Legislative Audit: Counties and Municipalities
October 9, 2025
Representative Richard Womack I call this meeting to order. The first order of business is the adoption of minutes at the September 11, 2025, meeting. Mr. Rye, do you have a question? Okay, we’ve got a– let me give everybody just a second to ponder that. So we do have a motion to accept those and we’ll need a second. Okay, all those in favor of adoption say aye. All opposed no. Thank you. That will stand adopted. Next item up is the update on private reports delinquent December 31, 2022, water and sewer.
Delinquent water and sewer reports
Staff Thank you, Mr. Chair. This is an update on the engagements that were delinquent from the 2022 year. And this update is based on the parameters that were set in the September meeting. We have five entities that have provided their 22, 23, and 24 engagements, and their turnback has been reinstated by the Treasurer.
We have a total of 24 engagements, 10 of which provided a 22 and 23 report, six provided a 22 report, and additional eight provided engagement letters with a projected completion date of prior to December 31, 2025. These 24 engagements have had letters hand delivered to the Treasurer’s Office requesting that their turnback be released.
We’ve got one more that we received earlier this week after the deadline of the Treasurer’s Office. That would be Buckner. If you’re looking at that report in the far right-hand column, its letter will be delivered probably earlier next week. And that leaves us with 13 of the 2022 engagements that are still delinquent or that we have not heard from. If there are no questions, this completes this report.
Representative Richard Womack Thank you. Committee, are there any questions? You’re recognized.
Representative Carol Dalby Question for staff. Joe, on these when you said out of these 13 or 14 that are still on here, how many of those you’ve not heard anything from?
Staff We’ve heard something from all of them at some point in time. And I say something, starting last July of 24 when the committee asked us to reach out to them, we heard something from all 43 of them between then and the December LJAC meeting. Otherwise, y’all were going to take action at that point on three of them. And they immediately responded and got them off that list.
So we’ve heard from them with either a written plan or a generic engagement letter– I say generic– one that does not have the actual completion date because that’s not something normally that’s put in an engagement letter. So we’ve heard from them. And a lot of them I’ve received multiple phone calls from. I talked to them, but they haven’t complied with the parameters that were set out in the September meeting.
Representative Carol Dalby Mr. Chair?
Representative Richard Womack Yes, ma’am.
Representative Carol Dalby Well, I guess I misunderstood. Because I thought you said there were maybe three or four that you had heard nothing from. But that’s not correct?
Staff Inside the parameters. They hadn’t complied with– I misspoke. Inside the parameters that was set in the September meeting.
Representative Carol Dalby Okay. All right. Thank you, Chair.
Staff My apologies.
Representative Carol Dalby No problem.
Representative Richard Womack Representative Ladyman.
Representative Jack Ladyman Thank you, Mr. Chair. So they’ve contacted you. So these people that have not complied, why did they say they are not compliant? What were the top reasons they gave?
Staff Several of them were that they were having a hard time. A lot of them just flat apologized for dropping the ball and they were late to the game. A lot of them, once they were late to the game, they were having CPA troubles. Several of them, CPA was sick. They either switched CPAs or were waiting on that one.
Some of them have, I’ve seen, received a few emails that stated that the CPA still needed records from them, that the records were inadequate. I’m quoting a CPA’s email that I was copied in on. So a couple of them we haven’t heard from since last fall, a couple of them.
The Municipal League has done a great deal of legwork on this. They’re in contact with, I’m assuming, everybody on this list. They have provided a great deal of this documentation to get the ones moved over to the September 12th parameters.
Representative Jack Ladyman So out of the 43, 30 of them have complied in some form or other and 13 have not. Is that correct?
Staff That’s correct. That’s where we stand based on the September 12 parameters set by the full committee.
Representative Jack Ladyman And to your knowledge, nobody has just totally ignored this request.
Staff I don’t believe so. I do not believe so. I think once the committee withheld their turnback, I think they started doing whatever action at that point they could.
Representative Richard Womack Representative Dalby, you’re up next.
Representative Carol Dalby Thank you, Mr Chair. Joe, I want to go back to something you just said because I guess I’m not tracking. But I made a note. You said that there are some that you haven’t heard from since last fall.
Staff I haven’t heard from them. The Municipal League may have.
Representative Carol Dalby Can we call the Municipal League to the front to ask them? I think we all want them to comply. And we don’t want them to ignore us. And I’m not to the point of just forgiving them. So I’m kind of curious, is there some that the Municipal League has not had any contact with?
Representative Richard Womack So before you guys take the table, Senator Johnson, did you have something that might blend well with the Municipal League’s presence?
Senator Mark Johnson Mr. Chairman, thank you. Representative Dalby’s question was part of what I was going to ask. Because I’m not criticizing you, Joe, but you said, Some of we hadn’t heard from since last fall. I was thinking, wait a minute, you mean fall of 24?
Staff Yes, sir.
Senator Mark Johnson That was a little disconcerting. Now, but then you corrected in response to Representative Dalby that they may have contacted the Municipal League, which at least shows an interest of trying to comply on their part. However, the Municipal League doesn’t have any legal authority to do anything other than they’re an association that helps folks. And I appreciate them very much.
But we passed a law, and now we’re trying to enforce it or partially enforce it, or whatever the full committee decides to do. I’m just trying to– that was pretty disconcerting when he said since last fall. That’s over a year, as far as I was concerned. So that’s all I wanted to add to that. And I’ll wait and hear what our folks from the Municipal League say.
Staff Sure. Let me clarify a little bit. We reached out at y’all’s request during the fall of 24. Because June 1st, they become delinquent, of 24. So we started sending letters requesting either an engagement letter, didn’t have any parameters on what needed to be in the engagement letter, or a written plan.
We received something from all of them between that time and the end of November, first couple days of December. They were supposedly in the process of getting their reports in. That was the the last communication we had with them. Of course the committee didn’t meet until June of 25.
So then in July we made the motion. We reached out to them again with the letter stating that their turnback had been escrowed. And then there really wasn’t any reason for them to contact me if they didn’t have a report. And then in September we reached out again and said that there was other avenues to get your turnback back. And they haven’t answered that in the last 30 days or so. Does that help where we are? Okay.
Representative Richard Womack Senator Gilmore.
Senator Ben Gilmore Thank you. And maybe we’re getting to this, because I think it’s pertinent to the discussion, but there’s been some articles written. And I know based on those articles there was from the Treasurer’s Office a request for an AG opinion. I think it would be helpful to the committee to hear that.
I don’t know if Ms. White is prepared to share or discuss that at any point in this committee, but I think it would be pertinent for us to have the discussion based on what that guidance was for the committee’s sake. So at the proper time, I defer to the chair, but I just would like to hear that.
Representative Richard Womack Great, thank you for that. Yeah, just so we don’t stack up too much, if the representatives from the Municipal League could come to the table. And when you get there, please state your name and affiliation for the record. And then Ms. Dalby, when they’ve finished that, maybe refresh us on your question.
John Wilkerson John Wilkerson, general counsel, Arkansas Municipal League.
Jack Critcher Jack Critcher, legislative liaison, Municipal League.
Steve Dixon Steve Dixon, field rep, team lead, Arkansas Municipal League.
Representative Richard Womack Thank you, gentlemen. Ms. Dalby, you’re recognized.
Municipal League perspective
Representative Carol Dalby Thank you. Thank you, Mr. Chair. Y’all were in the room a while ago, and my question is we have this list of about 13 or 14. And my question to y’all, because I know you’ve been working on it and been working diligently, and we do appreciate the work that you’ve been doing to help the help Audit and help us get to the bottom of this. Out of this number of folks, can you tell us your estimate of how many are going to have those finished, and if so, when?
And secondly, are there some that you’ve either not heard from– we just heard Mr. Archer tell us that there are some, the last time we heard from them may have been June of 24. Can you just give us an update? Because I don’t think there’s anybody on the committees looking to punish these towns, but at the same time, we have a law on the books. So the real question is, do we follow the law or do we not follow the law? And so can you kind of guide us as to what y’all have done and who’s left and what’s left out of those 13 or 14?
