Audit Counties and Municipalities: Dec. 11, 2025

Senator Matt Stone We are ready to begin. But before we begin, all the committees have been asked to take a 20-minute recess to accommodate Senator Irvin’s Christmas gift that she’s doing, event to have gifts given to needy needy children in the state. And we will gavel back in promptly in 20 minutes. So that’ll be 10 minutes till 2. But right now we’re going to take a 20 minute recess. Thank you. [Recess] Members, I believe we are ready to get started. I think our 20 minutes is up and maybe even a couple of minutes past that. But I was going to ask to see if Senator Crowell would open us up in a word of prayer. 

Senator Steve Crowell Dear Lord, thank you so much for today. Thank you so much for safe travels in this season where it all started, where you were born. Lord, we just ask you to watch over us today as we do the people’s work and keep our hearts and our minds clear for the right decisions. In your name, Lord, we all pray. Amen. 

Senator Matt Stone Well, I believe we’re ready to get started this morning. But before we do, I want to take just one moment. I was thinking about something when I looked down there at Representative McElroy. Whatever we do in life when we speak, we give off nonverbal communication. And even where we’re just sitting quietly minding our own business, we give off nonverbal communication. Representative McElroy, I just wanted to ask you exactly what is your sweater saying this afternoon? 

Representative Mark McElroy Ho ho ho.

Senator Matt Stone Well, that’s good enough. I guarantee you, you have the Christmas spirit. With that being said, the first item on the agenda will be the approval of the minutes. Motion. Second. All in favor say aye. Ayes have it. I want to recognize staff for the following agenda items. 

Staff Thank you, Mr. Chair. Item number C, update on private reports, delinquent reports from December 31, 2022 for water and sewer. Since our October meeting, well, the list that was emailed to you on Friday, there’s been two additions to it. Now we have a total of 12 entities that are in compliance since we started this process in July. And that’s an additional seven more. 

So we’ve got 12 out of the 43 that letters have been delivered to the treasurer’s office, and their turnback has been reinstated. I reached out to everybody that was lacking a 2024 report in early November. I have made contact with in some manner, didn’t talk to them all right then, but I have made contact with everybody on that list except the city of Carthage. And I believe they’re in the audience today. 

So we’ll check them off the list here in a little bit. So we have reached out to every one of them since November 5. We’ve got 10 that have additions, that just lacked their 24 and three that have filed their 2022. So we’re down to 31 that are still being escrowed. Mr. Chairman, that concludes my report. 

Senator Matt Stone Without objection, we’ll file the report. Seeing none. 

Staff Thank you, Mr. Chair. Item D is the 2023 Delinquent Water and Sewer private report. We started out in July with 64 on this list. Now we’re down to seven. So we’ve got 57 of the 64 have been filed. And these are not currently having their turnback escrow. Mr. Chairman, that includes my report. 

Senator Matt Stone Without objection, we will file this report. Seeing none. 

Staff All right, let me get my ducks in a row here. Next item on the list is the discussion of Act 709 of 2021, repayment of misused street funds by the city of Carthage. With the chair’s permission, I’d like to go ahead and present this report. 

Senator Matt Stone Yes, go ahead. 

Town of Carthage

Staff On pages 7 through 9.Under reports referred to the prosecuting attorney and the Attorney General’s office, we have the town of Carthage 2023, 2022, and 2021. Under the mayor and recorder treasurer, the town paid the recorder treasurer position more than the appropriated salary as shown below in non-compliance with Arkansas Code. 

Over $700 and $174 in 2023 and 22, respectively, due to the former recorder treasurer training and assisting the new recorder treasurer without an amendment to the budget, and almost $700 in 2021 due to apparent budget error and an additional payroll check to the recorder treasurer. Cash restricted for street purposes, totaling $19,306, was transferred in 2016 from the street fund to the general fund without supporting documentation as required by Arkansas Code 27-72-07. 

In the prior engagement, $800 was transferred from the general fund to the street fund. And during 22 and 21, the town transferred $400, or 2% of general fund revenues, and $1,300, or 5% of general fund revenues, respectively, from the general fund to the street fund. As a result of these transfers, the balance due to the street fund is $16,806 at December 31, 2023. The town has not passed the ordinance or resolution to repay the street fund or has not obtained authorization from the Legislative Joint Auditing Committee for repayment of less than 10% of general fund revenues annually in compliance with Arkansas Code 27-72-07. 

