last question. Then you're recognized to make that motion, please. I make the motion that we bring them before we—if we have to subpoena them, I don't know if that's the right way, Mr. Archer, but we need to get them all here because we can't get our questions answered, and this is pretty serious. The people of Helena, West Helena, deserve to have
a government that works for them, and they can't work for them if the money's missing and there's nothing there. We'll do
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the will of the committee. We certainly do not mind bringing them to July 11th, Friday meeting.
Do they need to be subpoenaed? We'll have to ask Ms. White about that, but normally an invitation would be the first step in that step. But we can, if you word your motion correctly, we can check on whether or not subpoenas would be necessary. I guess if it's the will of committee, we can go ahead and skip to that and invite them with a subpoena or just invite them. It would be whatever the committee wishes to do. I'm going to make
Representative Carol Dalby
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35:30
a motion that we subpoena them there to be the full committee because this is serious for the people of Helena West Helena.
And I don't want us to get there in July and then it becomes August and then it becomes September. And I think our citizens deserve some answers and the legislature deserves some answers. We've given a lot of money over there to help with their water issues. I'm not hearing anything, and my next question was going to be, you know, what kind of staff cuts have you made or anything like that? I'm not hearing any of that. I'm hearing a lot of hopes and dreams, which is great that didn't pay the bills. So I would move that we subpoena those individuals to that Friday, July 11th meeting.
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And invite the mayor, treasurer, city clerk, and the A&P director. Yes, those four people that are listed in this
Representative Carol Dalby
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report, and that would be my motion. I think that's the best way to get to the bottom of this. Do we have
a second? We've got a second. Representative Rye, all in
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favor, say aye. Any opposed? Can we back up just one minute, Ms. White? Can we amend that? Would you consider amending that to have the legislative auditor subpoena them? It makes the process so much quicker because he can do it this meeting.
Otherwise, we've got to go tomorrow, and then
Representative Carol Dalby
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36:50
it would be September. Yes. I would certainly, I would make that, I would amend that, I would amend that and make a substitute motion that we subpoena those four individuals and that we permit the
auditor to issue those. I have a second by Representative Rye. All in favor say aye. Aye. Any opposed? Saying none. Your
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motion passes. Thank you. Can I add something regarding the cuts to payroll?
I think she mentioned something about cutting payroll. Well, Mr. Turner, we've moved on from this item right now. We
still have a full agenda to get to. So just get your questions together and be prepared to answer on July the 11th. Yes, sir. Yes, Representative Dombie. Mr. Chair,
Representative Carol Dalby
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would it be permissible that we have a motion to hold this audit, hold this over until the next time? Well, the deferral did that. We won't discuss
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it in the Thursday meeting, but it will be on the agenda for the July 11th. Okay, I just wanted to make sure we were in the right procedure. Oh, yeah, we'll start from scratch.
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Yes, ma'am. Okay, thank you. Oh, thank you.
Speaker 28
37:54
Thank you, Mr. Turner. Yes, sir. Okay, continuing to, under reports certified to the bond board and referred to the prosecuting attorney and attorney generals, we have the city of Dermott on page 15 through 17 for 2023 and 22. Under the mayor, the city paid a total of $5,007 in 1382 and 23 and 22, respectively, for overdraft fees, late fees in conflict with the public purpose doctrine discussed in Attorney General's opinion 91.4.10.
This is a repeat finding. Accounting procedures for municipalities are set forth in Municipal Accounting Law and Arkansas Code. The city was not in compliance with these codes and other proper accounting procedures as noted below. The bank accounts were not properly reconciled. The reconciliations were not approved by the municipal official or employee other than the prepare. This is a repeat finding in the previous two reports. Pre-numbered receipts were not issued for all funds received.
This is a repeat finding. Adequate supporting documentation was not provided for tested disbursements of over $26,000. That was 11 of the 50 tested disbursements and pre-numbered checks were not always issued in sequential order. This was a repeat finding in the previous two reports. Cash receipts and disbursement journals were not prepared for all funds. This is a repeat finding. Significant amounts of receipts, disbursements, and transfers were not posted, improperly posted, or improperly deleted,
resulting in unidentified amounts, changes in prior years fund balance, books being out of balance, and misstatements of revenues and expenditures. This is a repeat finding. An annual financial statement was not prepared or published. This is a repeat finding for the previous four reports dating back to 2018. Financial statements were not provided to the City Council members on a monthly basis. This is a repeat finding in the previous two reports. Continuing on page 16, restricted street fund monies were improperly used for
non-street related utility payments and accounting services during 23 and 22, totaling almost $5,300 and just over $5,900 respectively in non-compliance to Arkansas code. The city owes the following funds for transfers of restricted cash for which documentation was not provided. For the year 2023, the General Fund owes the Nursing Home Capital Improvement Fund, the Street Fund, Fireman's Pension Trust, McDermott Cemetery, the ARPA Recovery,
Police Bond and Fine, the Working Capital Payroll Fund, a total of over $135,000. The street fund owe the special sales tax street and water general and ARPA funds a total of $209,000. District Court Automation Fund owes the Fire Equipment and Training Act 833 and the Fireman's Pension Trust Fund $1,319 and over $11,000 respectively.
Police, I mean, Fireman's Pension Trust Fund owes the general fund over $11,000. And the Act 833 fund owes the district court automation $1,319. For the amounts due from previous years, the general fund made payments to the nursing home fund of $6,000, to the street fund for $9,900, to the Fireman's Pension Trust Fund for $100. McDermott Cemetery Fund is $700 and the ARPA Recovery Fund for $6,542.
Farmers Pension Trust Fund made payments in the Street Fund of over $1,000. There were additional attempts to make payments due from previous years, but the payments were made to the incorrect fund resulting in additional Interfund payables. We had the same finding for
Speaker 17
42:08
2022 since this is a two year report. They're just, those numbers I just gave you are the most updated numbers. So, but I will, staff would like to note that after the report date.
We have verification that all the street funds have been repaid. So the street funds have been made whole for their
Speaker 28
42:30
funds. So as far as Arkansas Code 277207, the city is in good standing currently. Continuing on page 17 under the district court clerk, the balance in the 23 and 22 district court city bank account was not identified with receipts for cases not yet adjudicated and the payments made
Speaker 17
42:52
on all unpaid individual time accounts in the amount of over $3,200 and
over $4,800 respectively in non-compliance with Arkansas code. This is a repeat finding in the previous 19
Speaker 28
43:04
reports, dating back to 2003. Under the police chief, police department cash receipts exceeded cash deposits by $4,036 during the period January 1 of '22 through June 12 of '24. Unreceived checks and online payments were included in bank deposits, which concealed a portion of the undeposited cash.
Speaker 17
43:29
On June 12th of 24, Police Department Secretary LaSola Hayes resigned from employment and acknowledged misappropriating his police department funds. Believe we've got District Court Clerk Megan Charlton here to
Speaker 28
43:39
answer questions. Would you state your name and position for the record, please?
Megan Charlton, I'm the court clerk in
Speaker 159
43:51
Dermont. Do you have an open statement? No, sir.
Are there any questions of the committee?
Representative Dalby, you're recognized for a
Representative Carol Dalby
Unverified
44:04
question. Thank you, Mr. Chair. I'm sorry I'm the only one asking questions today. Thank you, ma'am, for being here.
I appreciate it. I'm really concerned that we're talking about this. This goes back to
Speaker 163
44:17
2003. Yes, ma'am. When did you become the district court clerk? The end of 2018, December of 2018. And have
Representative Carol Dalby
Unverified
44:24
you gone to the training that is provided by the AOC or by the Municipal League on how to account for these funds and how to properly document them?
Speaker 159
44:35
Yes, ma'am. But this has been something going on, like you said, for 19 years. And there has been a former employee that stole money and that is still continuing to pay back. And then now we have another employee that allegedly has taken money from the same fine account. In y'all's, I'm
Representative Carol Dalby
Unverified
44:55
sorry, may I just have some latitude to ask some questions? Okay, thank
you. In the city of Dermott, in that district court, it appears that this is under one of those situations where the police chief takes in the money?
Speaker 159
45:13
Yes, ma'am. The police department collects the bond and fine money, and then they disperse it to me at
Representative Carol Dalby
Unverified
45:20
the beginning of every month. And then is there that problem of the reconciliation because sometimes you have those defendants who may have paid months in advance and then there's a lag time. Have you tried to account for
Speaker 159
45:33
all of that? Yes, ma'am. We've been keeping track of our bonds pending report and deducting that from the leftover balance in our account to try to identify it.