John Wilkerson Sure. So, as soon as the committee made the decision, we instantly went into hyper speed to try to do as much as we can as quickly as we could. So we have a team of seven field reps, not including Jack and I, who started calling each of the cities or towns that are on either the 22 list or the 23 list. And we wanted to go through each list and, especially the 22 list, we wanted to ask, how many connections do they have?
Because we’ve heard some confusion as to when– not based on the law. The law’s clear. But some confusion amongst cities about when they need an AUP or when they need a full audit. So we asked how many connections they have. We asked them who their auditor or their accountant was, who they’ve used. We asked, have you gotten those records to the accountant by now? And we heard yes’s and no’s. And Joe’s recitation of what he’s heard is similar to ours. Some had, some hadn’t.
And then we said, look, if you’re on the 22 list, you have to have an engagement letter with a date certain by the end of the year, so make sure you get that done. And then we followed up with the accountants as well. So of the 13, I can say there’s not been a city or town that we have not actually talked to.
There are some cities and towns that were unable to get the engagement letter done. There were some cities and towns, not a lot, but there were at least– I can think of one off the top of my head. And another two or three, I believe, that we talked to and then we didn’t hear anything from them.
And we’ve tried to get a hold of them several different ways, and we just haven’t heard back from them. So on the whole, my estimation is that given another– and I’m not asking the committee to do anything different, obviously– but given another month, I think we probably get the rest of the 13 minus three to five that we just are unable to convince to kick it in gear. That’s my estimation.
Jack Critcher I’d like to add to that a little bit. There are probably– I spent all day yesterday, spoke with all seven of our field reps, got a report from each one. By the way, our field reps, they have kind of like congressional districts, if you will. The state is divided. Each one of them has a territory.
And after talking with each of them, taking notes– and by the way, Joe has been so helpful with, not only our field reps and me and others, even some city officials. They have worn his email out. And he’s always been quick to respond, been very helpful on keeping a running account on who has submitted their reports, who hasn’t, and what they’ve submitted, is it adequate and all that. So it’s been great to work with and we really appreciate that, Joe, you and your staff.
But yesterday, I think– I’ll just tell you, and I’ve spoken to some of you about it. There are probably going to be four cities. It doesn’t matter if you give them at the end of this year, next year or whenever, they’re probably not going to comply. And that’s nobody’s fault but their own. But that’s a long way of answering your questions.
But I think John’s right. Probably 30 days from now, I think that number 13 will probably be reduced to four. And I think instead of letters, I think most of those audits will be actually completed and turned in.
Representative Richard Womack Okay, Representative Lundstrum, do you have something for Municipal League?
Representative Robin Lundstrum Actually not for the Municipal League, although it does reflect some of their work. We have, as I just asked for, as of today, we have 357 cities that have complied with their 2022 audits. So it’s well done them. 340 that have done the 2023. 171 have done their 2024. And two have actually completed their 2025 because the year ends June 30th.
So the message has gotten out. This is working. I would encourage this committee to push off any decisions or wait to do anything and just let this process work another month or so and see what’s happening. I think you can be proud of the work. They’ve heard you and they have followed the law.
So that’s a real impressive number. 357, 340, 171. They got it. So if we bend or twist this for a small number, when we have this many that have complied, I think that sends the wrong message. So I just want to encourage you, things are getting done.
Representative Richard Womack Representative Rye?
Representative Johnny Rye Yes, sir. Thank you, Mr. Chairman. Jack, if you don’t mind explaining this, we’re in the year 2025. Is there a time frame of when these cities are supposed to get that in for this year?
Jack Critcher Representative Rye, thank you for that question. I can be corrected here by Audit staff or anyone else. But I think the 2025, I mean you have to wait until January 1 to have an accurate report on 2025 because we operate under a calendar year as opposed to how y’all operate. So it’s due, and Joe can correct me if I’m wrong, the 2025 would be delinquent December 31 of 2026, I think. Is that right?
Staff Actually it’d be due December 31 of 26. It would not be delinquent under Act 453 until June 30 of 2026. One year’s the due date. You become delinquent after 18 months.
Representative Richard Womack Representative Dalby.
Representative Carol Dalby Thank you, Mr. Chair. Representative Rye brought this question to mind. So 2022, when did they become delinquent?
John Wilkerson July of 24.
Representative Carol Dalby July of 24. At the end of 23 but delinquent July of 24.
John Wilkerson Correct.
Representative Carol Dalby And then so you’ve got 22. And so they’re already way behind if they’re on this 13 group. Same thing with 2023 and same thing with 2024. Well 2024 is not quite yet.
John Wilkerson At 24, they wouldn’t be delinquent until July of 26.
Representative Carol Dalby Right.
John Wilkerson Yeah.
Representative Carol Dalby So the ones we’re talking about though have been delinquent for more than a year and occasionally two years. Am I correct? Am I understanding it?
John Wilkerson You’re Correct.
Representative Carol Dalby Okay, thank you. Appreciate that. Thank you, Mr. Chair.
Representative Richard Womack All right, thank you. Are there any other questions for Municipal League? Representative Ladyman.
Impacts on small towns
Representative Jack Ladyman Thank you, Mr. Chairman. Well, I understand why we’re playing hardball here and we have to do that. And I agree with Representative Lundstrum. I think it’s been successful because we had that large number of people that complied. And I believe the hardcore people that you all mentioned that are not doing anything, we need to still use the big stick on them. I agree with that.
But my concern is, I mean, you guys should know this. Are there any cities out there that are doing everything they can do, but they just cannot make this happen? And are we putting pressure on these little towns? I looked at the population here, these 13 cities that are left. If you take Beardon out, Beardon is 776 people, the other 12, their population is 339 down to 120. That’s a small town.
And I know by experience that there are problems that these small towns cannot fix. So is there any town that we’re going to be hurting, shutting down? Is their water system going to be shut down? Are they in that fix or not? Can they go another 30 days without shutting anything down?
John Wilkerson It’s tough to say for each individual town. I can tell you that you’re right, that that is a concern that we’ve always had. Another concern is the actual accountants that are out there. We’ve heard from the vast majority of accountants out there. They’re eager to help. They do admit that, yes– I won’t speak for any particular accountant– but I have heard that, yeah, we put that small town behind some of our other clients, and, yes, we should have been more on top of it.
Now granted the cities and towns should have been more on top of it too. I’m not excusing that either. But we have heard from accountants having were not as quick as cities were needing. I heard from one accountant that’s like, listen, I don’t even like doing this type of work. Now granted again, if the city or town knows that, they need to go find another accountant.
So part of what we’re trying to do is identify those accountants that are very eager and very helpful. And we’ve identified a good number. They’re also having to do a lot in a little bit of time, which has been a challenge as well. Because there’s a lot to do. Doing AUPs has helped as well.
And all those small towns would just, unless there’s a federal loan out there that requires a full blown audit, those small towns, I hope, would just have to do an AUP. So our goal is to not let any town get hurt, at least past December 31 when everything is done. But, yes, it could hurt small towns very much.
Jack Critcher Mr. Chairman, if I could add to that, I talk to these towns almost daily. And to answer your question, are there some that will, that it will put up extreme financial hardship? The answer is yes. I’ll give you one example. One told me that they had two years audit. And by the way, these audits, the cheapest I’ve heard of is $3,500, and that’s an AUP. And some of them are paying 10,000. That’s per year.
And they had enough to pay the auditor for the one year. And they said, Oh, wait a minute, call the auditor back after I talked to him. I said, You gotta get 24 in, possibly. You sure gotta get 23 in as well. We don’t have the money. So they call the auditor and the auditor said, Well, I was financing your other one at $250 a month or 350, whatever it was a month, but said, I can’t do that. You’re going to have to come up with it.
So they had a fundraiser and they raised enough money over that weekend to pay. But, yeah, the short answer is yes. If they don’t have the turnback coming in, it does for some. The number I don’t know. I don’t know how many cities that affects. But it does, yes.