This is a repeat finding dating back to 2016. Under the mayor, as of the report date, Legislative Audit and a law enforcement agency are in the process of investigating certain financial transactions of the city, which will be included in a subsequent report. The governing body did not review the prior year report or accompanied comments and recommendations at the first regularly scheduled meeting following the receipt of the report in non-compliance to Arkansas Code. This is a repeat finding. 

The town is in non-compliance to Arkansas Code 14-58-202 and 203 as noted below. Budgets were not adopted by ordinance or resolution. 2023, the general fund expenditures exceeded appropriations by almost $9,500 or 30%. 2021, general and street fund expenditures exceeded appropriations by over 17,000 or 77% and over 10,000 or 38% percent respectively. This is a repeat finding. 

Continued on page eight under the recorder treasurer, a review of disbursements revealed that supporting documentation was not maintained for the following disbursements in non-compliance to Arkansas Code. Over $1,300, over $2,800, and $542 disbursed in 23, 22, and 21, respectively, due to the lack of documentation. The validity of these disbursements could not be determined. Over $1,300, over $1,600, and $432 dispersed in 23, 22, and 21, respectively, to vendors that appeared to be for legitimate business purposes. However, supporting documentation was not available. 

Accounting procedures for municipalities are set forth in Arkansas Code annotated 14-59-101 through 119. The town was in non-compliance with these code sections and other proper accounting procedures as noted below. Annual financial statements were not published or posted. This is a repeat finding dating back to 2012. Bank accounts were not reconciled. This is a repeat finding. Prenumbered receipts were not issued. 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 were not reconciled to total deposit the disbursements per bank. This is a repeat finding. Agreed upon procedure report for the water and sewer system was not obtained in non-compliance to the Arkansas Code. Similar finding was issued in the prior three reports dating back to 2016. 

The following issues were noted during review of the payroll records. IRS quarterly 941 reports were not provided for 2023, second quarter, third quarter, and fourth quarter, and 2021, first quarter and third quarter. This is a repeat finding. Federal taxes for 2023, third quarter were not remitted to the IRS. The amount could not be determined due to the 941 report not being provided. This is a repeat finding. 

As of the report date, it appears the town owes the IRS for delinquent payroll taxes, penalties, and interest from 2016 to present, totaling $9,358. I believe Mayor Shawn Randall is present today to answer questions. If you’ll come to the end of the table, please, sir. And record treasurer Cassie Randall was also invited, but she called and asked, could we defer her portion. 

Senator Matt Stone Mayor Randall, would you state your name and position for the record, please? 

Shawn Randall Mayor Randall, Mayor of Carthage, Arkansas. 

Senator Matt Stone Do you have a statement that you would like to make? 

Shawn Randall Just want to answer some questions.

Senator Matt Stone  All right, members, does anybody have any questions of Mayor Randall. I’ll give everybody just a minute to digest the report. It was pretty lengthy. And they just maybe need a moment to think about it and come up with some questions and see what we can do to get the city of Carthage into compliance. 

Well, hearing no questions from the members, I have a question. Just how do you expect or do you have a plan to pay back the street funds that you’re delinquent on or that you have spent erroneously?

Shawn Randall Yes, sir. I’ve been mayor since 2019 and when those funds was transferred over to the street department, those funds were earmarked for the general fund. I think that was done, like was said earlier, that was done in 2006-16. So I didn’t have any kind of oversight as far as having that money directed to the correct place. But what we’ve done sir, since I’ve been mayor, we started out real real strong. 

I assessed a lot of the problems that our city was going through, and that was one of the big things that I looked at. And we got on board, and I heard you earlier, but, just me sitting here thinking, I thought we had done a resolution in order to start paying some of that money back. But we did start paying some of that money back. Then through some different situations, we kind of fell off from it. 

But recently we just started paying some of it back, and that’s on record. So yeah, that’s just an issue. And it’s been several issues, taking over a city. And I’m not blaming anybody. That’s not what I do. I just try to come in and try to take the best approach that I can take to try to fix the issues. But sir, sometimes when you come in, it’s so many things. 