But with all the issues that we've had going on, the amounts have been fluctuating and we can't, in good faith, disperse it and then run the risk
Speaker 148
45:54
of the account being negative. Can you
Speaker 159
45:57
give me a money amount? We're working around like $7,000 and $5,000 unidentified. But then the report says like over $3,000. Okay. Thank you. Representative Dalby.
I was just sitting there thinking we may want to defer this until
our next schedule meeting on July the 10th
and maybe get the mayor here and get better
Representative Carol Dalby
Unverified
46:23
answers to your questions. And I understand the problem district courts have. That's a problem throughout the state, and we dealt with it last term in this committee, and I've yet to figure out how we can alleviate that problem, and I understand this disbursement, the lag time of that. I am concerned about all this other, but she doesn't have any answers in that
regard as to what's going on. It just, there's a lot of money.
I understand. Would you be willing to put that in the form of a motion just to defer until July the
Representative Carol Dalby
Unverified
46:57
10th and we'll get the mayor here? Certainly. I move that we defer this until July the 10th and request the mayor. And Mr. Archer, should there be
the treasurer? I can't remember who else was. The city of Durarmont
Speaker 108
47:09
contracts with a CPA to do part of their books.
Speaker 13
47:13
Correct. So they don't have a treasure. Do they have a city clerk? There is a city clerk.
Representative Carol Dalby
Unverified
47:20
Okay. Well, I'm kind of speaking on the motion, but I don't mean to be. My motion would be, yeah, we defer and get the right
people here. But I'm also curious as to they sign an engagement letter and still
haven't gotten any report from the CPA firm. That's not fair. I mean, that's not right for a city to
sign an engagement and then not get the work back. Do we have any information on that, Mr. Archer?
Speaker 28
47:51
They are not alone in that process with the ARPA
Speaker 16
47:56
funds and the federal requirements for those audits and with the passing of the amendment amended to the law for 2022 reports to be on an 18-month deadline. There's been a great response to that by the local CPAs out there, but there is a huge backlog. And to speak to that in the next meeting, June 30th of 25th is going to roll around,
And that's going to make the 18-month period for the 23 reports be due as well. So that will be an issue that probably in the July meeting that this committee is going to have
Representative Carol Dalby
Unverified
48:37
to act on. And I apologize, Mr. Archer. Has Dermott been on our list in the past of the CPAs not giving their reports? I just can't remember from the last term whether they have been or not. You know, we used to get a list. Do we have that updated list?
you know, the cities and counties that are on the outside.
Speaker 14
48:56
Well, the city is in compliance because we do
Speaker 16
48:58
that one. And I don't believe we provide a list to the water partners because the
Speaker 60
49:03
law didn't ever give a deadline until last June. So that's relatively new. Okay, thank you.
Thank you for the latitude, Mr. Chair. Yes, ma'am. Do we have a second on that motion? Second by Representative Rye. All in favor, say aye. All opposed? Just saying none, the motion passes.
Speaker 28
49:22
Mr. Archer. Continuing on page 18 with a report certified of the bond board and
referred to the prosecuting attorney and the attorney general by the city of Portland, 2023. Under the mayor, the city determined an employee used a city fuel card to make unauthorized purchases totaling $778. The employee, Cordell Brown, pleaded guilty to one count of theft of property and was ordered to pay restitution of $770. Under the recorder treasurer, during review of disbursements it came to our attention
that the city paid five council members and 11 volunteer firemen a total of $2,700 and almost $6,000 respectively as contract laborers instead of employees in accordance with IRS guidelines. This is a repeat finding in the prior two reports. I believe we have recorder treasurer Amber Spaulding here to answer questions. Ms. Spaulding? Would you state
your name and position for the record, please? Amber Spaulding,
Speaker 184
50:25
recorded treasurer for the City of Portland.
Thank you. Do you have an opening statement? No, sir. Are there any
Senator Steve Crowell
Unverified
50:35
questions by the committee? Senator Kroll? So you have this, the way you pay the firefighters and city
Speaker 184
50:40
councils fixed this year? Yes, sir. We got everything entered into CSA under employees to be paid.
Speaker 186
50:45
Okay. And you have a new procedure to make sure when they are using the fuel card?
Speaker 187
50:51
Yes. Okay. They have to now sign their field cards in and out and bring
Speaker 188
50:55
receipts. All right, are there any other questions?
Seeing none, I'd make a motion to-- without objection, I'd make a motion to file. Ms. Pauling, you're
Speaker 28
51:15
excused. Thank you. You're welcome. Starting on page 19, we have 20 reports that would be referred to the prosecuting attorney in the AG. Starting on page 19 and 20, we have a special report of the Bauxite District Court review of transactions from July 31st of 24 through November 12th of 24.
Speaker 17
51:35
We have staff member Michelle Ashley here today to
Speaker 194
51:45
present this report. Thank you. This report is issued in response from the 22nd Judicial District Prosecuting Attorney for Legislative Audit to look at allegations that a check from the District Court was returned due to insufficient funds. And just a little background on BoxSight, this is our third follow-up.
We had issued a special report in August of last year after reviewing court transactions and determining that they had moved $38,000 from the court front fund into an improper account. And so while looking at this, we determined that the check was insufficient because they accidentally paid a bill out of that account. They just paid the wrong account. So we followed up that with them.
And then we also, during this, we went ahead and followed up with them on our recommendations from our prior report. And so I just want to let the committee know that Bauxite is following through with their reimbursement agreement, and they have made those payments, and they are steadily reducing the amount that they owe to the court fund. And they previously owed some money to Bryant District Court for administering the court account. And Bryant District Court has confirmed that that balance has been paid in full.
you. Are there any questions on the report? Saying
Speaker 28
53:31
none without objection, we'll file this report. Thank you. Continuing on page 21 through 23, under reports, refer to the prosecuting attorney. We had a special report on the six regional solid waste management districts, a review of selected policies, procedures, and transactions, July 1 of 21 through December 31st of 22.
In conjunction with this report, the Mississippi County judge was invited to
Speaker 17
53:56
be here today. He called and requested this report be deferred to the July meeting so he could
Speaker 16
54:03
be here. He had a conflict in scheduling, so staff recommends that we
Speaker 201
54:10
defer this report. Without objection, we'll defer this
Speaker 28
54:17
report, saying none. Continuing with reports referred to the prosecuting attorney and attorney general on page 24 of the city of Camden 2023 under the treasurer.
The city paid employer contributions totaling 3656 on behalf of a firefighter into a deferred compensation plan from June 24th of 21 through April 30th of 24. These contributions were not in accordance with the city's policy manual, which states all regular full-time city employees except for police and fire personnel had the option of participating under the city's deferred compensation plan.
The city personnel discovered this unallowable contribution and the repayment plan was established at a rate of $15 per pay period for 244 pay periods. It appears that the repayment plan conflicts the Arkansas Constitution Article 12 Section 5, which prohibits the city from loaning its credit to an individual. If there are
Speaker 17
55:16
any questions, staff recommends that we file this report. With that objection, we'll
Speaker 202
55:28
file the report. Continuing under referred to the PA and AG on page 24, still on page 24.
Speaker 28
55:36
No, that was 24, on page 25 through 27, I'm sorry. City of Carlisle for the years ended 23 and 22. Under the mayor on page 27, the city paid $3,972 to a fireman for fire truck repairs
Speaker 17
55:55
in 2022 without an authorizing ordinance in apparent conflict with Arkansas code. Staff recommends, if there aren't any questions, staff recommends we file.
Speaker 28
56:10
file this report. Continuing on page 27, under referred to the PA and the AG, City of El Dorado 23 and 22, under the mayor. In February of 2019, excuse me, the city purchased the Playscape property from the El Dorado Festival and Events, EDF E, a non-profit organization for $3.45 million. and entered into agreement to lease the Playscape II EDFE for $10 annually,
with the EDFE having exclusive control to operate Playscape and pay all expenses for activities conducted on the premises. The city paid EDFE $200,000 and $300,000 in '23 and '22, respectively, to operate Playscape without a contract for services. On June 18th of 24, the city entered into a contract for services in which it agreed to pay EDFE $200,000 in the calendar year 24.