Representative Jack Ladyman Yeah. Well, I mean the cities put themselves in this situation. I agree with everything everybody said about that. And we don’t want to do something that will put us back to the problem we had at the beginning. But there may be cities that we need to give a little slack here. If we know that they’re doing everything they can and they have good reason not to, and that’s my only comment.
But for the committee members, maybe we want those people to come in here and talk to us, maybe, if they really need the money to keep the city open. If they shut down a water department, that’s a big deal for a town. And who does that hurt? That hurts the people. Even though the cities are at fault, the pain is felt by the people. And you can quote me on that.
Jack Critcher Yeah, one other thing, if I may. A lot of these small towns, they operate with very little, almost month to month. And I got a call from one the other day. They had a sewer pump. They have three sewer pumps. This one sewer pump went out. I think it’s, I don’t know, 35,000. I don’t know how much it is, a lot of money. And as long as they’re getting their turnback, they can tread water.
But if they go a couple of months without their turnback, they’re in bad shape. But I really believe this, and then I’ll hush, I really believe that next year, I think that number will be probably four cities. I think when January rolls around, almost every one of these cities that are on this list will say, Hey, we have to start preparing for our water audit for the year that just concluded, because they have gotten the message.
Representative Jack Ladyman Thank you.
Representative Richard Womack Okay, thank you. Yeah, we’re kind of redoing last month’s meeting again, so let’s try and move on. But is that Representative Ray or Beaty? Who’s got a question down? It’s hard to tell from here. Beaty?
Representative Howard Beaty Yes.
Representative Richard Womack You’re recognized.
Representative Howard Beaty Thank you, Mr. Chair. I guess my question, after last month, I agree with you as far as we don’t need to relitigate and rediscuss all the ins and outs that happened last month. My question is related to last month’s action in this committee and then the action taken at the Joint Audit Committee on Friday, where the committee basically granted the extensions on these.
And was there notification back to the cities from Leg Audit that they would be receiving their turnback money? Was there anything communicated back to the cities related to the actions taken by Leg Audit?
Representative Richard Womack Mr. Archer?
Staff Thank you, sir. Yes, the 24 that I mentioned, those that had filed a 22 and 23, those that had filed just a 22, or those that had provided an engagement letter with a completion data before 12/31/25, which were the parameters set out in the motion, on October 3, 23 letters were sent to them, emailed personally. And I emailed to them. I did that.
And I also hand delivered it to the Treasurer. And then Wabbaseka got in late Friday afternoon, 5 o’clock. And I got it to them on Monday morning the 6th. So those 24, each one of those– now, there were several of them that I dug forever for an email address because I wanted– I used the Municipal League’s directory.
And half of those bounced back. And I’d go through all my files to see if I’d ever been emailed by these individuals. And I Googled them, went to their web pages. And I believe I’ve got all of them. But maybe one that the email didn’t come back and I exhausted every effort I had on that. But, yes, sir, they were all emailed because I didn’t want it to get in the mail. I wanted to get to them immediately since we were down to crunch time.
Representative Howard Beaty Follow-up, Mr. Chairman. I appreciate the latitude. That’s kind of my concern. I know Senator Gilmore asked and referenced the AG opinion and the timeliness of getting that back in for the treasurer and for this committee.
I know at that last meeting there was some discussion on the proper path to take care of this and expungement was discussed at that committee meeting. And I think there were some comments that expungement would not work. My concern is we held those turnback, then we notified these cities that we were going to release those funds. They’ve had council meetings after that notification, and then they’ve made plans thinking, some of those cities, that they’re going to get their turnback funds, not just the month, but the couple of months that were held.
So they made financial decisions for their cities based on the notification they were going to receive turnback and comply with the directives of the committee and Leg Audit. So my plea today is those cities that made those financial decisions based on that notification, that action that we had taken last month, if we continue to hold their turnback now, we have only compounded that problem for those cities after they received that notification. So I appreciate you letting me speak since I’m not an actual member of this committee. I’m over in Education.
But I would ask this committee to take that action as identified in the AG letter once y’all discuss that and move to expunge the action that was taken to correct the things in conformity with what AG Griffin sent to the Treasurer. And that would be my only comment. And thank you, Mr. Chairman.
Representative Richard Womack Okay, thank you. Before the Municipal League leaves, is there anybody else that has a question for them? Senator Johnson, go ahead.
Senator Mark Johnson Thank you, Mr. Chairman. Senator Critcher, appreciate what you just told us. I was told by another legislator last month that there was a problem of finding CPA firms willing to do this work. And you alluded to the fact that some of them, I hate to say, put it on the back burner, because they probably had other more pressing matters.
But the very idea a community has to have a fundraiser to pay for an audit so they can keep their water turned on is problematic. Do you see that or have any of them reported that back to you about the fact that they can’t find a firm that’s willing to?
Jack Critcher Yes, sir. They have Senator Johnson. If you’re in rural Arkansas, South Arkansas, Eastern, it just depends. But the short answer is yes. As has been mentioned, number one, there’s not a lot of money in it. And number two, our finance director has mentioned that auditing or doing, whatever it’s called, the APU or whatever– AUP– is when you do a municipality, there’s some more liability involved as opposed to, I guess, a private. So they’re not lined up eager to do those audits. So it is a problem in areas.
Senator Mark Johnson Do you have a solution or at least a recommendation for a solution?
Jack Critcher We have. We’ve discussed that. Senator Hammer, I don’t know if he’s in here.
Representative Richard Womack I feel like we’re just going over plowed ground, honestly, at this point.
Senator Mark Johnson I would withdraw for now, Mr. Chairman.
Representative Richard Womack Senator Gilmore, you have one more?
Senator Ben Gilmore I have more of a comment than anything. And it’ll be really short, Mr Chair. To the Municipal League, would you make sure that Mr. Archer has updated contact for the cities?
John Wilkerson Absolutely.
Senator Ben Gilmore I think that’d be helpful.
Representative Richard Womack Okay, thank you. Is there anybody else that has something they think’s really important to discuss with the Municipal League? All right, thank you guys. I guess, Miss White, if you’re willing, this would be an appropriate time to have a quick synopsis of what we’ve learned since the last meeting.
AG Opinion on holding turnback funds
Emily White Thank you, Mr. Chair. Emily White, Arkansas Legislative Audit. Thank you, Senator Gilmore, for that opportunity to explain briefly just the advisory opinion that we saw on this issue. It was advisory opinion number 2025-096. And I’ll hit the high points of that advisory opinion.
So that opinion explains in detail the language of the statute at issue or the law at issue, which you all heavily debated at your September meeting. And that was Arkansas Code annotated 14-234-120 subparagraph C.
In addition to that, that advisory opinion also recommends to you all as a committee that if you wish to seek to undo the notification to the Treasurer and the legal effect of that notification to the Treasurer, then you can expunge the action that the full committee took in July, which notified the Treasurer and thereby caused the Treasurer to have to act regarding those 43 municipalities. And that’s it, in summary, Senator Gilmore.
Senator Ben Gilmore Thank you. Thank you for that, because we debated that heavily last time, whether it was expungement or recension or whatever it was. So I appreciate the clarity there. So on that, the initial action that happened in July, the motion was made. I don’t remember what that motion was. I don’t remember. So there would need to be an expungement on that, and then I presume an expungement on any action that was taken thereafter.
Emily White That’s right, Senator Gilmore. I would recommend that, as your counsel, just to be clear, if the committee desires to clean that up, I would recommend you expunge both and not just one.
Senator Ben Gilmore Okay. I think that’s clear. Thank you.
Representative Richard Womack Representative Dalby, go ahead.
Representative Carol Dalby I have a question from Ms. White. When you made that last statement, so to expunge both, that means we also expunge the action of December 31. And so all deadlines would be off, and they can, I mean, as far as holding turnback. Because remember we did that where we said, Okay, you have until December 31st or December 1st, whatever date that was, to either get us an engagement letter or to get us the audit in. And so if we expunge that, then there are no deadlines. They can just ignore us. Is that correct?