And it’s not that I went to a certain school or had formal training on how to per se be a mayor. I came in this just particularly trying to be a community leader. And so, but my thing is to try to correct every issue that the state says that we have to correct. We just have so, so many things that I have to take time out for to try to make it there. 

But like I said, recently in the past month, we’ve made some big transfers from the general fund to the street fund to try to knock down on because I think since I’ve been mayor, we’re the ones that knocked it down from 19,000 down to 16,000. And so, like I said, in the past month or two, being that our funds were taken from the street due to, I think– which I know the water department has to do our water audit, and we’re working on that now. 

So the general fund has had to help out the street fund the past couple of months. And so that’s how I got back onto, okay, the general fund owes the street fund. And so we’ve been paying that back lately, the past couple of months. 

Senator Matt Stone Okay, Mayor, I’m going to recognize Senator Hammer. He has a question. 

Senator Kim Hammer Thank you, Mr. Chairman. And Mayor, thank you for being here. I really want to ask staff to clarify something. Who was it that was asked to be excused? 

Staff The recorder treasurer. 

Senator Kim Hammer The recorder treasurer? 

Staff Yes. And the only reason she’s– correct me if I’m wrong, mayor. She’s fairly new, right? 

Shawn Randall Yes, sir. 

Staff She wouldn’t have been invited other than for the street fund repayment issue. None of these repeats are under her, but we went ahead and invited her so if she could shed any light on how we could repay this. But it was the recorder treasure that asked to defer. 

Senator Kim Hammer Can I proceed? 

Senator Matt Stone Yes, feel free to. 

Senator Kim Hammer Mayor, in looking at the report, I guess one of the questions I have is you’ve been mayor since 2019. The previous recorder treasurer, how long was he or she in their capacity? 

Shawn Randall I think she was with us, sir, I think for about a year. So if I recall correctly, she was with us to about 2020, to about, I would say, about September, October of 2020, somewhere up in there. 

Senator Kim Hammer Yeah. Okay. And we all know the buck has to stop somewhere. You’re the mayor, so it gets to stop with you. But I’m wondering how much of the findings in this report are attributed to previous employees. Because you’re looking at IRS quarterly reports not filed and you’re looking at several things. And I’d just like to hear your thoughts on that. 

Shawn Randall Yes. When I became mayor, sir, in 2019, we was behind on taxes then. And not to put all of the taxes on the prior administration, it’s still some taxes that we’ve accumulated since I’ve been mayor, that we haven’t really had a chance to get a hold of because we’ve been kind of concentrating on the past taxes. 

Once again, when I first became mayor, that was one of the things that I also looked at. And we started out strong, sir. I was real eager, started paying back a little bit to the IRS. And then once once again, just kind of got off track on it. You know, it’s no excuse. I mean, I have a table full of stuff that I got it to cipher to try to get back on track. But yes, that is definitely one of the things that we need to definitely get on track again and start paying down. 

Senator Kim Hammer What’s your total city budget? Do you know right off? 

Shawn Randall No I don’t. 

Senator Kim Hammer Okay. As far as the ability to repay and not fall behind, you have enough income to be able to meet your obligations, do you think? 

Shawn Randall We could always use more. I’m not going to say it’s an excuse to say that we can’t pay anything. But it would always be a great help if the city was able to do a little more. We the saw mill just opened up back down there. So I think we’ve been receiving some taxes from the saw mill, which has been awesome to us. So no, sir, we just, whatever funds that the city is getting, we’re just going to have to allocate some of it to try to pay back some of the things that the city owes. 

Senator Kim Hammer Okay. Thank you. 

Senator Matt Stone All right. I’m sorry, Representative Dalby, go ahead. 

Representative Carol Dalby Thank you, Mr. Chair. I’m just curious. I quickly added up, and it’s rounding, but if you take the turnback and you take the exceeding the appropriation, your expenditures exceeding that, what you owe the IRS, and you’re up to $100,000 that you owe. And this is dating back all the way 10 years nearly that you’re owing. 

So I guess really my question is, have you ever considered, the city ever considered just dissolving and letting the county start taking over some of the responsibility? That type of thing? Because we’re talking $100,000 in a town that’s 222 people, according to our report. So I understand, you said there’s problems and you’ve taken over. But you’ve been there since, what, 2019? 

