Legislative Joint Auditing-State Agencies
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Representative Robin Lundstrum
Unverified
0:00
It's 1.30, and we are going to take some folks out of order, but let's do some business first. Adoption of minutes. Do I have a motion? Looks like Representative Marcus Richman is giving me a notice. Okay. Second. All right. Thank you. Let's go to reports, and let's start just a little out of order. Yeah,
Speaker 5
0:27
well, we have a, Madam Chair, we do have the 10 reports without findings that are in there today.
We've got five we're going to present with findings, but the 10 without findings,
Representative Robin Lundstrum
Unverified
0:36
you're going to go ahead and approve those now. Okay. Let's take those 10 without
Speaker 5
0:43
findings and mark those as approved. Okay. Okay, so as a request, we're going to take the Department of Labor first. And so the labor report we have today has three findings,
Speaker 9
0:54
and this is the June 30, 2023 report. Finding
Speaker 12
1:00
one. Let's see what page this. Start one. It
Speaker 7
1:02
should start on page 6 of your synopsis.
The first finding, DFA's Financial Management Guide, requires special written authorization with justification of the benefit to the state by the agency head for all meal reimbursements without overnight travel. Any meals provided may not exceed the maximum labor rates as listed in the Federal Travel Directory without additional special authorization from the agency head. none of the boards that provided meals at board meetings or exceeded the maximum allowed rates obtained the required special authorization and you can see detail additional detail on these meals in the table of that finding the second finding our review of travel expenditures and
reimbursements for compliance with state travel regulations revealed the following deficiencies reimbursements for private vehicle mileage is to be computed using the shortest major highway route between destinations. The Division of Labor had excess mileage claimed as well as a duplicate reimbursement resulting in overpayments totaling of about $1,700. Also, reimbursement of travel expenses may only be claimed in connection with official business of the state. A letter of authorization by the administrative head of the agency with justification of the benefit to the state should accompany any travel expenses reimbursed for personal convenience. Seven of
the nine board members of the Professional Engineers and Surveyors Board do not live in Little Rock and must drive two to three hours to attend board meetings. To accommodate these board members' drives, the board set the start time for meetings at 10 a.m. Two board members incurred expenses totaling about $700 for lodging and meals prior to the meetings without an official business purpose being documented. The letter of special authorization was not provided for these expenses. And the last finding, DFA's financial management guide requires cash,
including checks to be deposited to the Treasury at least weekly. Our review revealed deposits were made more than 10 days after the receipt date, as noted in the table of the finding. Additionally, our review of receipts revealed several deficiencies in various divisions of the agency where incorrect license fees were charged. Duplicate payments were received from licensees and various other issues with license requirements. And you can see a lot of detail about these deficiencies in the bullets of that finding. The total net underpayment for these deficiencies, for these incorrect payments, totaled about $820.
Madam Chair, that concludes the findings for the Labor and
Representative Robin Lundstrum
Unverified
3:19
Licensing Board. Thank you. And if I could have the Secretary come up and any of
Speaker 16
3:36
his guests. Please introduce yourself for the record. Madam Secretary, members of the committee, Daryl Bassett, Labor and Licensing Secretary.
Representative Robin Lundstrum
Unverified
3:46
Steve Guntharp, Labor and Licensing. Director Bassett, do you want
Speaker 18
3:52
to go line by line and address these starting at finding one and let us know
Speaker 16
4:12
what's been done for corrective action? Absolutely. The first finding, Madam Chairman, was regarding the lack of an authorization for travel order.
We have now created that authorization form along with the help of DF&A. So we have that form in place. Let me tell you just exactly what created that scenario. That occurred with our board members, actually. They were traveling in town from out of town, and they were staying overnight. We simply were in error by not forcing them to declare that
and having an established form in place where it would require them to do that, we now have that form in place, and so that issue should not be a problem going forward.