Emily White As you know, Representative Dalby, an expungement in the law treats the action as if it never existed. So you’re exactly right.
Representative Carol Dalby So those deadlines would no longer exist?
Emily White That’s correct. If you expunge the action you took in September.
Representative Richard Womack Representative Ladyman.
Representative Jack Ladyman Thank you, Mr. Chairman. I have a motion at the proper time. I have two motions.
Representative Richard Womack Okay. Are there any more questions or comments? Senator Dotson.
Senator Jim Dotson Thank you, Mr. Chair. This would be a question for staff, I guess. Just as far as the actions of this subcommittee cannot overrule the full Legislative Audit committee, correct?
Emily White That is correct, Senator Dotson. So all this subcommittee could do is make a recommendation to the full committee. A subcommittee cannot undo the actions of the full committee. And this full committee engaged in both actions in July and September.
Senator Jim Dotson So just to be crystal clear, even if this committee voted to expunge something, it would not be expunged unless the full committee tomorrow actually expunged it.
Emily White Our position, my position as the attorney, is that this subcommittee cannot vote to expunge. You all can recommend to the full committee to expunge, but you yourself do not have the power to expunge it because the actual action was taken by the full committee. And again, a subcommittee cannot undo any action of the full committee. So you can make a motion to recommend something to the full committee that they expunge, but that actual expungement would have to come from the full committee.
Senator Jim Dotson Thank you.
Representative Richard Womack Senator Gilmore.
Senator Ben Gilmore Asked and answered.
Representative Richard Womack Okay, great. Any more questions or comment for Ms. White? All right. Representative Ladyman, I guess we’ll hear your motion.
Motion to recommend expunging previous votes on turnback
Representative Jack Ladyman Thank you, Mr. Chairman. Well, I move that this subcommittee recommend to the full committee to expunge the vote taken by this committee at its July meeting to withhold the turnback funds from the cities and towns that had not completed their water and sewer audits for 2022 and 2023 by December 31. That’s my motion.
Representative Richard Womack Senator Gilmore.
Senator Ben Gilmore I’ll second to go to discussion.
Representative Richard Womack Say that again.
Senator Ben Gilmore I’ll second to go to discussion on the motion.
Representative Richard Womack Okay. So we have a motion and a discussion– I mean and a second.
Senator Ben Gilmore Can I have discussion?
Representative Richard Womack You bet. Thank you. On that, I just want to make a point of clarification. Because I think we just heard that there’s two motions that need to be done.
Representative Jack Ladyman There will be a second motion.
Senator Ben Gilmore Okay. All right. Then fine.
Representative Richard Womack Representative Dalby.
Representative Carol Dalby Could we ask Representative Ladyman to restate that? Because in my hearing, I heard two things blended into his one motion. Maybe I heard it wrong. But he talked about the action of July and of September. And so I’m just, I’m not comfortable in voting on a motion that’s blended to.
Representative Richard Womack I will reread it, but I did not mention September.
Representative Carol Dalby Could you reread?
Representative Richard Womack Yeah, please reread it.
Representative Jack Ladyman So I move that this committee recommend to the full committee to expunge the vote taken by this committee at its July meeting to withhold the turnback funds from cities and towns that had not completed their water and sewer audits for 2022 and 203 by December 31.
Representative Richard Womack You’re recognized.
Representative Carol Dalby Then I have a question for Ms. White, because it’s my understanding when we did that in July we did not have a date of December 31 or December whatever, and that the date came up in September. And so I think the motion is not worded correctly because it’s got a date in that we didn’t have in July.
Representative Jack Ladyman Will you make a friendly amendment to remove December?
Representative Richard Womack Ms. White, can you address that?
Emily White Representative Ladyman, I do agree with Representative Dalby’s position on that because the action you all took in July almost verbatim was– the motion was to withhold turnback for those 44 municipalities or 43 municipalities we now know. The December date did not come up until your September action at the September committee meeting.
Representative Jack Ladyman Okay. I apologize. I missed the September meeting. Mr Chairman, if I can I’d like to remove the last part of that ‘by December 31.’ Strike that. So let me repeat it.
Representative Richard Womack May I ask you a question? Since I don’t think anything we’re going to do here today is going to carry any water into tomorrow, could we just skip this and do it tomorrow when it might matter?
Representative Jack Ladyman I think we have to recommend, if I heard–
Representative Richard Womack I don’t think the committee has to recommend anything. I think that’s simply a possibility.
Emily White Mr. Chair, I believe that’s accurate. It could go either way. It’s however, this body wants to handle it. You could recommend if you wish. But I also believe that, based on the fact that it’s on the subcommittee’s agenda today, that the full committee could hear it tomorrow. It’s just however you wish to proceed, Representative Ladyman.
Representative Richard Womack Okay, Senator Gilmore, you have some discussion.
Senator Ben Gilmore Yeah, thank you, Mr. Chair. So again, I’ll defer to whatever the committee wants to do. If you want to recommend, not recommend, it’s fine. I just think that if it’s not recommended today, I presume then we will have the discussion tomorrow. But I don’t want to put the chairs on the spot because I see only one chair. I don’t see the other. Senate co chair. If he’s here?
So I think if we had that assurance that we’ll have that discussion tomorrow, then I’ll defer as the second. However, I just want to make sure we have that discussion. Because I do think, regardless of what we do, based on the motions that were made both in July and in September, I’m not entirely sure that those were proper motions in the way they were worded anyway.
So I do think there probably needs to be a discussion on that and an expungement made of those motions, and then we decide where we go from there. Because I do believe that there are some cities that need to be held accountable. And I think we do need to have a discussion on those going forward. I think maybe that discussion needs to happen after December 31.
But as I’ve explained to the Municipal League, I think there’s some real problems that have been identified as a result of all this. I’m not going to belabor the point. I’m rambling as it is. But I look forward to the discussion tomorrow if the committee doesn’t take a recommendation action today.
Representative Richard Womack I don’t want to put the chairs on the spot either. However, would either of you like to comment? And if you don’t, that’s totally fine with me. I want to give you an opportunity. Representative Ladyman.
Representative Jack Ladyman Well, I believe that the members of the larger committee depend on the subcommittees to discuss and recommend. And I think some of those folks think we ought to do our job and recommend to them whether it’s needed or not. I believe it’s an important step. We do this in our standing committees, so the larger committees depend on what the subcommittees recommend. So my motion stands.
Representative Richard Womack Okay. Let me come back to you in just a second. Representative Rye, do you have a question or comment?
Representative Johnny Rye I’ve got a comment. Yes, sir. Thank you, Mr. Chair, for letting me in here. I hope that we’ve got everything we need, Miss Emily, even if we take it from here or if we wait until tomorrow, if we’ve got everything lined up the way that it should be so that we can go forward in the right direction after tomorrow. Yes, ma’am.
Representative Richard Womack Let’s hear your motion restated, please.
Representative Richard Womack Are we ready? I move that this subcommittee recommend to the full committee to expunge the vote taken by this committee at its July meeting to withhold the turnback funds from the cities and towns that had not completed their water and sewer audits for 2022 and 2012.
Representative Richard Womack Okay. So that’s the motion in its entirety. Is everybody clear on what we’re about to take up? All right. All those in favor of passage of this motion say aye. All opposed?
Representative Richard Womack Question. Mr. Archer, does this require two thirds?
Staff No. No. Majority.
Representative Richard Womack Simple majority. Can we vote one more time? I’m sorry, I had too many things in my mind. Trying to follow the rules. All those in favor say aye. All opposed? I’m going to call that motion failed. Let me deal with the roll call first. How many hands do we have? We’ve got three. [Roll call]
Representative Robin Lundstrum Point of order.
Representative Richard Womack Yeah, let’s hear your point of order.
Representative Robin Lundstrum I believe the chairs are ex-officio members and … get to vote.
Staff She says that’s correct.
Representative Richard Womack That’s correct. Thank you. Okay, the motion has passed. Okay, let’s hear this motion.