Shawn Randall Yes, ma’am. 

Representative Carol Dalby And so I mean, it just seems to me that this is a mountain almost too high for this town to climb. And at some point in time, these bills, they’re due. I’ll get to my question. Are you raising taxes? Are you raising water rates? I mean, what are you doing to raise the money to get this all paid back? 

Shawn Randall Yes, yes, ma’am. You saying $100,000 in taxes? 

Representative Carol Dalby No. When I look at you paid some back on your street fund. That was 19 and you paid it down to 16. So that’s about $3,000. So if you take that and then you had general fund expenditures that were in excess of the budget and you add those up. That’s roughly 40,000. And then you have the disbursements that were over the amount, that was around 10,000. 

You haven’t paid the Dallas County Treasurer for election costs for the years 23, 22, 201, well, f14 through 22, and then forward. So that’s not been paid. And then you had the IRS, just the IRS, not talking about the state, that’s right at $30,000. So I mean, my question is, that’s a lot of money, and you don’t have a lot of people. What are you doing to raise the money to pay these entities back? 

Shawn Randall Okay. When I first became mayor, one of my things was just looking through the city of Carthage, we didn’t have a tax. And so I worked hard and I got the tax passed, got it put on the ballot. Never have been done in the city of Carthage’s history. So I got that done. And right now that’s generating, by the grace of God, anywhere between, I don’t know– the checks that the city has received, anywhere between I guess 2,600 and 3,200 month. 

So that was a real big thing for the city to try to generate cash to try to take care of these bills. Some  of those numbers, I think, is kind of– I’m not saying, I’m not going against what you’re saying as far as how the numbers add up. But as far as what I’ve looked at for the city of Carthage is, I think the city of Carthage can definitely get back on track. When you come in, one of the biggest things that I thought about, ma’am, and I hate to kind of get off track, was one of the things that I saw when I came into it, I didn’t realize how much we were behind. S

o I did a lot of, was a lot of miscellaneous stuff, just small stuff, leaving the gas on inside the city hall during the summer. So I cut down on that. And the city of Carthage, we actually saved up  some money. Then we got embezzled. One of the clerks that we had there, all that money and all the accounts that we had saved up with the plans that I implemented– first, I started inside the city first. 

Okay, what are we doing here that you guys are not keeping track of that normally adds up at the end of the year? So I cut that down. Okay, we got a bank accounts up, and we was moving real, real good. All of the plans that the tax was passed to generate money, because my whole thing was, hey, we gotta pay down some of this stuff. Then we got embezzled for over $50,000. 

And I hate to rear off here, the bank put the signature card in wrong that gave this clerk the opportunity to go to Little Rock and he drawed out all cash. So we went back and forth with the bank. So that just basically wiped away everything that I worked hard hard for. 

Okay, so now after that happened to us, now I gotta go back into this and say, wow, man, you know, Lord, I pressed hard. And it is one of them things where I know what the city needs to do. I believe in my city. And I believe that we’re going to get on track. So back to your question, ma’am, as far as that, the tax was passed, which is a great, great thing. And we’re going through other little things that we have talked about as a community to try to get some extra funds in there to definitely knock down on the debt that the city of Carthage owes. 

Representative Carol Dalby Thank you. I appreciate that. My suggestion is you might consider dissolving as a city. That might be the most helpful thing. Thank you. 

Shawn Randall Appreciate it. Thank you, ma’am.

Senator Matt Stone  I believe Representative Rye has a question. 

Representative Johnny Rye Yes, sir, I do. And thank you, Mr. Chairman. Sir, on page seven, about halfway down through paragraph number two, it says in prior engagement, $800 was transferred from the general fund to the street fund in 2022 and 21. The town transferred $400, which is 2 percent of the general fund revenues. 

And then it went on to do 5 percent, which is 1,300. Sir, it sounds like the budget’s only about $20,000 a year for the general funds. Is that possible. Because that $400 represents 2 percent. And if you add that up it’s $20,000. 

Staff That’s correct. 

Representative Johnny Rye I just don’t understand how you can operate. 