Representative Robin Lundstrum
Unverified
5:05
All right. Any questions from members? Okay. Thank you. If you could go
Speaker 16
5:11
to finding two. The next finding was vicinity miles, and we call them vicinity miles. When you use Google Maps, and of course we discussed this at length with our auditor, uh the the uh dfna was actually looking at miles from one city limit to the next city limit well
that's not exactly what happens with my inspectors who are traveling to the various cities they get to the city line but then they often have to travel around in the city and so they were including those miles uh in on their forms which they rightly should be doing because they're not traveling around in the city for pleasure they're moving around going to different sites and so that was the discrepancy hopefully um we uh we won't have that finding again but
i just don't know what kind of position we're going to have to be in we can't tell them to uh only get seek reimbursement from city limit to city limit so hopefully we can work with the F&A and resolve this in the future. But that was the vicinity mile issue. Okay, thank you. Finding three? Let's see, where
Speaker 25
6:20
is three? Oops. Okay. Where is it? We're on page four. Okay.
Speaker 16
6:30
Bottom of page four. I'm so sorry, Madam Chairman. I'm a little discombobulated. I left my readers at home, so I'm having trouble finding. Okay. Oh, yes. This was occasioned as we were changing systems. We've put in a platform that we call electronic licensing platform that reports directly to ACES. Before then, we were taking checks. We were on a more manual system.
And so the auditor chose, just by chance, to test our deposits as we were changing from the manual system to our electronic licensing platform. The idea behind that, Madam Chairman and members of the committee, is that we can now, instead of having people come in personally, we can perform these licensing procedures online. He caught us just in that 60-day gap, and those deposits weren't being deposited to ACES within that 10-day period of time.
Though there was no indication at all that they were not being deposited, we just weren't making it within a 10-day period of time. Since that audit exception, that was late in 22, we've completely adhered to that 10-day deposit tool. We have ELP up and running, but for three entities, we've had three entities out of the 21 that still aren't on ELP, but that was what occasioned that particular finding.
Representative Robin Lundstrum
Unverified
8:07
Okay, thank you. Any questions from members? Seeing none, we'll report these for tomorrow. Thank you. Thank you, ma'am.
Speaker 16
8:17
Thank you, members of the committee. okay the
Speaker 34
8:27
next report we have with findings is the attorney general this is back at the first part of your synopsis
Speaker 7
8:33
this is the june june 30 2023 report and it has one finding in our review of 20 lump sum career service payments made during the physical year we noted
one payment of 800 which is the amount awarded for 10 to 14 years of service to which the employee was not entitled. The employee's career service date entered in ACES did not reflect a gap in service between 2012 and 2017, and it was not until February 2023 when the employee transferred to another agency that the career service date was updated in ACES. By then, the employee had received a total of $2,400 for fiscal years 2021 through 2023. Madam Chair, that concludes the finding. Thank
Representative Robin Lundstrum
Unverified
9:13
you. Is anyone from the Attorney General's office here, Mr. Rosenbaum?
Speaker 37
9:17
please introduce yourself for the record i'm sid rosenbaum chief fiscal
Speaker 39
9:34
officer for the attorney general's office zach
Representative Robin Lundstrum
Unverified
9:36
mayo general counsel attorney general's office okay thank you gentlemen could you give
Speaker 38
9:42
us a explanation or how it's been handled sure in 2017 an employee He was hired by our agency, and his career service was erroneously entered into ACES.
So moving forward to 2020, 2021, and 2022, he was incorrectly paid career service. The career service bonus for the years that he accrued, and this was not the case. It was discovered, and the total amount was $2,400. And we have, under the advice of legislative audit, we have gone back and talked with the employee and worked through OPM to get the money returned back to the state. Okay, thank you. Any questions?
Representative Robin Lundstrum
Unverified
10:23
Okay, without objection, we'll report it as well. Thank
Speaker 34
10:26
you. Thank you. Okay, our next report with findings is the
Speaker 7
10:34
Department of Human Services 2023 report, and this report contains three findings. The first finding, while performing an observation of assets from a current capital asset listing dated March 20, 2024, we noted nine of the 60 equipment items sampled with a total purchase cost of almost $33,000 could not be physically located for observation or were not properly identified for audit verification as noted in the bullets of the finding.