Representative Jack Ladyman Or if someone else wants to make this motion. I did not attend the September meeting, but I was told by our legal teams that we should expunge the other vote as well that was taken in September. So I will make that motion if nobody else wants to to expunge that September motion.
Representative Richard Womack You’re recognized.
Emily White Representative Ladyman, again, I just want to remind the body that it’s a motion to recommend to the full committee expungement. You all don’t have the ability to expunge it yourself.
Representative Jack Ladyman Let me restate that then. Thank you.
Emily White Yes, sir.
Representative Jack Ladyman I move that this committee recommends that the full committee expunge the vote that was taken by this committee in September.
Representative Richard Womack All right, thank you. Any discussion on that motion? All those in favor say aye. All opposed? All right, the motion passes. Senator Johnson.
Senator Mark Johnson Thank you, Mr. Chairman. Regardless of whether these two motions passed or failed, that does not bind the full committee in any way of what it should choose to do tomorrow on these matters?
Representative Richard Womack Correct.
Senator Mark Johnson Okay, thank you. All right.
Representative Richard Womack Thank you. We’re going to move back into where we were. So without objection, we’re going to file this report. All right, that’s done. Thank you, committee. Next up is the update on private reports, delinquent December 31, 2023, these water and sewer reports. You’re recognized, Mr. Archer.
Staff We’re at 23 now?
Representative Richard Womack Yes, sir.
Staff Thank you, Mr. Chair. Let me get together myself here. In July, there was a motion made to send letters to those that were delinquent for their 23 report only. No turnback has been withheld from these groups. The September meeting, we included the deadline on these as December 31st of this year. We sent 23 letters out to these individuals that we had not received reports for.
We are down to 15 now that we have not received reports. So we’re getting a very good response to those letters. And there was no requirement for them to provide engagement letters from the committee. It was simply to ask for reports. And like I said, turnback hadn’t been– we’re just updating you that we’re down to 15. If there are no questions, that completes my report.
Representative Richard Womack Thank you. Are there any discussion or questions? All right, seeing none, without objection, we’ll file that report. Thank you, committee. We’ve got an update on Act 709 of 2021.
Staff Yes, with the permission of the chair, I’d like to go ahead and call the city of Rockport to the table and present their report.
Representative Richard Womack I’m sorry, I got out of order. Oh, I’m sorry. You’re right. Now is Rockport. That was my mistake.
City of Rockport
Staff To refresh the committees from what happened in the September meeting, Rockport, their report was deferred because the officials couldn’t be here today. And we were suggesting that they, or recommending that the committee consider substantial non-compliance with municipal accounting code. They were able to get here today.
So on page two of your synopsis, accounting procedures for municipalities are set forth in Arkansas Code Annotative 14-59-101 through 119. The city was in non-compliance with these codes and other accounting procedures as noted below. Pre-numbered receipts were not issued for all funds received. This is a repeat finding. Cash receipts journals were not properly maintained to include all receipts and were not reconciled to total deposits per bank. This is a repeat finding.
Cash disbursement journals were not properly maintained to include all disbursements and will not reconcile to total disbursements per bank. This is a repeat finding. Bank accounts were not reconciled. This is a repeat finding. Adequate supporting documentation was not maintained for tested disbursements of over $16,000 or 17 percent and over $26,000 or 58 percent for 23 and 22 respectively. Without adequate supporting documentation, the validity of these purchases cannot be determined.
Budgets were not provided for 2022 in non-compliance to Arkansas Code. The 2022 budget was not provided upon request. However, it was given at report date. No procedures were conducted. The city has not obtained an audit or agreed upon procedure or compilation report for the city’s sewer system since 2018 as required of Arkansas Code. This is a repeat finding in the previous two reports.
On page three under the district court clerk, the district court clerk was in non-compliance to the Arkansas Code and proper accounting procedures as noted below. Bank reconciliations were not properly prepared. This is a repeat finding. Cash disbursement journals were not properly maintained to include all disbursements and will not reconcile to total disbursements per bank. This is a repeat finding.
Representative Richard Womack All right, if these officials from Rockport will make their way to the table. I see you there. Appreciate it. Please state your name and affiliation for the record in the microphone.
Kevin Baker Kevin Baker, Mayor.
Darlene Shockey Darlene Shockey, District Court Clerk and Admin Assistant.
Representative Richard Womack Thank you.
Sylvia Orrell Sylvia Orrell, admin assistant.
Representative Richard Womack Okay, thank you. Do you guys have a statement you’d like to make?
Sylvia Orrell I’m just going to say that I’m new. I just started in October, so some of these findings I’m not aware of until recent. But I will say that since I’ve become I have started doing all the reconciliations of the books and I have those with me.
And I have started properly doing all of the accounting and all of that stuff,. So prior to all of that, I’m not sure what was going on. But I know that they had several people and things like that. But I will say that for 25 it has been a big improvement. I have all my journals for all the accounts and everything.
Representative Richard Womack Okay, thank you. Do we have any questions from committee?
Staff Can staff make a statement?
Representative Richard Womack Certainly. Please do.
Staff Just to update the committee, we’re currently doing their 2024 engagement. So we’ve been in contact with them almost weekly, I would say. And I got a report as of Monday that the journals for 25 are manually kept now. And the receipts are being written for all the receipts. And we did an impromptu disbursement test and they provided all the adequate supporting documentation to the two or three that we asked.
So staff does believe that great progress has been made since the deferral in September, and staff no longer recommends that we start the process of 14-59-117 that would end in withholding turnback. Staff actually recommends that we file this report as it stands.
Representative Richard Womack Okay, thank you for that. Any question or discussion from committee? All right, seeing none, then without objection, we’ll file this report. Thank you guys for being here today. All right, next up is an update on Act 709 of 2021, repayment of street turnback for Gilmore.
Senator Ben Gilmore Point of clarification. No relation.
City of Gilmore
Staff Give me one minute. City of Gilmore, in the December meeting, they had passed an ordinance in 2022 and 2023 to repay about $95,000 of misused street fund. That ordinance was that they would pay back 10 percent of the unrestricted revenues in the general fund. During that audited year, they paid back 1.6 percent.
This committee recommended in the December meeting to escrow their street fund revenues until which time these funds were paid back in full. We confirmed in September that these funds have been paid back in full and we recommend that staff vote to have us to notify the treasurer to release these funds.
Representative Richard Womack All right. Thank you, Mr. Archer. Is there anybody here from the city?
Staff No. They wouldn’t be here. I need a vote to get it turned back on.
Representative Richard Womack Okay, motion. Yeah, do we have a second? All those in favor of adopting say aye. All opposed? Thank you. That’ll stand adopted. Next up is a review of reports, item G on the agenda.
City of Searcy
Staff Okay. We had eight deferred reports from the September meeting. Starting on page one, we have the city of Searcy, 2024. Under the district court clerk, the district court clerk was unable to identify over $124,000 remaining in the bank account with receipt numbers for cases not yet adjudicated and payments of all unpaid individual time accounts as required by code. This is a repeat finding from the previous 12 reports. Believe we have district court clerk, Mrs. Linda Wiseman, here.
Representative Richard Womack Thank you, Mr. Archer. Miss Wiseman, if you would, turn your microphone on and state your name and affiliation for the record, please.
Linda Wiseman Linda Wiseman, Chief District Court Clerk for Searcy District Court.
Representative Richard Womack Thank you. Do you have a prepared statement?
Linda Wiseman Very simply an update. I was here in June in answer to our 2023 audit, and at that time it appeared we had hit the point that the same dollar amount was showing for the past three audits. And I was told to go and ask Judge Kennedy to prepare an order to send the funds in. I visited with him, he’s prepared to do that.
The 2024 audit, of course, was finalized during that time. So the funds have not been sent yet. We are working with Ms. Teresa Shaw, one of the business financial analysts at the administrative office of the courts. She indicated she’s working with three other courts in addition to ours, attempting to send back funds.