Shawn Randall I think it’s a little more than that with some of the monies that the city gets. But if that’s numbers that you have, I’m not quite sure an exact number at the moment. But the city can operate. I don’t really think it’s a issue of can we sustain. Through the plan that was implemented, like I said earlier, it was funds that was generated. 

Like I said, when I go back to the tax with the history of that city, and I’m not bragging on anything, it was just something that I believe that the Lord gave me to come up with some ideas. And when I assessed it, it says, hey, the city has never had a city tax. And so as I assessed it, I said, well, if we get this city tax passed and everything, that’ll be more funds. So as far as you know, the city just shut down? No, no, no. I don’t think it’s that serious. I just think it’s more of getting everything back on track. Y

ou know, when you operate in a small city like that, just like you guys know, for these positions that you need help with, sometimes you don’t keep people on. And most of the time, they’re not really per se trained. So it’s no excuse. But it is just one of them things that sometimes the mayor winds up doing a lot. And I work a full-time job, you know. It’s no excuse. 

But I think that once we get back on track, when the $50,000 was stolen from us, that we got not a penny of that back. Well, excuse me, sorry about that. I think they gave us back the ACH debits because he took our debit card and tried to do some purchases, and those were the only funds that they gave us back. So the funds that we had saved to try to handle some of the business and move forward as a city, those were snatched from us. And so when those were snatched from us, it’s like boom. Wow, why did this happen? But it happened. 

Senator Matt Stone Yeah. I want to recognize– I’m sorry. I want to recognize Senator Hammer. I believe he has another question. 

Senator Kim Hammer And, Mayor, you may have just been talking about, what funds were you talking about being snatched away from you? 

Shawn Randall General funds and street funds. Is that attributed to, if I’m looking at my information right, you’re also on the water audit report, correct? 

Shawn Randall Yes, sir. 

Senator Kim Hammer And so you’re having your funds withheld now? 

Shawn Randall Yeah. No, just on the– I think right now it’s just the street side fund, which is the turnback funds. Those are being, yes. 

Senator Kim Hammer How much is that? Is that that 19,000 or part of that? 

Shawn Randall No. 

Senator Kim Hammer How much are you having withheld? 

Shawn Randall It’s different amounts. How much it can be, $1,500 turnback check, how much it can be an $800 or $900 turnback check. But those, you never know what the state is going to send you, , as far as those amounts go. But yes, those are being held back, sir, until we get the water audit done. 

Right now we’re working on the water audit. We’re in the process of doing it now. And so we  had to get a loan. We used to have a guy that would that was local, that did our water taxes for years. Actually, he was on the taxes before I became mayor. And I’m not quite sure what qualifications that the guy had. I’m not saying– but and somehow they wasn’t done like they’re supposed to have been done.

And so we kind of fell behind there. And so, but now we’re in the process to go back to these prior years that we are behind to get that fixed. Actually, we have to do a little loan in order to get that audit done. So right now we’re working with Communities Unlimited. They’re assisting us with this process, and so that is moving forward. 

Senator Kim Hammer  All right. Just curious, how much did you have to borrow to get your audit? 

Shawn Randall I think it was like around $6,000. 

Okay. So in addition to what you gotta pay back, you gotta pay back that 6,000 also, right? 

Shawn Randall Yes, yes. Yes. Whenever that follows through, yeah. Whatever payments that is on that, I’m not quite sure at the moment because we’re still working on completing that whole deal. 

Senator Kim Hammer And then one other thing. The $50,000 you mentioned, and I’m going to use the word embezzled, is that a fair word to use? 

Shawn Randall Yeah. 

Senator Kim Hammer Were there criminal charges and prosecution? Or where are you?

Shawn Randall Yes. Charges was unfiled and they’re in the process of, I don’t even know if– I don’t even think he’s been to court yet. But they’re, as they say, I guess they’re in the process of trying to prosecute him or–. I’m not sure. 

Senator Kim Hammer How long ago has that been? 

Shawn Randall That was last year. 

Senator Kim Hammer I’m sorry, last year? 

Shawn Randall Yes. 

Senator Kim Hammer Okay. And the 50,000 just vanished overnight or over a period of time? 