Without apparent additional consideration beyond that contained in the 2019 lease agreement. As of the report date, the city paid EDFE $150,000 in 24. This arrangement is in non-compliance with Article 12, Section 5 of the Arkansas Constitution. This is a repeat finding. Continuing under the mayor, on February 15th of 23, the city paid 242,638 for amulets with an estimated delivery date of 700 days after payment.
Although it appears the city saved 14,814 by prepaying for the amulets, The prepayment conflicts with Arkansas Constitution, Article 12, Section 5. Continuing under the mayor, an employee was paid 31 hours of vacation before the leave was earned. The employee was subsequently terminated, resulting in an overpayment of $554. This arrangement appears to be in conflict with Article 12, Section 5 of the Constitution,
which prohibits cities from loaning credit to an individual. Continuing under the mayor, a review of disbursements revealed that supporting documentation was not maintained for disbursements of almost $8,000 and over $29,000 in 23 and 22 respectively, non-compliance to the Arkansas code. Due to the lack of documentation, the validity of these disbursements could not be determined. Additionally, we noted an overpayment of $1,100 to a vendor.
Speaker 17
58:55
If there are any questions, staff recommends
that we file this report. Without any objections, we'll file
Speaker 28
59:04
this report. Saying none, Mr. Archer. All right. Continuing under reports referred to the PA and the AG on page 29, we have the city of Mena. Under the mayor and city clerk, in 2022, the city negotiated with a vendor to supply lockers for the police department at a cost of over $8,400, and subsequently paid the vendor over $4,200 in advance for half the total cost.
The vendor failed to fulfill this obligation and agreed to repay the city at a rate of $500 per month. The vendor made payments totaling $3,500, leaving a balance of $703. The last payment the city received was on June 12th of 23. And based on the documentation provided by the city, the city attorney is attempting to resolve this matter. The advance payment and balance due conflicts with Arkansas Constitution, article 12, section 5, which states in part, no city shall appropriate money for
or loanless credit to any corporation, association, institution, or individual. Without, if there's
Speaker 17
1:00:11
any questions, if there are, excuse me, if there are no questions, Staff recommends we file this report. Without objection,
Speaker 28
1:00:24
we'll file this report. Continuing on page 29, under Referred to the Prosecuting Attorney and Attorney General's Office. City of Salem, 2023, this report was prepared by a private CPA.
During our audit, we were notified by the City of Salem that certain bank transfers and invoice payments were not approved by city officials. Due to the lack of oversight
Speaker 17
1:00:49
in the baseball and softball enterprise fund bank statement, seven transfers out of the bank account were incorrect and in error. In addition, management approved, in addition, management approval for payments of invoice was not obtained. If there are no questions, our staff recommends we file this report.
Speaker 28
1:01:13
this report. Continuing under the reports filed to the PA and AG on page 30, we have Clark County under the sheriff and collector. On April 14th of 23, a county narcotics officer utilized the county owned vehicle for personal out of town trip without permission. According to the county officials, during the trip, the officer wrecked the county vehicle, causing the county to incur towing and storage fees totaling over $2,600.
Subsequently, the vehicle was determined to be a total loss. And the county received insurance proceeds of just under $17,000 for the loss of the vehicle and was reimbursed over $2,600 for the towing and storage fees. The officer was placed on administrative leave without pay for five days and retired in July of 23. In addition, the officer's timesheet reflected that he worked eight hours on the day of the accident. However, the information contained in the accident report indicated the officer was not working that day.
Furthermore, the sheriff's drug buy fund issued checks holding $1,400 to the officer during 23. The sheriff's office was able to provide supporting documentation for $500, leaving $900
Speaker 17
1:02:30
in drug buy funds unaccounted for. There are no questions staff recommends we file.
Speaker 28
1:02:44
this report. Continuing under referred to the prosecuting attorney in the AG on page 31,
we have Sebastian County 2023 under the county judge. The county discovered and we verified that a former employee received a salary payment of $993 in 2023. The month after the employee resigned, due to payroll personnel failing to verify hours worked. As of the report date, the county had not recouped any of the amount from the former employee. Also under the county judge, on August 31st of 23,
the county discovered that a vendor payment of 59,692 had been fraudulently diverted to another bank account. After the vendor contacted the county about not receiving payment. The county had set up an ETF payment request on July 24th of 23, after receiving an email that appeared to be from the vendor, without verifying the authenticity of the request. Law enforcement and the financial institution were notified. However, the county was unable to recover the funds.
Speaker 41
1:03:57
recommends we file. Without objection, we
Speaker 28
1:04:01
will file this report. Continuing on page 31, refer to the PA and AG. We have the Beaver Water District of Washington and Benton Counties. This is as of September 30th of 2024. This report was prepared by a private CPA. For the year ended September 30th of 24, the district had a failure of controls over the expense section for fraudulent vendor communications.
The controls in place were followed and confirmed with the real vendor. which had confirmed that invoices had needed to be paid the impersonator had intercepted communication inside the entity imposed as a known vendor the fraudulent vendor communicated communication led to a ch payment when legal counsel and insurance company was contacted
Speaker 17
1:04:50
no claim could be submitted due to the limited coverage the funds could not be tracked Therefore, the full amount was expensed.
Speaker 17
1:05:07
file this report. Without objection, we will file this report. Continuing on pages 32
Speaker 28
1:05:12
through 33 under reports filed by the prosecuting attorney in the Attorney General's Office, we have the City of Cotton Plant 2023 under the Mayor. The following issues were noted during payroll testing. We were unable to substantiate salaries paid to payroll preparer because timesheets lack sufficient details such as the date, time, and hours worked,
did not always contain the employee's signature certifying the hours worked, did not always contain supervisor approval. Additionally, some timesheets were stamped with the mayor's signature stamp, which according to the mayor was not kept in a secure location. Were not always provided for review. We were unable to validate the following payments, $1,200 to the mayor for unused leave. The mayor did not maintain time sheets or leave records documenting leave time used.
The city did not have a policy regarding payments for unused leave. After we questioned the payment, the council on October 8th of 24 approved two weeks of of vacation for 23 for the mayor. However, the meeting minutes provided lack clarity regarding the details of the approval. Subsequently, the mayor reimbursed the city on November 25th of 2024. Hourly rate approved for the amount paid to the payroll preparer for
the period October 24th of 23 through December 31st of 23. Continuing under the mayor, a fixed asset listing was established. However, it was not properly maintained to include additions and deletions. It did not contain certain values, acquisition dates, and identification numbers for equipment. In addition, a fixed asset policy was not adopted by the government body as required by code.
A similar finding was noted in the previous nine reports, dating back
Speaker 17
1:07:17
to 2011. Continuing under the mayor, electronic fund transfers and debit card transactions were noted without
Speaker 28
1:07:23
an authorizing ordinance, with written policies and procedures approved by the government body as required by code. This is a repeat finding. Per review of payroll records, the city has unpaid federal and state taxes totaling over $208,000 for the following items.
$2,400 owed to the DF&A for current year state withholdings. Over $48,000 owed to the IRS for current year federal tax withholdings. And over $158,000 for taxes, penalties, and interest for prior periods dating between 2015 and 2022. A similar finding has been noted in the previous six reports, dating back to 2014. On page 33, continuing, although Schedule 1 of this report shows a balance of over $11,000,
it was brought to our attention that as of December 31st of '23, the general fund owed a significant amount of balances due to the IRS and DF&A. As shown on Note 6 of Schedule 3, when these outstanding amounts are considered, the general fund has a deficit fund balance of over $197,000. This is a repeat finding from the previous report. I
Speaker 60
1:08:41
believe Mayor Clara Brown is here today to answer questions. Ms. Brown, are you here?
Speaker 201
1:08:50
Maybe she not, oh. Yes, I guess not. Let me see. Yep, she signed in.
Ms. Brown, are you here today? She just stepped out? Well, I guess she didn't want to speak. She
Speaker 210
1:09:14
had signed in to speak. She kind of asked to get her.
She kind of asked to get her. OK, she went to get her. I'm with you. I misunderstood.
I thought you said the woman that stepped out was Ms. Brown, Mayor Brown. I got you.
Speaker 212
1:09:32
If the community wishes, we can come back to that one when she's present.
Nope. Okay. Right, until we find her, we'll just wait on this and we'll move forward and we'll come back to it if she shows up.