So it’s going to be longer, a longer process than just turning around and writing the checks to send the money. But it is in the process. We’re hopeful by the end of this calendar year, but she absolutely could not guarantee that, but we’re working toward that.
Representative Richard Womack All right, thank you. Any questions or comments from committee? Go ahead. You’re recognized.
Senator Mark Johnson Thank you, Mr. Chairman. Below the issue with the $124,000, Mr. Chairman, it says that in August 24 there was an unauthorized withdrawal of over $76,000. And the city responded there was a positive pay program that has been implemented, which basically says if they write a check, they send a copy to the bank and say, hey, we wrote this check. But I just want to know if they identified what happened to the $76,000.
Linda Wiseman Pardon me, was that in the district court’s audit part? The only letter I have–
Senator Mark Johnson It implies that it is, yes ma’am. I don’t know.
Staff Well, we issued that finding, if I may. We issued that finding under other issues instead of under a particular report official because that was no fault of the city, and they got their money back. It was a process where internal controls worked. It was, more than likely, it was part of another official–
Senator Mark Johnson Thank you, Mr. Chairman. Thank you.
Staff We recommend we file this report if there are no questions.
Representative Richard Womack Yeah, are there any more questions? Okay, then without objection, we’ll file this report. Thank you for being here today.
Town of Garner
Staff Continuing under deferred reports, still on page one, we have the town of Garner, 2024-2023, under the recorder treasurer. A fixed asset listing was established but not updated to include all purchases as required by Arkansas Code. In addition, a fixed asset policy has not been adopted by the governing body. This is a repeat finding. We have clerk treasurer Carla Johnson here to answer questions.
Representative Richard Womack All right, thank you. Ms. Johnson, if you wouldn’t mind, state your name and affiliation for the record.
Carla Johnson Carla Johnson, recorder treasurer for the town of Garner.
Representative Richard Womack All right, thank you. You have any statements you’d like to make?
Carla Johnson Yes. My council finally did approve a dollar amount for us to track for the fixed assets. It will be $1,000 or more. We are working on getting that ordinance done and finalized before the end of the year.
Representative Richard Womack All right, thank you. Any question from committee? All right, then without objection, we’ll file that report. Thank you for being here today.
City of Portland
Staff On page two, we have the city of Portland, 2024, under the mayor. The city was in non-compliance with Arkansas Code as noted below. General fund disbursements exceeded budgeted appropriations by over $97,000 or 34%. Street fund disbursements exceeded budgeted appropriations by $5,900 or $23%. Budgets were not adopted by ordinance or resolution. This is a repeat finding the previous four reports. I believe we have Mayor Thomas Frazer here today.
Representative Richard Womack Hey, Mayor. If you would, please state your name and affiliation for the record.
Thomas Frazer Thomas Frazer, Mayor, City of Portland.
Representative Richard Womack Thank you, sir. Do you have a statement?
Thomas Frazer The only explanation I can give you at my own expense is when I walked into this position, I was blind and ignorant as far as proper proceedings, making sure things were done correctly. But everything that I’m aware of was appropriated through the city council.
It just was not made in the correct manner as far as making the report or having anything done, especially like having the budget made by a resolution. That was just my own lack of knowledge of knowing how to do that. But I have been working with our district municipality field rep, Ms. JoAnne Bush.
She has been guiding me extremely well and trying to make sure I do get things done correctly. I’ve been working with our city clerk a lot more closely with her to try to make sure that everything gets done correctly from here on.
Representative Richard Womack Okay, so you feel like measures are in place to keep you from being back with the same issues?
Thomas Frazer I’m doing my best to make sure we do not have the same issues. I’m trying to do my best to make sure everything is done correctly and everything is reported correctly and everything goes through the way it needs to, that we do not have to be back here again.
Representative Richard Womack Alrighty, thank you. Any question from committee? All right, seeing none, we will, without objection, we’ll file this report. Thank you for being here today.
Thomas Frazer Thank you, sir.
Staff Continuing on page four and five, we have four private reports, all water reports that were deferred from the previous meeting. We have still not received adequate responses on those. Staff recommends that we defer these one more time.
Representative Richard Womack Okay. Okay. So unless there’s an objection from the committee, then we will go ahead and defer these again. Thank you, they’ll be deferred.
Criminal referrals
City of Earle (mayor and court clerk)
Staff Starting on page six, we have two reports that have been certified to the bond board and referred to the prosecuting attorney and the AG’s office. We have the city of Earle, 2024, under the mayor. In August 24, the mayor charged almost $2,900 for hotel and fuel charges for an out of state trip. Council meeting minutes from August of 24 reflect the council’s approval to pay the expenses.
Subsequently, council meetings from October 24 reflect the council voted not to pay for expenses related to this trip since adequate supporting documentation had not been provided to the treasurer. On April 8th of 25, the mayor provided supporting documentation to audit staff. However, the documentation could not be substantiated.
As of the report date, the city had not paid the credit card charges, and the mayor had not reimbursed the city. Without adequate supporting documentation reflecting a business purpose, these charges appear to conflict with Article 12, Section 5, and the public purpose doctrine.
Under the district court clerk, the following discrepancies totaling over $23,000 were noted in the district court clerk’s bank deposits and receipts. Almost 12,000 in receipts issued between January 1 of 23 and August 13 of 24 was subsequently voided, leaving a balance on defendants’ accounts.
The validity of these voided receipts could not be substantiated. Almost $6,300 in receipts issued between January 1 of 23 and August 13 of 24 were voided and the cases adjusted by crediting the defendant’s accounts. Adequate supporting documentation was not provided for these adjustments. $5,400 in receipts between January 1 of 24 and July of 24 of 24 could not be traced to a bank deposit.
Law enforcement is currently investigating these matters. Staff recommends we file this report if there are no questions.
Representative Richard Womack Thank you. Any question from committee? Representative Ray?
Representative David Ray Thank you, Mr Chairman. I just have a question on this first finding where it says, The mayor provided supporting documentation to audit staff, however the documentation could not be substantiated. What does that mean, in a little bit more specificity?
Staff There wasn’t an agenda provided. There was basically a recap provided that appeared he created it. There wasn’t anything that we could trace to a scheduled meeting online or there wasn’t an agenda that city business was conducted there.
Representative David Ray Where was this travel to?
Staff I believe it was Chicago.
Representative David Ray Okay. All right. And based on the documentation that was provided, it didn’t appear like the travel was to a legitimate function or event? Is that what you’re saying?
Staff That benefited the city.
Representative David Ray Okay. All right. I appreciate that clarification. Thank you.
Representative Richard Womack Any more questions from committee? Then without objection, we’ll file this report.
City of Mount Ida (mayor and treasurer)
Staff On page seven, the city of Mount Ida, 2024, under the mayor and recorder treasurer. The mayor and recorder treasurer received more salary payments and health insurance reimbursements than they were entitled to during the period January 1 of 24 through May 31 of 25, resulting in an overpayment totaling over $108,000.
The mayor received 26 extra checks totaling $74,000 and 36 extra health insurance reimbursement checks totaling over $20,000 for a total of $94,491. As of May 31 of 25, the mayor had been paid $31,121 of his authorized 2025 yearly salary of $34,799. In addition, the mayor received $985 for mileage without proper documentation of business purposes and $958 for a cell phone stipend without an authorizing policy or council approval.
The recorder treasurer received three extra payroll checks totaling almost $3,900. This is a repeat finding from the previous report. And 18 extra health insurance reimbursement checks totaling just over $10,000 for a total overpayment for the recorder treasurer of $14,193. In addition, the recorder treasurer received a $750 cell phone stipend without authorizing policy or council approval.
The following issues were noted while reviewing the payroll records. The sum of the quarterly 941 tax liabilities does not agree to the federal tax remitted on Form W3. This is a repeat finding. The mayor, payroll preparer, and other employees and officials were paid a benefit for not participating in the city provided insurance program in 2024. This benefit was not reported to the IRS. This is a repeat finding in the previous two reports.