Additionally, of the 60 items tested, six had documented dates and aces as being last inventoried over two years prior to the sample listing date of March 20, 2024. 2024. The second finding, during our review of the agency's Arkansas-abled investments of foster care trust funds, we noted a total of $1.3 million in foster care client funds were sent by the agency to a third-party administrator for investment against multiple foster care client investment accounts over the last five years. Our review of the check contributions issued during FY23
and corresponding any investment balances noted that in two instances, check contributions of $700 and $800, respectively, had been applied by the third-party administrator against incorrect foster care accounts. Also, the HC failed to properly monitor, identify, and follow through with timely remedial action regarding check contributions outstanding at the end of the year. Eight outstanding items totaling $8,300 were outstanding, ranging from 10 to 21 months at the time of our review, with the following issues also noted.
Five of these outstanding checks were sent to the third-party administrator but never invested against the applicable account. and three of them were misfiled by the agency and never submitted to the third-party administrator for investment. The third finding, the agency's procedures documenting gift card handling by the Division of Children and Family Services state that a completed and signed chain of custody form listing distribution date and recipient receipt must be returned to the agency within 14 business days. The agency's procedures also state that all gift cards must be kept secure in the division safe.
During fiscal year 23, the agency purchased 116 gift cards with a total value of over $11,000 to be used by DCFS for Christmas gifts, graduation gifts, and survey incentives. Additionally, as of the beginning of the fiscal year, the agency had 48 gift cards with a total value of about $2,400 on hand in the safe. Based on review of distribution of gift cards, we determined that the agency did not properly follow procedures regarding the obtaining and maintaining a final recipient signed dated chain of custody forms and did not ensure that the
undistributed cards were held in the division safe. For 17 gift cards valued at $1,700, our review revealed that five of those gift cards valued at $500 that were reported distributed in December 22. The final signed chain of custody forms listed different card numbers other than identifying numbers on file with the agency. For eight gift cards valued at $800 that were intended to be distributed in May of 23, the chain of custody form provided had no recipient signature and date or was signed and dated by the recipient in March of 24 at the time of our review. And for four gift
cards valued at $400, they were intended to be distributed in May of 23 that these were not distributed but were being held on site at a county field office. Additionally, the AC failed to report the safe contents valued at $1,700 as an asset in ACES at June 30, 2023. Madam Chair, that concludes the findings for DHS.
Representative Robin Lundstrum
Unverified
13:53
Okay. And do we have agency representatives here? If you could state your name and position for the record, please.
Speaker 48
14:08
Misty Eubanks, Deputy Secretary of the Agency over Operations and Budget. Brett Hayes, Chief
Representative Robin Lundstrum
Unverified
14:19
Deputy Counsel. Okay. Thank you. There's quite a bit to unpack here. if
Speaker 52
14:27
we could start with finding one. Yes, this is an
Speaker 48
14:31
agency wide finding as noted. Um, this was based on a sample of assets and we do concur with this finding. Um, we noted deficiencies. Those have
been updated correctly in ACES and division procedures have been updated and we've done retraining with our several capital asset managers and gone back through policy. I have a question.
Representative Robin Lundstrum
Unverified
14:54
I understand that's supposed to be updated annually, and a couple of these are two
Speaker 48
15:01
years old. Yes, that is correct. Okay. So we've gone back and done reconciliations on those. We also have the issue, sometimes things are not retired timely, and so we've
made a real effort to clean up our ACES rolls around assets
Representative Robin Lundstrum
Unverified
15:19
as well. Okay um there was another question on inspections
when you when you purport something lost or stolen I've lost
my question let's go to the next one members do you
Speaker 48
15:40
have any questions on things that are lost and stolen we do go back out and try to do another field sighting of that
or if it rises to the level where it could be criminal activity we've also undergone a method where we're referring those or making
Representative Robin Lundstrum
Unverified
15:57
police reports okay and has that been done in the
Speaker 54
16:00
last audit that has been done since the last audit yes okay and that's been an ongoing we've made a real effort to clean up our assetting we have so many stations throughout the state and this has been an ongoing cleanup process over the last i would say four or five years we've really been heavily invested in that work okay thank
Representative Robin Lundstrum
Unverified
16:19
you members do you have any questions on the finding number one
Speaker 51
16:22
all right finding number two so finding
Speaker 48
16:30
number two these are our foster care trust fund accounts that we hold on behalf of our foster care client children. We've made several strides in this area. We implemented a new process for submitting those checks to the third-party administrator that's much more timely. We've also done a reconciliation process for these ABLE accounts,
and we're doing monthly meetings with the third-party administrator. Brett, anything
Speaker 50
17:00
to add? I will add on some of these. There was a
Speaker 64
17:04
few instances where on these deposits that didn't get made, those funds were deposited to the corrected account. And in the event that one of the children that was in foster care was no longer in foster care, we returned those funds to the Social Security Administration.