Speaker 28
1:09:48
Forget, don't let me forget that one. Okay, continued on page 34, under reports referred to the prosecuting attorney and
Attorney General's office, we have the town of Emerson 23 and 22, under the mayor and record of treasurer. In testing 22 payroll records, the following items were not provided for payroll prepared. Documentation of the unauthorized, excuse me, documentation to authorize hourly rate for pay, timesheets and other documentation to support the hours worked. Without adequate supporting documentation, we were unable to verify
Speaker 17
1:10:25
if the amounts paid were correct.
If there are no questions, staff
recommends we file this report. Without objection, we'll
Speaker 36
1:10:36
file this report. Seeing none, Mr. Archer? Yep, we'll keep going
Speaker 28
1:10:41
here. On page 35 through 38, under the, referred to the prosecuting attorney and Attorney General's office with the city of Eudora 2023 and 22 under the mayor. Review of debit card charges for the period January 1 of 22 through December 31st of 23
reveal the following improper or questionable purchases totaling $14,179. Over $9,500 for undocumented disbursements, the validity of which could not be determined. over $1,600 for lodging and meals without a business purpose indicated. Over $1,180 for decorations, $824 for 144 candles, $736 for food related items. $103 for personal books, $65 for hotel late checkout fees, and $50 for a donation.
The city made payments totaling $2,644 and over $11,000 paid in '23 and '22, respectively, for related party
Speaker 17
1:11:47
transactions to city employee and the employee's business without an authorizing ordinance in apparent conflict with
Speaker 28
1:11:57
Arkansas code. Review of selected travel reimbursements and fuel purchases for the period January 1 of '22 through December 31st of '23, revealed the mayor purchased fuel totaling over $3,700 without vehicle information indicated.
Received mileage reimbursement totaling $2,222 without a business purpose indicated or approval by the City Council as required by U-Door Ordinance 2019-01. Received reimbursement for a fuel purchase without an invoice and purchased $31 in fuel on the same day she received reimbursement for mileage. During the same period, the district court clerk received travel reimbursements, totaling over $2,000 without specific dates of travel indicated or
approval by the City Council as required by UDOOR Ordinance number 2019-01. Included in this amount is one reimbursement of $907, which covered a five-year period of 2017 through 2021. Should be noted that invoices totaling $879 were not provided for January through May of '22 and January of '23. Without supporting documentation, we were unable to determine the validity of these purchases.
Continuing under the mayor, property taxes restricted for street purposes of $683 were deposited in the general fund in error. and not transferred to the street fund in noncompliance with Arkansas code. This is a repeat finding. Continuing on page 36, an audit agreed upon procedure and compilation report was not obtained for the water and sewer system funds for 22 and 21 as required of Arkansas code. A similar finding was issued in the prior report.
Under the mayor and district court clerk, district court clerk used all of her accrued sick leave in May of 2023. The city allowed her to receive payments for unearned sick leave, resulting in a salary overpayment totaling $10,417. Subsequently, the district court clerk retired in July of 24. Continuing on page 37, under the Mayor and Clerk, Treasurer.
Accounting procedures for municipalities are set forth in Municipal Accounting Code, Arkansas Code annotated 1459.101 through 119. The city was in noncompliance with these codes and other proper accounting procedures as noted below. Cash receipts and disbursement journals were not properly maintained. Municipal multiple transactions were posted to improper assets. And liability accounts in the general ledger resulting in numerous posting errors. A similar finding was issued in the prior report.
Also, journals were not established for the Street Vehicle Grant Fund and the Emergency Shelter Renovation Grant Fund. Pre-numbered receipts were not issued for all funds received. Also, receipt numbers were not always recorded in the general ledger. This is a repeat finding in the previous two reports. Bank accounts were not always properly reconciled and approved by someone other than a preparer. This is a repeat finding. Electronic disbursements were made without proper approval of the City Council by ordinance
or without establishing written policies and procedures to ensure that the electronic fund payment system provided for internal controls and documentation for audit and accounting purposes. This is a repeat finding. And lack of management oversight permitted these instances of non-compliance with municipal accounting law and proper accounting procedures. The effect of not following municipal accounting law and proper accounting procedures precludes management for making appropriate informed decisions on behalf of the city.
Speaker 17
1:16:04
I believe Mayor Tameka Butler is here to answer questions. Is Mayor Butler here? Would you state your name and title
for the record, please? My name is Tamika Butler. I'm the
Tamika Butler
Unverified
1:16:23
mayor of the city of Eudora, Arkansas. Mayor Butler, do you have an
Speaker 223
1:16:31
open statement? I do not, but if it's okay, I have my CPA here with me as well.
Clark Terrell
Unverified
1:16:35
Is he allowed to come up? Sure. That would be fine. Thank you. If you will, will you state your name and your relationship to the city? My name is Clark Terrell, I'm a CPA in practice in the city of CrossFit, Arkansas, and I provide outside accounting services for the general fund, street fund, parks and recreation, sewer and water on a selective basis. Thank you.
Does anybody have any questions? Thank you Mr. Chairman,
Representative Jack Ladyman
Unverified
1:17:13
I'm down here at the end. Under one of these findings, there's like three or four repeat findings. What are you doing to stop those repeats? What are you doing to fix those issues? And I'm looking at the on page 37 if you've got a copy of that. Is there anything being done to fix it?
Were there repeats? I mean, what are you doing to fix
Speaker 223
1:17:40
the issues? Can you state with me what, can you restate with those
Representative Jack Ladyman
Unverified
1:17:44
repeat findings? I'll read one of them. Okay. Pre-numbered receipts were not issued for all funds received. Also, receipt numbers were not always recorded in the general ledger. Similar finding was issued in previous two reports. So use that as an example. What are you doing to fix that problem? Did you find it? I'm looking for it right now.
I'm on page 37 if you've got the
Speaker 223
1:18:11
same report I do. No, I don't have that report. But what we have done, though, I can kind of give a statement. What we have done in reference to the receipts not being issued in sequential order, I have been paying closer attention to that because a lot of the receipts that are issued are issued at the front counter where our water clerk does that. And so now I'm being more mindful of checking behind her
to make sure that those receipts are issued in a sequential order because at first she wasn't going in sequential order. She was just writing the receipts from left to right instead of right and then going to the left column based on how our receipt books are ordered,
Representative Jack Ladyman
Unverified
1:18:55
how they're numbered. Have you had any employee changes, new employees? Yes, sir. That particular person
Speaker 223
1:19:00
is no longer employed with the city. Okay. So you got other procedures
Representative Jack Ladyman
Unverified
1:19:05
to fix the other three items? Yes, sir. All right. Thank you.
Representative Coop, you're recognized for
Representative Cameron Cooper
Unverified
1:19:16
a question. Mayor, thank you for being here. At the beginning of the report, there's an accounting of over $14,000 in questionable debit card charges that were made. $824 for candles, money for snacks, candy, drinks, money for personal books. who is making these purchases? Why? What were they for? And what
are you doing to have better
oversight over how those debit cards are
Speaker 223
1:19:45
being used? Well, in regards to the, um, I think you mentioned something about 9,000 in undocumented disbursements. I'm not sure what that is because we do have some records that are still at the attorney general's office. So I haven't seen them to be able to provide a detailed explanation of those, but I'm pretty sure when I look at them, I can. As far as the lodging and the meals without proper business purposes being indicated, we started enforcing that you must attach to your reimbursements the agenda for the meeting
or training that you attended. If you can get a copy of the sign-in sheet, things of that nature to validate where you were and why you were there. For decorations, at the time I made those purchases. That wasn't all at one time. It was over the course of the two years. We are in a very old building. Next year to be 90 years old. And it's very dead looking. I must, and that's probably not the right word. But our building is 90 years old. We need a new roof. And that even goes for
the candles. There's a lot of mold and mildew in the building. And this is where we work out of every day to do the day-to-day operations. So in order to be able to stay in the building, because the scent is so strong, we burn candles while we're there. Since then also, we haven't had purchased any candles. If so, I'll buy some myself or the water clerk will buy some herself, but we have to burn them so that we're able to stay in the building.
And when it rains, a lot of times, We have to take periodic breaks and go and sit in our vehicle outside because the scent is just that excruciating, and we have to let it die down in order to go back in, in order to finish working. Since then, we've reached out to the prehistoric society to help us because it is listed on the prehistoric registry to come down and do an assessment to hopefully get us a new roof soon because that's where a lot of the mold and mildew is coming.