Shawn Randall Yeah. We missed a statement. The bank didn’t get us the statement. And prior to that, he had went on a spree, about a two-week spree. How I actually found out about it is I called the bank. One of my street workers, he had to go get some parts for the tractor. And he called me. He said, Mayor, he said, man, he said, is there a problem? I said, a problem? And what? He said, man, he said, they wouldn’t let me get the part. I said, man, I said, we got it’s almost like 40 something thousand dollars in there, man. I said, that shouldn’t be a problem. 

And so I called the bank. And this is the funny thing about the bank. When I tried to get the money back, I called the bank and I said, I said, ma’am, I said, this is Mayor Randall from Carthage, which I see him, and it was a funny weird thing. She said, I can’t verify you. She said, I know who you are, Mayor. I said, I said, what do you mean you can’t verify me? 

So lo and behold, what the problem was, when we added this guy that embezzled, stole, rob, how we going to say it– every time I think about it, I get– but when we put him on the signature card, they put him as the whole signee. My name wasn’t even on it. And so that’s when he went to Little Rock, that’s how he walked in the bank and got $50,000 cash money on 13 different times. A

nd I went back and forth with the bank. And I walked inside the bank. I said, I said, Why is my name not on? Well Mayor, we gotta fix it. I said, You gotta fix it? I said, is that y’all? But yes, yeah, yeah, that was the issue, sir. 

Senator Kim Hammer All right, so they’re working. It’s being pursued and hopefully you can get the money back. All right. Thank you. 

Senator Matt Stone All right, I want to recognize Senator Crowell. I believe he has a question.

Senator Steve Crowell I’ve got kind of a question-slash-conversation with the committee here. We’ve touched on, they’ve got basically an $18,600 held back already. They owe 16,000. It looks like they haven’t hit their 10 percent yet. So I’m kind of in the thought process of making a motion to keep their hold back even when they get their water done and catch it up to 10 percent as of, as of date. 

Shawn Randall Actually, sir, it’s 12,000. 

Senator Steve Crowell But that would get them caught up at least in that part. Because I mean, they’re not even close to 10 percent. Feedback, anybody? 

Senator Matt Stone Senator Crowell, I’d like to give a little feedback. And, mayor, it sounds like you inherited some problems. There’s been some more problems, some embezzlement. It seems like you’ve made a valiant effort to try to do the right thing. 

Shawn Randall Always, sir. 

Senator Matt Stone But my original question is what is the city of Carthage’s plan to repay the money from the general fund back to the street fund? And we’ve heard a lot of history and a lot of talking around, but we need a plan that we can reduce to writing. And I think Senator Crowell’s in the process of making a motion or has made a motion, but it needs to incorporate everything, even maybe catching you up. And then what you can pay back monthly and still have money to operate on your city. So we’re getting long in the tooth. We need to come up with a plan.

Shawn Randall Yeah, that plan, sir, actually started– well, started when I first became mayor. Like I said, we paid back roughly about $3,000 on that. And that was an issue that I inherited, but I did move forward and tried to rectify that. We paid the $3,000, I think it was $3,000 and something. We knocked it from $19,000 down to $16,000. And with other things, we just kind of just fell off of it trying to fix some other issues. 

But we have definitely been back on that process the past two months. I think I’ve moved like $4,000, and that’s what I was referring to the senator there. So now it’s $16,000, so now it’s down to like $12,000. And so we have started back the plan to pay that, because that was one of the findings that I talked to the auditor about. 

And I told her, I said, I promise we will definitely start that. And so I’ve started that and, like I said, the bill now is like $12,000 owed back to the street fund. 

Senator Matt Stone Let me recognize Senator Crowell again.

Senator Steve Crowell  Senator Stone, I like your idea. So what we need from you today is, can you pay roughly $170 a month back to the street fund? 

Shawn Randall Yes, sir. Yes sir. 

Senator Steve Crowell Okay, because that puts you at about 10 percent. That’s a plan that needs to be put into action next month. 

Shawn Randall Yes, sir. 

Senator Matt Stone We have a motion from Senator Crowell. Do we have a second? Second. Any discussion? 

Representative Carol Dalby I have a question of the Senator. 

Senator Matt Stone Sure.

Representative Carol Dalby If I may inquire of him. 

Senator Matt Stone Yes. 