So I think that was on two of the cases and on five
Representative Robin Lundstrum
Unverified
17:36
accounts. that's correct okay members do you
Speaker 51
17:40
have any questions quiet today all right next
Speaker 48
17:43
finding number three the gift cards yes so gift cards we utilize in dcfs for various events it's outlined here in the auto but primarily for graduation and or christmas gifts for our foster youth um this is one where we did have gift cards that were recorded either
incorrectly we did update those and for ones that were located out in the field those were either returned back to central office and placed properly in the safe or chain of of custody was redone and we have done retraining on those procedures and we do have safety measures such is only two people accessing the safe at any one time and
Speaker 54
18:22
sign in and sign out procedures in place in past audits has
Representative Robin Lundstrum
Unverified
18:27
this been an issue in past audits i do
Speaker 64
18:32
believe we had an audit finding on
this particular issue about four or five years ago but it's been quite a while i think this is the first time it was actually back in the in the audit testing for
Speaker 51
18:45
a few different cycles that would be correct so we did have appropriate internal controls it's just retraining and making
Speaker 54
18:51
sure that those are always adhered to so having proper due diligence so that's something we've definitely
Representative Robin Lundstrum
Unverified
18:57
leaned in again on okay thank you members any questions number
Speaker 2
19:04
three okay i believe that concludes any any questions comments from members okay thank you so much
Representative Robin Lundstrum
Unverified
19:09
Okay, thank you. Without any objection, we'll move to the next one. Okay, the
Speaker 7
19:17
next report that we have with findings is the Department of Parks, Heritage, and Tourism 23 report. This report contains two findings. The first finding, as noted in fiscal year 22, there was a deficiency in the ACS calculation of sick leave payouts. in 23 we reviewed all 28 employee sick leave payouts made in the physical year and it revealed one instance of an employee who did not receive the correct payment amount
the employee was paid a little over $1,100 but was only entitled to about $600 resulting in an overpayment of almost $500 and the second finding the department notified us in April of 24 of the loss of receipts totaling at least $700 from one of its museums In this case, an employee was terminated, and Parks' law enforcement officers are currently investigating this matter. This finding was referred to the prosecuting attorney and the Attorney General. Madam Chair, that concludes the findings for Parks, Heritage, and Tourism. Is
Representative Robin Lundstrum
Unverified
20:11
there anybody from the agency that can come up?
Speaker 72
20:20
If you could introduce yourself for the record, please.
Speaker 73
20:31
shay lewis secretary of the department of parks heritage and tourism jamie
Speaker 75
20:37
fisher cfo parks heritage and tourism okay finding number one so finding number one ended up
Shea Lewis
Unverified
20:42
being a calculation error error that was took place for a retiring employee for payout of sick leave. Since that mistake, we have implemented additional review measures and procedures that
include senior level staff review at the CFO or finance level to prevent this from happening in the future.
Representative Robin Lundstrum
Unverified
21:01
Okay, thank you. Any questions from the body? All right. I think most of
Shea Lewis
Unverified
21:08
us are interested in finding number two. Sure. So at Mosaic Templar Cultural Center here in Little Rock, Self-reported theft was made of $700 that led to termination of an employee. Investigations are still ongoing.
It's been turned over to the Pulaski County Prosecuting Attorney's Office, who is working on an affidavit. Since that time, we have implemented a point-of-sale system with internal controls to prevent this from happening in the future and is functioning at this time. Okay. And do you do some type of spot
Representative Robin Lundstrum
Unverified
21:44
testing with that, or does it automatically catch something when it goes to the wrong account since this was going to
Shea Lewis
Unverified
21:51
the wrong account? So the previous process was more of a manual process, kind of an older style of bookkeeping, and didn't allow for as much checks and balances.