It's a two-story building and it runs down the stairwells, the floors, in the bathrooms. We're not able to use the staff restroom and hadn't been for about two years because the mold and mildew has just completely taken over the entire restroom. The food-related items, we were hosting events for our youth, like for Easter. We have a Christmas parade every year, and we are responsible for feeding the youth that participate, that are a part of the band that participate in our Christmas parade.
We're responsible for feeding them. That's part of the agreement that the superintendent and the band director made with us. The $103 for personal books, those were books that I purchased for staff development training. So it wasn't for personal use. It was for all of my staff, from the water clerk to our public works crew to our firefighters. We even invited some council members to the staff development meeting just so they can come and participate with that.
With the $65 late checkout fee, I was at a conference, at a training, and it ran over. So by the time we finished, and I realized what time it was, it was after the checkout time of noon. We didn't finish until about 3 o'clock. By that time, I had gone to ask for an extension or get my things, and they told me that the $65 had already been processed to the card on file. And the $50 donation, without looking at it, I can probably honestly say that it was for a Community Development Institute membership fee.
The city is a part of the Community Development Institute, which is housed out of UCA in Conway, Arkansas. And that membership fee is $50 a year. And I think I was trying to get everything
Representative Cameron Cooper
Unverified
1:23:56
that you were saying. Thank you for that explanation. I appreciate that. What measures will you take to ensure that your future purchases will be an appropriate use of taxpayer dollars? Legislative auditors calls these questionable purchases.
So what will you do to justify these purchases to ensure that it is an appropriate use of tax dollars?
Speaker 223
1:24:16
Well, before I purchase them, I'll make sure that they are allowable before that. And if not, then I'll ask for donations to make sure that we still get things that
Chair
Unverified
1:24:30
we need. Are there any other questions? Representative Lateman, you're recognized for
Representative Jack Ladyman
Unverified
1:24:34
a question. Thank you, Mr. Chairman. So, Mayor, do you have any procedure when you're buying things on this debit card, you just spend the money.
Do you have any process to check before or after some form to fill out what these expenditures are for and what ordinances they're covered under? Do you have anything like that, or is that what you're looking to set
Speaker 232
1:24:55
up? We have it set up now. We do have it set up now. It's in place now. If you
Representative Jack Ladyman
Unverified
1:25:01
reference your ordinances or go back to the city council and have them approve these things, as long as your attorney approves them, then that should take care of your problem.
Chair
Unverified
1:25:13
Thank you. Thank you. Any other questions? Representative DeBerry, you're
Representative Stan Berry
Unverified
1:25:22
recognized for a question. Thank you. Thank you, Mr. Chair. Out of all this that has gone on, is there or how much money has not been recovered? I don't know, but I guess, or is that a fair question, or is there an answer for that?
Speaker 244
1:25:44
I didn't hear his question. How much? Well, I'm going to. Oh,
Speaker 16
1:25:50
okay. I'd have to, I mean, it's not necessarily missing money. It's just that we questioned the use of it. I mean, or it was undocumented. Like we've covered the $14,000, those items there, you know, the majority of it is that we just didn't have documentation to tell us what it was. So we didn't know what, you know, the $9,500. The rest of it we questioned.
You move on down to the fuel payments. Those were fuel purchases by the officials that they could not document that they were actually for business purposes. They may have been, they may not have been. Most of them were not documented, or they were in violation of the city's
Representative Stan Berry
Unverified
1:26:38
ordinances. So I may not be answering your question. Well, and I think so, but all that money in question is $14,000.
And that's right up at the top, basically $14,000 in question. additional $10,000 of overpayment
Speaker 16
1:26:53
of sick leave, I don't believe they've recovered any of it, have they? We're not aware that they have. We haven't been notified that they require, that may be a question for the mayor.
Speaker 223
1:27:09
We have not recovered any of that. And as far as the fuel purchases, the procedure that we've had in place but just wasn't enforcing,
When the employees purchase fuel, we require them now to write their name on the receipts as well as the license plate of the vehicle that they're putting the fuel in. Because we also have gas containers, even if they're purchasing fuel to go into the gas containers, we have them to document that on the receipts as well. Okay. Thank you, Mr. Chair. Thank
Speaker 90
1:27:45
you, Representative. Are there any other questions?
Seeing none, Mr. Archer, we'll file the report without objection. Without objection, we'll file this report, saying none, you're excused from the
Speaker 28
1:28:01
table. Thank you so much. Thank you. So Mayor Brown, back in the room. Okay, we'll just start over with the City of Cotton Plant on page 32 and 233, under reports referred to the prosecuting attorney and attorney general.
Under the mayor, the following issues were noted during payroll testing. We were unable to substantiate salaries paid for the payroll preparer because time sheets lack sufficient detail, such as date, time, and hours worked. Did not always contain the employee's signature certifying the hours worked. not always contain supervisory approval. Additionally, some timesheets were stamped with the mayor's signature stamp,
which according to the mayor was not kept in a secure location. We were not always provided, they were not always provided for review. We were unable to validate the following payments. $1,200 paid to the mayor for unused leave. The mayor did not maintain timesheets or leave records documenting leave time used. The city did not have a policy regarding payment of unusually. After we question the payment, the council on October 8th of 24 approved two weeks of vacation for 23 for the mayor.
However, the meeting minutes provided lack clarity regarding the details of this approval. Subsequently, the mayor reimbursed the city on November 25th, 2024. an hourly rate approved for the amount paid to the payroll preparer for October 24th of 23 through December 31st of 23. A fixed asset listing was established, however, it was not properly maintained due to maintain to include additions and deletions and
did not contain values, acquisition dates, identification numbers for
Speaker 17
1:29:57
equipment. In addition, a fixed asset policy was not approved by the government body. as required by Arkansas code. This fine has been repeated in the previous nine reports dated back to 2011. Electronic fund transfers and debit card transactions were noted without an authorizing ordinance, with written policies and procedures approved by the government body as required by Arkansas code. This is a repeat finding.
Per review of payroll records, the city has unpaid federal and state taxes due
Speaker 28
1:30:30
totaling over $208,000 as follows. $2,400 due to DF&A for current year state withholdings. Over $48,000 owed to the IRS due for current year federal withholdings. And $158,000 for taxes, penalties, and interest for prior periods dating between 2015 and 2022.
This is a repeat finding from the six prior reports dating back to 2014. Continuing on page 33, although Schedule 1 of this report shows a balance of over $11,000, it was brought to our attention that as of December 31st of 23, the general fund owed a significant amount of balances due to the IRS and Department of Finance Administration has shown in Note 6 on Schedule 3. With these outstanding amounts were considered, the general fund had a deficit fund balance
of over $197,000. Similar finding was issued in the prior report. I believe Mayor Clara Brown is here to answer questions. Mayor Brown, if you would, would
you state your name and your position for the record, please? Clara
Speaker 250
1:31:38
Harston Brown, Mayor of Cotton Plant, Arkansas.
All right, then the other young lady that's with you today,
Would you state your name for the record, please? Nicole Carroll, treasurer. Thank you, Ms. Carroll. Mayor Brown,
Speaker 254
1:31:54
you're recognized to make a statement, please. Yes, I would like to make one because all this, what people still understand that this
rate back to 2014, half of it before I even got in office, and I've been trying to work with that ever since I've been here. Then I have to deal with the 2018 bills that were left on the table also that went along with that. Then with my term, I could even meet my own payroll. I couldn't do anything because I hadn't had that many employees because we couldn't pay them because we didn't have anything to pay them with. We didn't have nothing. Then when we started getting the income and we were doing pretty good,
like I said the last time when I was here, we was on the right road. I was getting everything, everything was already, ooh, I had got Ms. Pam Wright to come in and help us out with the books and everything to put us back in line with every code that it was. Then plus I had a lawyer to be at the meeting in order to let us know when we wasn't doing things right. But during that time, my last, I'm not going to say treasure, bookkeeper that worked for me.
Now, this other lady that we hired back in January, I went into the hospital and had a hip service, and I was out of office for about three months. One month was at home, and the other two months was in and out of office. Then while I was out, and when I came back, it was so many discrepancies done, we already had on bills. When I get back in there, we three months had on the bills that we already had covered. So between the bank bill that we was already at and the bills that was coming forth that she hadn't paid in those three months' time, all of them hit at one time.
Every bill that the city had hit at one time. And I did the best I could to try to keep the city afloat. We didn't have any money. I tried to line it up with the state and federal guidelines. So the lady that we were using to help us out, she told us, when you get ready to resperse money, put it all in one account. So every time we get some money, we will put them in general funds, except for the street department, Act 83 also.