Continuing on page eight, under the mayor, the 2024 budget was not adopted by ordinance or resolution in non-compliance to the Arkansas Code. This is a repeat finding. Under the recorder treasurer, accounting procedures for municipalities are set forth in Arkansas Code 14-59-101 through 119. The city was in non-compliance with these codes and other accounting proper accounting procedures as noted below.
Annual financial statements were not posted. This is a repeat finding. Fixed asset records were not properly updated. This is a repeat finding. I believe we have mayor Vann Morgan and recorder treasurer Amber Weston here to answer questions.
Representative Richard Womack All right, thank you for coming today. Please state your name and affiliation for the record.
Amber Weston Amber Weston, recorder treasurer.
Vann Morgan Vann Morgan, Mayor.
Representative Richard Womack Thank you. And do either of you have a statement you’d like to make before questions?
Amber Weston I have several. We did adopt a policy for cell phone and mileage going forward. They had been doing that previous to me being there, so just kept on with the practice. We have now last council meeting adopted a policy for both. I have talked to Todd, my auditor, about how to fix some of these bank accounts not being reconciled properly, exactly in detail what he wanted me to do going forward.
And with the cash receipt journals, which I have a little bit of an issue. We had a three-year audit. They kept them for six-plus months and then when I get them back to catch them up, then Todd comes back to get them. So it’s kind of hard with cash receipt journals that are being taken out of the office to keep them updated correctly and properly when you don’t have them there to go as you’re going along with your bank statements and other things.
So as far as our council, we have also fixed all the payroll issues going forward. We have ways to pay it back and then policy going forward on not– we passed a resolution on to not do this going forward.
Representative Richard Womack Okay. Mr. Mayor, do you have a statement?
Vann Morgan No.
Representative Richard Womack Okay. Representative Dalby, you’re recognized for a question?
Representative Carol Dalby Thank you, Mr Chair. Are you the mayor that’s listed in this report that received all this excess money?
Vann Morgan Yes, ma’am.
Representative Carol Dalby And I’ve read this two or three times sitting here. I guess I’m being a little slow today and can’t figure it out. But you knew you were getting extra pay? I mean, what precipitated this? This is what’s just really kind of fascinating to me. I mean, I know what my paycheck is. And if I’m getting something extra, I sure know where that came from. I mean, what happened that all of the sudden you’re getting a whole bunch of extra money you weren’t entitled to? Are you just claiming overtime or what? I’m just curious.
Vann Morgan Well, I didn’t really realize it was that much, but it came out to be that much. I was just needing money helping my kids and I was getting advanced checks, which I’m not anymore. And I’m paying it back. I’m not getting paid anymore. I’ve already paid back about $9,900 already.
So each month, I don’t get a salary. I don’t get any kind of insurance, reimbursement. And also I’ve got my house for sale. So I’m going to, at the end of my term, if I hadn’t paid it all back, I’m going to finish paying it back with selling of my house.
Representative Carol Dalby Follow up, Mr. Chair?
Representative Richard Womack You’re recognized.
Representative Carol Dalby So has this been the practice in Mount Ida that if you needed more money you could just go and say I need another check and get an advance on your pay?
Vann Morgan No, ma’am.
Representative Carol Dalby Okay. Thank you.
Representative Richard Womack All right, any other question from committee? All right. Then without objection, we’ll file this report. Thank you guys for being here today.
Monticello Water and Sewer
Staff Starting on page nine, we have 11 reports that were referred to the prosecuting attorney and to the AG’s office. The first one is the Monticello Water and Sewer System. A review of selected transactions for January 1 of 23 through August of 31 of 24. We have our staff member, Michelle Achley, here to present this report.
Michelle Achley Thank you. This report is issued in response to a request from the 10th Judicial District prosecuting attorney for audit to review selected financial records of the City of Monticello Water and Sewer System. ALA staff assistance was requested after city officials discovered impropriorities, including customers with delinquent accounts being improperly removed from shutoff lists.
Our review was conducted for the period January 1 of 2023 through August 31 of 2024. Located in Drew County, the system provides water and sewer services to residents and businesses in the city and certain surrounding areas. The city employed an office manager who supervised other office staff and oversees the accounting duties of the system. The employment of the individual who served as office manager during the review period was terminated on August 9 of 2024.
Shortly thereafter, city officials discovered that some accounts, including that of a family member of the office manager, have been improperly removed from shutoff lists even though they had delinquent balances and had not made timely payments. Staff review of system financial records revealed $3,483 in unaccounted for funds. The transaction dates for these undeposited funds were backdated in the computer system, which concealed the unaccounted for funds.
In addition, certain customers were removed from shutoff lists even though they had a delinquent balance and had not made timely payments. Furthermore, the method of payment was not always properly entered in the computer system. As a result, staff could not determine if additional funds were misappropriated.
As reflected in the appendix of the report, the mayor provided a response outlining the steps that had been taken to address the audit findings. The report was forwarded to the 10th judicial district prosecuting attorney and the attorney general. The prosecutor has responded that the former office manager Andrea Chambers was charged with theft of property on September 9th of this year. This concludes the report on Monticello Water and Sewer system.
Representative Richard Womack Thank you. Any question or comment from committee? All right, then without objection, we’ll file this report.
Ozan Water Department
Staff Pages 11 through 13, we have the Ozan Water Department review of selected transactions, January 1 of 21 through July 31 of 24. And again we have staff member Michelle Achley here to present this report.
Michelle Achley This report is issued pursuant to a request for audit to review receipts and deposits of the Town of Ozan Water Department. The 8th North Judicial District Prosecuting Attorney requested our assistance after receiving allegations of cash receipts not being deposited. This review was conducted primarily for the period January 1 of 2021 through July 31, 2024.
Ozan Water Department is located in Hempstead County and provides water service to approximately 130 customers. During the review period, the recorder treasurer collected department funds, issued receipts, and prepared deposit slips, while the mayor took funds to the bank for deposit. The mayor relieved the recorder treasurer of all department responsibilities in July of 2024 after discovering that some cash collections were not included in the prepared deposits.
Our comparison of manual receipts with bank deposits revealed $1,530 in undeposited funds. Due to inadequate records, staff were unable to determine if all other collections were properly deposited. Several internal control deficiencies, contributed funds being misappropriated, the misappropriation not being detected timely, and staff being unable to determine if additional funds were misappropriated.
Subsequent to discussions with the prosecuting attorney, the recorder treasurer agreed to pay and paid the department $1,530, which is the amount of undeposited funds noted in the report. As reflected in the appendix of the report, the mayor provided a response to the findings that addresses the steps that have been taken to strengthen internal controls and providing better fiscal oversight. The report has been forwarded to the 8th North Judicial District Prosecuting Attorney and the Attorney General.
Representative Richard Womack Thank you. Any question or comment from committee? All right, without objection, we’ll file that report.
City of Morrilton (mayor and treasurer)
Staff Continuing on page 14 with reports referred to the prosecuting attorney and the attorney general’s office. We have the City of Morrilton 2023 under the mayor and clerk treasurer. The city paid the Morrilton Area Chamber of Commerce $4,000 in sponsorship fees for a local event in noncompliance to Article 12, Section 5. If no questions, staff recommends we file this report.
Representative Richard Womack Any question or comment from committee? Without objection, we’ll file this report.
Marion County (judge)
Staff Pages 14 through 16, we have Marion County 2023 under the county judge. Of $24,000-plus in credit card payments tested, we were unable to substantiate 625 due to the lack of supporting documentation. Of this, $408 were for county library purchases with local vendors, and 217 were for the sheriff’s office consisting of meals and fuel.
Furthermore, we noted account credits totaling $344 without supporting documentation. This is a repeat finding from the previous two reports back to 2021. If there are no questions, staff recommends we file this report.
Representative Richard Womack Any questions? All right, without objection, we’ll file this report.
Town of Guion (mayor and treasurer)
Staff Page 17, the town of Guion, 23 and 22. Under the mayor and recorder treasurer, the town paid a council member to serve concurrently as fire chief in apparent conflict with Arkansas Code 14-42-107 and the common law doctrine of uncompatibility discussed in Attorney General’s opinion 2005-172. If there are no questions, staff recommends we file this report.