This new system, when reservations are made for rentals, it is implemented at that
Representative Robin Lundstrum
Unverified
22:07
time. Okay. Thank you. I think we should pass this on to review, but
Shea Lewis
Unverified
22:16
I'd like to know what the total loss was. At this point in time, we feel that $6,193 are suspected total losses. As I said earlier, it's going through the investigative process. The affidavit is related to to getting records from the person's account
to understand exactly how much may have been taken. Thank you. And there weren't any
Representative Robin Lundstrum
Unverified
22:43
other employees involved? No, ma'am. Okay, thank you. Members, do
you have any questions? Okay. We'll report this. Thank you. Thank you. Okay, last one. Okay. Our last report
Speaker 70
22:57
today is the Game and Fish Commission 23 report, and this report contains one finding. The Arkansas Game and
Speaker 7
23:03
Fish Commission notified us of the following thefts of state funds and property.
The first bullet there, the AG notified us that a vendor on December 4, 2023 had a $420,000 payment that the AG made via ACH in November that was not deposited into the vendor's bank account. Upon further review, it was confirmed that Game & Fish staff had received an act upon a fraudulent email requesting banking data change, resulting in a payment being made to a bank account not belonging to the vendor. A police report was filed with the Little Rock Police Department and the FBI. The investigation is ongoing. On March 4th of this year, an 18-by-21-foot carport with a cost of almost $1,000
was stolen from Game & Fish property located in Phillips County. A police report was filed with the Phillips County Sheriff's Office. And on May 21st of this year, a laptop with a cost of about $1,400 was stolen from Game and Fish property in Prairie County. An incident report was filed with the Prairie County Sheriff's Office. And this finding was referred to the respective prosecuting attorneys
Speaker 35
23:59
as well as the Attorney General. And I'm sure that concludes the finding. Thank you. And folks from Game and Fish,
Representative Robin Lundstrum
Unverified
24:04
if you could come up. Please identify yourself for the record.
Speaker 84
24:15
Good afternoon, everybody. I'm Austin Booth, the director of
Representative Robin Lundstrum
Unverified
24:23
the Arkansas Game and Fish Commission. Emily Schumate, CFO. Thank
Speaker 83
24:28
you. Let's start with the big one. Tell us what's going on and update us, please. Yes, ma'am. So promptly
Speaker 84
24:35
after we discovered the fraudulent email from a third party, we reported the theft to DF&A and promptly implemented an entirely different procedure for changing bank account information.
We also required multiple times agency-wide training for our staff. And since then, we've been able to work with the Department of Justice and the FBI. Not a whole lot that we can say in this venue today, but we're very confident in working with them that we will be able to recover nearly all of what was taken from the agency. Thank you. And this was a
Representative Robin Lundstrum
Unverified
25:12
pishing scheme? Yes, ma'am. All right.
I hope you share what you've learned with other agencies, because that type of scheme could easily
Speaker 88
25:23
work on anybody. And unfortunately, ma'am, they're only becoming more and more common and more
Representative Robin Lundstrum
Unverified
25:28
and more effective. Yes. Any questions from the body? members representative wardlaw my question is
Representative Jeff Wardlaw
Unverified
25:35
not for the department but audit it seems like reading this
finding everything was done right here i mean they they had a theft they reported it so i guess i'm kind of dumbfounded to why that's a finding because it looks like they've
done everything correctly in the timeline they were supposed to do it in it's just
Speaker 93
25:54
a reporting mechanism when we get things like this
Representative Jeff Wardlaw
Unverified
25:57
it's not necessarily a finding it's a report to the committee that these
Speaker 14
26:00
steps. Well it's that plus we have to report it to the prosecutor by the agreement we have with prosecutors if we have and the law requires us to if there's a loss of funds that we have to report that. But it's already reported
Representative Jeff Wardlaw
Unverified
26:11
to the prosecutor in the means of going through the local law. It's just a formality
Speaker 93
26:15
for us to report it to you guys so that you know what's going on. Thank you. I'm just curious. Yeah.