Then another thing, we got five loans that comes out every month, five loans for the last past, I don't know, 1900 and something, and they were half of them were matured to 2060. Then come, the city had, then was getting, with the population, they had enough to pay those bills. Now with my population, I ain't even half that size. The city do not get nothing to really cover my own bills instead of trying to hit those bank bills also that I acquired.
I knew I wasn't going to pay them all, but I had got them substantially where I could have them every month. I can meet everybody's payment. But with the sacrifices in the office where they took three months worth of pay out of there that they didn't earn, that throwed me behind again. So, like, every time I start trying to go straight, some always throw me back. Well, I live at 90% senior citizen down there, 90%. And the young folks down there, you don't get too many that want to do anything to help you out.
Then you get some that you think that you can trust. I worked with them for four years. I thought I could trust them. And I knew while I was gone, I didn't want to get my hand on no bills anymore. So, I gave them my stamp to keep payroll going and keep the bills going. So, when I really got back in the office to look at what was going on, I don't think I can do. I called the council in. I did call the state in. Now, right now, that case is still in court. Now, I don't know how they're going to come out on that deal.
But that's what threw everything out of my plan that I had going. I done worked hard for this city. Hard. I didn't gave my all. I lost two hips a pair of teeth with 100 pounds. I have gave all. The only thing I'm trying to do now is serve my term out. I don't want the next mayor to come in to endure what I went through. That's shameful. And with no one telling you what's going on.
You asked all the time. They say, oh, everything's good, everything good. They don't tell you anything. When I went in that office, I took people sitting there with me, supposed to be helping me figure things out. I educated people. Filling things out to help me get these bills organized and get them paid. So when I went in the office, I took them in with me. We gathered all the books, everything. We gathered all the bills. When they gathered all the bills up, them bills hit almost a million.
out there what I'm laughing. I haven't seen it from that day to this one. If I knew I wasn't going in with no help, I never would have taken this job. Never. So the next person running for mailman tells them exactly what's going on. They're going to be their choice or not. Do they want to take it on? Now, the city hired this young lady here as my bookkeeper treasure to help me straighten some of the other stuff that Ms. Pam Wright had trained the other girl to do. I had to come in and start all over again to train her all over
again. So it looked like I could go forward for going backwards. So that's where we're now. We have no money. Everybody look at that marijuana factory thing. We got money. We lucky we get $2,000 a month. We
Speaker 256
1:38:01
lucky that we get that. We get $8,000 from the state. 3,000
Speaker 254
1:38:08
for a street. And I got to try to keep the water company going, I got to do a rate study on that, and
now coming up, I knew of a scrubs was in the water meter with water reading every month 'cause it kept fluctuating. So I sent two more people out there to read the water meter, coming to find out the lady that reading the meter, all of them was wrong. I had to get rid of her. now i got to find me somebody else to read those meters i haven't had number one headache to the next one since i've been in i had no peace then when i thought i'll get two weeks vacation check hey and the state said i couldn't get it wasn't no problem i didn't really want it we didn't have it
i didn't want it i paid it back because i didn't want nothing i spent enough money up there i ain't got to take nothing. I've been given. And don't nobody come in and help me. I can't get no cattle fishing, no state rep, or nobody. I don't know somebody ever hold me since I've
Speaker 256
1:39:14
been Mr. Christen. He the only one. I can't get a hold of another state rep.
All right. Are there any questions of the mayor? Representative Dauber, you're recognized?
Representative Carol Dalby
Unverified
1:39:26
And not necessarily of the mayor, but of staff, possibly. Can you outline and
remind me, because I've forgotten since the last, whatever, last summer, whatever on this committee, what steps does the legislature need to take to dissolve a town? You know, we have that power and we have that legislative authority, and it appears to me that from what the mayor has just testified to, they've got a million dollars in expenses.
Speaker 260
1:40:00
No, no, we did have that. I had paid most all of those off and worked off
Speaker 254
1:40:06
all the penalty that Captain Plan did have on it. I have covered a lot of ground since I've been in there. I have paid off a lot of bills. I done paid off some loans from
Speaker 256
1:40:17
nothing. Pinching pennies. And we really appreciate that, and thank you
Representative Carol Dalby
Unverified
1:40:23
for your diligence in doing that. But can you give us what the procedure is?
Because it appears from the testimony that money's going out. There's not enough money. She testified how that, you know, dwindling, not only a dwindling population, but no tax, really no tax base. Can you just give me, just remind me
Speaker 262
1:40:48
what that procedure is? Send some money down. That would be a better
Speaker 16
1:40:53
question for Ms. White, but I will say the one that I can remember. If the City Council votes and submits that, I believe, if submits that to the Governor, then that's one avenue.
Now, the other avenue requires a substantial noncompliance with Municipal County Code, which takes two rounds through 1459-117, which there's only been one instance of that, and that took about seven to eight years, if my memory is correct. But I can get back with you in the next meeting with Ms. White. If you could just give us that
Representative Carol Dalby
Unverified
1:41:30
report, just to remind us, because it just is frustrating
when we hear this and know that it's never going to get better.
Speaker 256
1:41:42
I'm not going to say it's never going to get better. I would say on a new administration and a new
Speaker 254
1:41:53
council, the city may get better. That's the only way that city is going to make it. Get another mayor and another council. Ain't nothing wrong with the city. That's what the city needs. The city needs another mayor. That's exactly what they need.
And more council people, somebody younger, I'm 75 years old, I'll be 76, it's mine ain't got no business in there and I know it. Are there any other questions about the committee? What's
the will of the committee? Without objection, we will file this report. Mayor, Mr. Carroll, thank you for your time.
Speaker 28
1:42:44
Thank you. Y'all are excused. Continued under reports filed the prosecutor and attorney and attorney general on page 39 and 40 of the city of Mount Ida for 23, 22, and 21. Under the mayor and recorder treasurer, the recorder treasurer received more paychecks than she was entitled during the period January 1 through 21 through December 31st of 23, resulting in a salary overpayment totaling $9,269. In addition, it appears she issued several payroll checks to herself
before the end of the applicable pay period, and therefore was paid in advance for hours' work. Continuing under the mayor and recorder of treasurer, the mayor and other employees and officials were paid a benefit for not participating in a city-provided entrance program for the years 23, 22, and 21. Payroll preparer was paid a benefit for not participating in a city provided interest program for 23 and 22. This benefit was not reported to the IRS, a similar finding was issued in the prior report.
Speaker 60
1:43:53
I believe Mayor Van Morgan and Recorder Treasurer Amber Weston is here to answer questions.
Speaker 266
1:44:07
Mayor, would you officially recognize, state your name and position for the
Speaker 268
1:44:14
record? Sorry, repeat that. I see. Would you state your name and position for the record, please? Yes, sir. Van Morgan, mayor of Mount Ida, Arkansas since January 2023.
Speaker 269
1:44:23
And ma'am, your name? Amber Weston, treasurer recorder. Mayor, do
you have an open statement? No, sir.
Are there any questions by the committee? Representative Cooper, you're recognized.
Representative Cameron Cooper
Unverified
1:44:39
Mayor, thank you for being here. The report notes that the mayor and other employees and officials were paid a benefit for not participating in the city insurance program. So could you just give us an idea of what that benefit is
Speaker 268
1:44:58
It's, I guess, would be the reimbursement of what your insurance you're out from another insurance. That's been going on since eight or nine years now that I know of. Like if they don't have the insurance coverage that we carry through
Speaker 120
1:45:27
Municipal League, they get reimbursed for other insurance.
Okay, thank you for the explanation, I understand
Speaker 16
1:45:38
now, thank you. All right, if the committee will indulge me just a minute. Our general counsel, Ms. White, she pointed out that 1459117 is the code that allows for
Speaker 17
1:45:52
dissolving of a municipal charter. And that one city, but that one is for what I haven't read it again real quickly during the meeting here.
Speaker 28
1:46:05
But there is about a three year process of going through municipal accounting law substantial non-compliance.