Representative Richard Womack Any questions from committee? All right, then we will, with no objection, we’ll file this report.
City of Judsonia (police chief)
Staff Continuing on page 17, the city of Judsonia, 2024, under the police chief. The city’s police department paid over $1,200 for 14 gift boxes for employees in apparent conflict with public purpose doctrine in Article 12, Section 5, as discussed in Attorney General’s opinion 91-410. If there are no questions, staff recommends we file this report.
Representative Richard Womack Any questions from committee? All right, then without objection, we’ll file this report.
City of Leola (mayor and treasurer)
Staff Continuing on page 17, the city of Leola, 24 and 23. Under the mayor and recorded treasurer, the city paid $900 for gifts for two retirees in apparent conflict with Article 12, Section 5, as interpreted by Attorney General Opinion 91-410. In addition, the transactions lack supporting documentation. Therefore the validity of these purchases could not be determined. If there are no questions, staff recommends we file this report.
Representative Richard Womack Any questions from committee? All right, then without objection, we’ll file this report.
City of Parkin (mayor and police chief)
Staff Page 18, continuing under reports filed with the prosecuting attorney and attorney general’s office, the City of Parkin, 2024, under the Mayor and Police Chief. Fines and cost revenue of over $284,000 exceeded 30% of the city’s expenditures in the preceding year by over $60,000 in noncompliance with the Arkansas Code annotated 12-8-403.
The revenue was generated from the traffic offense citations written by or arrests made by the city’s law enforcement personnel relating to law enforcement of traffic offenses. There are no questions, staff recommends we file this report.
Representative Richard Womack Any questions? All right, without objection, we’ll file this report.
Ashley County (sheriff)
Staff Continuing on page 18, we have Ashley County, 2023, under the Sheriff. Commissary inmate ending balance exceeded bank deposits and cash on hand by almost $4,900 and almost $2,800 for December 31st of 23 and December 31st of 24, respectively. In addition, kiosk deposits are not being made timely. If there are no questions, staff recommends we file this report.
Representative Richard Womack Any questions, committee? All right, without objection, we’ll file this report.
Bauxite Water and Sewer
Staff Page 19, we have a private CPA report on the Bauxite water and sewer system for 2023. We could not reconcile the proof of cash year-end balance to the book balance for one bank account. We could not reconcile deposits per proof of cash for the year with deposits per journal for two accounts. If there are no questions, we recommend we file this report.
Representative Richard Womack Any questions? All right, without objection, we’ll file the report.
Lakeview Water and Sewer
Staff On page 20, we have Lakeview Water and Sewer Department. It’s also a private report for 2023. We noted that receipts posted to customer accounts receivable accounts did not agree with the bank deposits. The total cash deposited was over $107,000 and the total cash receipts posted to the accounts receivable and billing system were over $135,000.
We also noted that three of the 10 customer payments tested could not be traced to bank deposits. We noted no evidence of independent review or approval of adjustments. If there are no questions, staff recommends we file this report.
Representative Richard Womack Any questions, committee? Then without objection, we’ll file this report.
Blue Eye and Valley Springs
Staff Continuing on page 20, we have eight reports. Oh, excuse me, I missed two there. On page 2021, we have two reports with repeat findings. The first one there on page at the bottom of page 20 is the town of Blue Eye. Is Mayor Sondra Eby here today? Okay, she called earlier in the week and requested us to defer this to November. Staff recommends we defer this so she can be here.
Representative Richard Womack Okay. Any objection, committee? Then we’ll defer this report.
Staff Continuing under repeat findings, we have the town of Valley Springs for 24, 23, and 22 under the recorder treasure. A detailed fixed asset listing was not provided as required by Arkansas Code. A similar finding was issued in the previous two reports dating back to 2016. I believe we have recorder treasurer Cheryl Breedlove here to answer questions.
Representative Richard Womack Thank you for coming. And would you please state your name and affiliation for the record?
Cheryl Breedlove Yes, I’m Cheryl Breedlove, treasurer recorder of the town of Valley Springs.
Representative Richard Womack Thank you. And do you have a statement you’d like to make?
Cheryl Breedlove Yes. At the time when I started this position I didn’t know there was a such thing as fixed assets. But I learned from the last audit before this one that there was. We did update it. We just didn’t find it. It was looked over in the paperwork that I had. So we had a computer crash. They did take the computer into the computer place and we found them. So we do have them updated at that moment. But I will start making sure that it is updated from now on further to make sure that every year if that’s what I need to do.
Representative Richard Womack Okay, thank you. Any question, committee? All right, without objection, we’ll file this report. Thank you for being here today.
Staff At the bottom of page 21, starting there we have eight reports with findings and no responses at the time we printed this. Number 24 there, the first one Lakeside Water Association, 24 private report. We’ve actually received a good response for them earlier this week and staff recommends we file that report.
Representative Richard Womack Okay, without objection, we’ll file that report.
Private reports on water systems
Staff The following six, which would be all private reports on water systems, would be three reports for the city of Dermott’s water system for the 24, 23, and 22 year, the Evening Shade water report for 23, two Franklin water departments for 24 and 23. We still do not have responses for these and staff recommends that we defer all six of these.
Representative Richard Womack Any question or comment from committee? Then without objection, we’ll defer.
Staff And the last one is the Humphreys Water and Sewer System. That’s a private report for 2023. We did receive a good response from them earlier this week and staff recommends we file that report.
Representative Richard Womack All right, any question or comment on that one? We will file that report.
Staff Staff would like to ask the committee to review– there’s 29 reports with resolved findings on pages 24 through 33. Staff would like the committee to review those. Staff recommends we batch all these together and file them. But if there’s one that the committee wishes to pull out, staff will oblige.
Representative Richard Womack I’ll give the committee just a minute to flip through there. You’re recognized, senator.
City of Sherwood
Senator Mark Johnson Mr. Chairman, on page 24, the second half of the page, it has a finding on the City of Sherwood. But there’s no response or recommendation. Is that just missing?
Staff No. It’s underlined. And underlined indicates that we have a good response for those and it’s been resolved. That’s the standard format.
Representative Richard Womack Thank you for that question. You’re recognized, Mr. Cooper.
Representative Cameron Cooper Mr. Archer, could you describe what that response was from the City of Sherwood?
Staff Off the top of my head, they actually came in and we met with them. Let me just go ahead and read the finding. The city paid over $190,000 for construction of sidewalks in non-compliance with Arkansas Code Annotative 22-9-203. The city has, for 25, they now bid the sidewalks at the beginning of the year by like yard or by foot or something. So anytime they have that to do, they’ve got a solid bid for the whole year for as many sidewalks as they wish, which is acceptable.
Representative Richard Womack No, sir. There’s no public comment on the agenda.
Unidentified So can you make a note on record that you’re refusing to let me speak?
Representative Richard Womack Certainly. Certainly. All right, committee, you’ve had a chance to look over those. Are there any that you’d like pulled out? All right. Without objection, we’ll file these reports.
Staff On pages 34 through 38, there are 89 reports with no findings. Staff recommends we file all these reports.
Representative Cindy Crawford Excuse me. I’m sorry. I’m not on the committee, but I am from Sherwood. And this issue’s been a real bone of contention in our community. And I was just wondering if I might ask, have they done sidewalks subsequent to this situation where they’ve handled it appropriately?
Staff We haven’t done the 25 engagement so we haven’t checked. But like I said, they provided us with their current policy that they had done for the year 25. We haven’t verified that policy because we have to wait until the 25 is years complete before we go in and do our engagement.
Representative Cindy Crawford Okay, thank you. That’ll help me.
Staff Okay, thank you.
Representative Richard Womack All right, thank you. Any question or comment on these reports without findings? All right, seeing none, without objection, we will file these reports. We’re done. That’s the end of today’s meeting. The next meeting of Legislative Joint Auditing Committee will be held on November 13, 2025. And this meeting is adjourned.