Representative Marcus E. Richmond
Unverified
26:24
Yes. Representative Richmond. very quickly uh concerning the uh the computer that was over in phillips i believe that was in phillips county or actually carport and then the computer that was in prairie county uh for the computer itself that laptop was that left in a
Speaker 98
26:48
vehicle or do you know no sir it was in a residence turned office and they entered the building through
Representative Marcus E. Richmond
Unverified
26:54
a window okay the only thing i say back when i first come up here to little rock uh every month there was
some type of theft going on and someone was left in vehicles someone's like what you're describing here this stuff comes in waves so i would just i would go out and and remind your people to take every security precaution possible because uh the thieves they never quit on this thing would you
Speaker 83
27:27
don't want to discuss publicly where where our vulnerabilities are but what i will say is uh the agency's made uh increasing facility control and security cameras
Speaker 84
27:38
more of a priority this fiscal year and into next thank you thank you madam chair thank you
Representative Robin Lundstrum
Unverified
27:44
i'm just curious how does anybody take an 18 by 21 carport that's a pretty difficult we have often wonder the same thing ma'am okay inquiring minds
want to know how that worked all right any other comments yes senator dismay so i mean i had the same thought
Senator Jonathan Dismang
Unverified
28:02
about the findings i mean like it can qualify as a finding to provide a recommendation but i'm not sure we really provide
we kind of gave a recommendation but we didn't also um now i think they followed through on their own with some i mean it's pretty diligent with what they've done and probably not being mimicked many other agencies I mean I would be curious how we do that in the future though because there's several of these that are actually self-reported and then we show up but then we call them findings but they're technically not findings and maybe at some point I'm not sure what you would if you just call that notes in a normal audit or what or a self-report yeah well there's there's
terminology for various portions of an audit findings is probably not what this is well right know there's there's some there's some
Speaker 14
28:46
things in the code that says we have to report losses over a certain amount of money that's what this is and we have a lot of those as you're referring to it's just yeah and that's just generally how we refer to things as a finding i mean i agree with you i mean they've done some things here there and there are some things that they've done that could be done too i know we have we've had these this is like you said this is getting to be a recurring thing where they send in fraudulent information we had one at highway retirement system not too
long ago and they're requiring some kind of two-factor authentication there's things like that they can do so yeah i agree with you these are things that we just have to report by
Senator Jonathan Dismang
Unverified
29:19
code well i just wonder if like i said we may need just i mean because to me an audit finding is a little bit different than what we're saying here i mean this isn't really a finding i mean i'm not sure at the time you could have deemed that their internal controls were insufficient it's just the world's changed correct so it's not you know it's a best practices issue as much as it is anything so anyway i think there may be a different way to list that in an audit report as opposed
Representative Robin Lundstrum
Unverified
29:45
of just being a finding so at the different section okay all right thank you any other members okay we will report this as reviewed um i understand mr booth this is your last meeting with us and so i want to wish you all the best thank you thank you all right members any other comments questions all right this meeting is concluded merry christmas
Agenda
A. Call to order by Chairman.
B. Adoption of minutes of the October 10, 2024 meeting.
C. Review of reports. (Refer to the Summary)
E. Adjournment.
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — LEGISLATIVE JOINT AUDITING - STATE AGENCIES, Dec 5, 2024 | Agenda | 2 | Official source ↗ |
Speakers
Representative Robin Lundstrum
Unverified
Speaker 5
Speaker 9
Speaker 12
Speaker 7
Speaker 16
Speaker 18
Speaker 25
Speaker 34
Speaker 37
Speaker 39
Speaker 38
Speaker 48
Speaker 52
Speaker 54
Speaker 51
Speaker 50
Speaker 64
Speaker 65
Speaker 2
Speaker 72
Speaker 73
Speaker 75
Shea Lewis
Unverified
Speaker 70
Speaker 35
Speaker 84
Speaker 83
Speaker 88
Representative Jeff Wardlaw
Unverified
Speaker 93
Speaker 14
Representative Marcus E. Richmond
Unverified
Speaker 98
Speaker 99
Senator Jonathan Dismang
Unverified