Speaker 17
1:46:11
And the other option I believe is just for them to turn it in. But we will do further research on that in case I missed it. But 1459117 is the code. Thank you Mr. Archer for that update. Okay, did we file
Speaker 204
1:46:36
Are there any other questions of the mayor? Without objection, we'll file this
Speaker 36
1:46:49
report. Mayor, y'all are excused. Continuing on page 40, under
Speaker 28
1:46:53
reports referred to the Prosecuting Attorney and Attorney General, we have the City of Perigoul, 2023, under the Mayor and Treasurer. Between March and April of 23, eight unauthorized disbursements of almost $15,000
were made from the City's bank account. The City personnel discovered these transactions upon reconciliation of the affected bank account. However, one transaction was not identified within the bank's framework to refund the transaction, resulting in unrecovered funds, $2,798. There are no
Speaker 17
1:47:26
questions, staff recommends we file this report. Without objection, we'll file this report.
Speaker 28
1:47:37
Continuing on page 41, reports refer to the prosecuting attorney and Attorney General, the town of Rondo, 2023, under the Mayor and Recorder Treasurer. Adequate supporting documentation was not provided for tested disbursements of over $4,000 in noncompliance with code. Of this, $1,485 in fuel purchases that according to the Mayor and Recorder Treasurer, partially placed in their personal vehicles without documentation of business purposes. Over $1,300 in payments to various other vendors.
Over $870, over $400, and over $48 for undocumented reimbursement to the quarter treasurer and other city employees and the mayor respectively. Without supporting documentation, a business purpose for these expenditures could not be determined. If there
Speaker 17
1:48:23
are no questions, staff recommends we file this report. Without objection, we'll file this report. Continuing
Speaker 28
1:48:35
on page 41 and 42, we have the town of Ralston, 23, 22, and 21.
On page 42 under the treasurer, numerous, I mean, excuse me, invoices and supporting documentations were not provided for 11 of the 25 disbursements tested, totaling over $3,800 in 23, 10 of the 25 disbursements tested, totaling over $4,600 in 22, And 25 of 25 disbursements total tested, totaling over $73,000 in '21. Due to the lack of documentation, the validity of these disbursements could not be determined.
If there are no questions, staff recommends we file this report. Without objection, we'll file this report. Continuing on page 43, under referred to the PA and AG, we have Dallas County 2022 under the sheriff. We became aware of and verified a sheriff's office employee who was also employed with a neighboring city. Review of this individual's timesheets from the county and the city revealed 17 days with 20 hours charged per day and two days with 24 hours charged in a single day.
However, it should be noted that the employee did not always complete his timesheet at the county or the city. And some of these hours worked may have been applied to incorrect days. The employee maintains that all hours were worked. However, the employee acknowledges that he utilizes the county owned vehicle when
Speaker 17
1:50:08
performing work at the neighboring city. There are no questions, staff recommends we file this
Speaker 32
1:50:15
report. Without objection, we'll file this
Speaker 28
1:50:18
report. Continuing under reports filed with PA and AG, on page 44, we have Lee County.
The county judge, under the county judge, excuse me, Lee County 2023, under the county judge, the county budgets and pays $8,500 to the county judge for a vehicle allowance, and includes this amount on his W-2. The county judge also charged $4,622 in fuel, which was budgeted in the road fund, to the county for the period February 3rd of 23 through August 15th, 24, and place the fuel in its personal vehicle.
The county does not have a travel or vehicle allowance policy. Therefore, we were unable to determine if this is proper use of these funds. If there are
Speaker 42
1:51:08
no questions, staff recommends we file this report. Without objection,
Speaker 28
1:51:12
we'll file this report. Continuing on page 44 under referred to the PA and AG. We have a private CPA report of the West Saline Water User Association for 2023. Customer adjustments were not documented in accordance with the leak policy.
And we noted 18 disbursements made to employees were not adequately documented. Without questions,
Speaker 17
1:51:36
staff recommends we file this report. Without objection,
Speaker 28
1:51:49
Starting on page 45, we have seven reports with repeat findings. Starting with city of Searcy, 2023, under the district court clerk.
District court clerk was unable to identify $124,603 remaining in the bank account with receipt numbers for cases not yet adjudicated and payments on all unpaid individual time pay accounts as required of Arkansas code. Similar finding was noted in the previous 11 reports. I
Speaker 17
1:52:17
believe District Court Clerk Linda Wiseman is here to answer questions. Ms. Wiseman, could you state
your name and title for the record please?
Chair
Unverified
1:52:34
Yes, I'm Linda Wiseman, Chief Court Clerk for Searcy District Court. Thank you. Do you have an opening statement? If I may, it'll just take a second. Okay. The previous Chief Clerk was Ms. Linda Maddox. She retired in 2022. The City of Searcy, the District Court, has had, it's my understanding, three different software systems. We're currently on context, provided by the state of Arkansas. We went on context in 2015.
Prior to that, they were on a system called Relativity, or RPS, from 2008 to 2015, and then there was a system even prior to that. The large amount of funds that are held as unidentified funds have continued to roll from one year to the next in the audits. We do not have access to records prior to context, prior to 2015, due to the system crash with relativity.
The intent that, and I can only refer to Ms. Maddox, and I apologize. The intent that Ms. Maddox always said, if that figure of the unidentified funds would ever be consistent, Her opinion and the judge's opinion was pay it out so that it could come to a near zero amount because it seems to be in the system as funds that we absolutely cannot attach to receipt numbers to defendants.
We do not have a high case of people claiming I paid bonds years ago, anything like that. We simply cannot identify these funds. Representative Dalby, you recognize for a question. Thank you, Mr. Chair.
It's my understanding, ma'am, that the district
Representative Carol Dalby
Unverified
1:54:37
judge can issue an order, ordering those to be paid out. Have you had that conversation with him or her? I don't know who your district judge is. I have, yes. But there is a way of clearing that out and moving down the road.
And my question is, how come
Chair
Unverified
1:54:55
that hasn't been done? The previous, the judge that this began to roll along with was Judge Mark Pate, who is now our circuit judge. Our current judge is Judge Eric Kennedy. Judge Eric Kennedy and Ms. Maddox had that very same conversation, and that's where they were of the opinion. If it could be a settled amount, basically, continue forward.
Judge Kennedy and I discussed that very thing yesterday afternoon, and he wants to pay it out, pay it out to the entities that it should go to so we could start fresh. I am encouraged 2022-2023 audits showed the $124,000 figure, very small difference. Brandon Grady, our auditor, has already given me an estimated amount for 2024 audit end,
and it is literally within $100 of this same $124,000. Judge Kennedy's comment was three years. If that figure is true in the 2024 audit, that would be three years for the amount to be basically the same. Go ahead. And I appreciate that. And I might
Speaker 53
1:56:23
suggest that you get with the judge probably tomorrow, if not this afternoon when you
Representative Carol Dalby
Unverified
1:56:29
get back, and suggest to him that he get with the AOC and get with that division
that deals with the district judges and see if we can expedite that along. I think the AOC will be very helpful in resolving this. And
Speaker 96
1:56:49
getting short on time, so please hurry. That's fine. We have been in
Chair
Unverified
1:56:53
contact with and getting training from the ALC on a regular basis. So thank you all very much for your
Speaker 281
1:57:00
time. Are there any other questions?
Speaker 41
1:57:07
Staff recommends we file. Without objection, we'll file this report. You're excused. Thank you, Ms. Wiseman. Thank you.
Speaker 28
1:57:16
Continuing on page 45 under reports repeat findings. We have the city of BB 2023 under the district court clerk. During our review of the BB district court, we noted the following non-compliance with Arkansas code. Cash receipts and disbursement journals were not properly maintained and reconciled with the bank deposits and withdrawals.
The cash disbursement journal did not indicate the correct date, check number, Payee classification or amount for numerous disbursements. This is a repeat finding and I believe
Speaker 202
1:57:46
we've got District Court Clerk Jennifer Latour here. Would you state your name and position for
the record please? Would you turn your mic on?
Speaker 282
1:58:10
Jennifer Latour, chief court clerk, maybe district
court. Do you have an open statement, Mr. Latour? No, sir. Are there any questions by
Representative Carol Dalby
Unverified
1:58:23
the committee? Representative Dolby, you're recognized. Not necessarily a question, Mr. Chair, but more of a comment or a suggestion. Have you gotten with the AOC to get training with the district court division of
Speaker 283
1:58:37
the AOC to work on this matter? Have not, but I plan on doing that. And then also we've opened or we've changed bookkeeping
systems and also opened or are in the process of opening a new bank account. Are
Speaker 192
1:59:00
there any other questions? Without objection, we'll file this report. Thank you. Thank for your
Speaker 28
1:59:07
time you're excused yes sir continuing under reports with repeat findings on page 46 we have the city of chittister under the mayor street fund expenditures exceeded budget
appropriations in 23 and 22 by almost six thousand dollars and just over fifty two hundred dollars respectively in non-compliance with arkansas code similar finding was noted in the prior of five reports dating back to 2014. I believe Mayor Bobby Box Sr. is here to answer questions. - Would you officially state your name
Bobby Box
Unverified
1:59:37
and position for the record please, Mayor Box? - My
Bobby Waton
Unverified
1:59:40
name is Bobby Box, the mayor of Chittester, Arkansas. - And do you have an opening statement?
- No, it's cold in there. - It's cold in here, okay. Do you need to borrow my jacket? Does anybody have any questions of the mayor?
Seeing none, without objection, we will file this report. Thank you, Mr. Mayor Box, you're excused, thank
Speaker 28
2:00:11
you. Not yet. Continuing on page 47, the reports with repeat findings of the town of Georgetown.
Under the record of treasurer, Accounting procedures for municipalities were set forth in Arkansas code. The town was in non-compliance with these codes as follows. Receipts were not deposited in a timely manner. Cash receipts and disbursement journals were not properly maintained. Adequate supporting documentation was not maintained for tested disbursements of over $1,700 in 23 and over $31,000 in 22. A detailed fixed asset listing was established, but was not maintained properly for additions.
IRS quarterly forms 941s were not provided, DF and A forms AR3 were not provided, and W2 forms were not provided. We were unable to determine if the proper amounts of withholdings were remitted. Therefore, additional penalties and interest could be due. This is a repeat finding from the prior year. The town's accounts were under-collateralized by over $426,000 at the end of 23 and were under-collateralized by $293,000 at the end of 22 in non-compliance of code.
This is a repeat finding as well. I believe Recorder Treasurer Debbie Bryant is here to answer questions. Would
you state your name and position for the record, please? Deborah Bryant, Recorder Treasurer, town of Georgetown. Do you have an opening statement? No,
Chair
Unverified
2:01:45
Ms. Bryant? Seeing none, without objection, we'll file this report. Ms. Bryant, you're excused. Thank you. Thank you.
Speaker 28
2:01:55
Continuing on page 48, we have the town of Gump, 48 and 49, excuse me.
We have the town of Gump Springs, 23, 22, and 21. Mayor, Ivory was invited here today and he could not get transportation to Little Rock today, The staff recommends we defer this report until
Speaker 201
2:02:22
I got sidetracked, but without objection, we will defer this report.
Speaker 35
2:02:31
Continuing on page 50, we have the town of Ulm for 2023 and 22. Is
Speaker 28
2:02:36
Mayor Floyd, I mean, is the Court of Clerk Floyd here? The Clerk Treasurer, Mary Beth Floyd, was invited. She had called and said she couldn't be here today due to health reasons. Staff recommends we defer this report. Without objection, we
Speaker 40
2:02:55
will defer this report. Oh, excuse me. Can
Speaker 28
2:02:57
I go back up on that? Sure.
This was, I apologize. The town of Ulm was being considered for substantial non-compliance with the Municipal Counting Code.
Speaker 16
2:03:11
And we paid them a visit in the 1st of May and their records have much improved. So there will be no need to consider that anymore and staff recommends we file this report and leave that additional visit. And then
Speaker 28
2:03:32
report. Town of Weldon, recorder treasurer Beverly Tooley was invited and
she called and said there was a family emergency last night
Speaker 28
2:03:49
be deferred. Without objection, we will defer this report. We have three reports with findings without proper responses. We've got two private reports, Grey Rock Water Association, and outside Kingsland Rural Water Association. Staff recommends we defer these reports to give time for adequate responses.
Speaker 28
2:04:13
these reports. On page 51 and 52, we have the Town of Norman 23, 22, and 21. The Town of Norman actually provided responses to all the findings. However, they have two findings that we need to address. Property taxes restricted for street fund purposes of $3,040 and $2,854 in '22 and '21 respectively were not transferred to the street fund as required of Arkansas code.
And under the Mayor and Recorder Treasurer, restricted funds were expended from the street fund as noted below. over $4,200, over $1,200, and over $7,100 for 23, 22, and 21 respectively for general fund expenditures, and $100 and over $3,800 in 23 and 21 respectively for water and sewer fund expenditures. In their response, the city indicated that they didn't have the funds to pay this back.
Well, Arkansas Code 277207 requires that as of December 31st of 22, all street funds had to be repaid. So staff recommends that we defer this report and invite them to come up with a payment plan for these funds. With that objection, we
Speaker 17
2:05:34
will defer this report. On pages 53 through 76, we have 81 reports with findings and had adequate responses. Staff will allow, we'll let you all have a few minutes to look through those if you have any questions.
If not, staff recommends that we file these reports. I'll just give you a few minutes to ask if
Speaker 71
2:06:11
there are any questions to file these reports. No motion. No, the motion. Five minutes out. Okay. Ten minutes, stop.
Chair
Unverified
2:06:19
I have a question. You're recognized for
Representative Carol Dalby
Unverified
2:06:26
a question, Representative Dalby. Thank you, Mr. Chair. On page 55 on the city of Lincoln, that's an awful lot of money. Can you kind of explain that? We've got financing sources and uses of the amount of $52,000, $67,000, $14,000, $190,000, $970,000, $457,000, $503,000, and on
and on it goes.
Can you kind of explain? Those numbers jumped out at me.
Speaker 16
2:06:58
Can you explain what that is? Yes, I'll do my best. This is a private report prepared by a private CPA firm, so we didn't do this report. But we issued findings similar to this. these would just be posting errors due to the financial statements, that these are the net results of the errors in the financial statements. It's my understanding of reading that. But if you would like to have the city come in, that would be up to the committee.
Representative Carol Dalby
Unverified
2:07:26
And I hate to prolong it, the next meeting, but that sure is a lot of
money for a little bitty town, or a smaller town. I shouldn't say little bitty. I'm good if
y'all are good. I trust what y'all, the advice our staff gives us. Staff recommend
Speaker 26
2:07:45
we file it, but that's up to the committee's wishes. We'll go along with whatever the committee wishes.
Well, do I get a motion to, without objection, to file this report then?
Representative Carol Dalby
Unverified
2:07:58
I'm going to object. Let's see if we can get them in here to answer those questions.
That's a lot of money. Okay. Do you need a
Representative Carol Dalby
Unverified
2:08:14
motion? Yeah, will you make a motion on that, please? I move that we hold this report over until next month and invite the City of
Lincoln to come and explain some of these discrepancies. Do we have a second?
Second by Senator Gilmore. All in favor, say aye. Aye.
Aye and opposed? Seeing none, your motion passes.
Are there any other questions about the other cities
Speaker 24
2:08:44
on the report? Without objection, I'll make
Speaker 17
2:08:47
a motion we file this report. Okay, on pages 77 through 83, we have 203 reports without findings.
Speaker 24
2:09:00
The staff recommends we file these reports. Without objection, I'd make a
Speaker 13
2:09:14
motion that we file these reports. That's all the reports we have to review today. We have just
a couple of minutes if there's anybody in the room that has a comment or if anybody, if any of the legislatures have a question.
Unknown speaker
2:09:30
If not, this meeting is adjourned.
Agenda
A. Call to Order by Chair
B. Adoption of Minutes of the December 5, 2024 meeting
C. Update on Act 709 of 2021, Repayment of Turnback Funds – City of Gilmore
D. Update on Delinquent Private Reports 1. City of Dermott 2. City of Black Rock 3. Town of Russell
E. Update on Noncompliance with Municipal Accounting Law 1. Town of Oil Trough
F. Review of Reports (Refer to the Synopsis)
G. The next meeting of the Legislative Joint Auditing Committee will be held on July 10, 2025.
H. Adjournment
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - COUNTIES AND MUNICIPALITIES, Jun 5, 2025 | Agenda | 8 | Official source ↗ |
Speakers
Senator Matt Stone Chair
Unverified
Speaker 3
Representative Jack Ladyman
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Speaker 14
Speaker 17
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Speaker 24
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Speaker 40
Representative Carol Dalby
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Senator Steve Crowell
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Representative Cameron Cooper
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Tamika Butler
Unverified
Speaker 223
Clark Terrell
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Chair
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Representative Stan Berry
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Bobby Box
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Bobby Waton
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