Representative Carol Dalby My question is what would happen if they fall back and don’t make– maybe it’s more for Mr. Archer. What would happen, let’s say that this is what we adopt, which is what we often do with cities to pay the 10 percent back. That’s not a problem. But given their history of not paying, what happens if they don’t pay? 

They miss a payment, they don’t pay next month, or they don’t pay whatever, what’s our next step? Because I think they need to understand where we are and what our next step will be. Because I just don’t ever see them digging out of the hole absent the street fund. But if Mr. Archer could answer my question. 

Staff 27-72-07 says you got two choices. They can self impose a 10 percent payback of general fund revenue. In this case, their total revenue for general fund was $19,000 and some change for 23. So we’re looking at that’s where the 170 come from. That’s round numbers. If you fail or do not meet that obligation, the law allows this committee to then withhold all street fund revenues until it’s paid back in full.

Now, as the mayor stated, they’re not getting any street fund revenues right now due to the lack of a water audit. So what that would be was, let’s say they got their water, I would think the committee could still impose that. And then if they got their water audit, then they still wouldn’t get their street fund money back until they got that done if they defaulted on that plan. Does that make sense? 

Representative Carol Dalby Yes, that makes sense. I just wanted to make sure everybody was clear. And the mayor understood what our next steps would be. 

Senator Matt Stone Senator Hammer

Senator Kim Hammer Like to direct to Mr. Archer, if you would please. 

Senator Matt Stone Yes, please. All right. 

Senator Kim Hammer The comment you just made, you said this committee could. But history reminds me, I think we did that before. And are we talking about this committee or are we talking about the full Legislative Audit committee? 

Staff This committee did it on another city. They stopped their turnback and it took them about nine– well, 11 months. They had one more month left before they– because it’s just for a year. They escrow it for a year. I misspoke. They escrow it for a year. And if they’re not paid back in full in a year, they lose it. And that other city was at the eleventh month and they paid back in full. And they got all their money back. 

Senator Kim Hammer Right. But I’m talking about, whatever action we take in here, it’s this committee. 

You’re going to have to ask someone with a law degree on that. But it’s my understanding that this committee makes recommendations. My understanding, keep that in mind. And when a chair report is approved, the full committee does it. But that’sjust– I probably overstepped there. But if you need an answer to that, we can get you one. But I can’t give it to you.

Senator Matt Stone All right, Senator Crowell. Just so for my own clarification, you started off talking about holding the turnback money. 

Senator Steve Crowell No. 

Senator Matt Stone So we’re not going to do that. 

Senator Steve Crowell We’re going to go with this motion. 

Senator Matt Stone So your motion, for the record, so I’ll make sure I understand and there may be others that need clarification too. 

Senator Steve Crowell So for the record, the motion is, they will pay $170 a month or 10 percent and get that on the books next month. And then we will follow the rule 20-whatever it was, the 27-70-20 from there on. 

Senator Matt Stone Mayor, I believe you said a while ago that you can meet that obligation? 

Shawn Randall Yes, sir. 

Senator Matt Stone All right. All in favor say aye. Any discussion? Seeing none, mayor, we have a plan. Hopefully you can stick to it and you won’t have to come back to the end of the table again. 

Shawn Randall Yes, definitely, definitely. 

Senator Matt Stone One more deal, I’m going to recognize Representative Beaty. I think he’s wanting to weigh in on it. 

Representative Howard Beaty Thank you, Mr. Chair. I just have a question. One, the mayor’s talking about an embezzlement or monies missing from the city, but I didn’t hear a date when that happened. So I guess my question is to Leg Audit. Did they note these transactions when they were in? Or is this at a different time and in a different time period that this happened? And has that been referred to the prosecuting attorney or law enforcement? Maybe the mayor can speak to who his city attorney is and also answer a question. The loan that you received, did that come from a bank? 

Shawn Randall Yes, sir. To your first question, yes, which, I’m down in Dallas County, sir. 

Representative Howard Beaty Yes, sir. I know where you are. 

Shawn Randall And the, yes, the prosecutor attorney has it. They, when we first filed charges on him, they locked him up. He bailed out. This was in April of last year, April, April/May of last year. And I think they finally got him. I mean, I want to say they picked him up, July, maybe? July, August, like a couple of months later. 

And so I’ve tried, called the prosecuting attorney several times. You know, I haven’t got a call back from him. So as far as I know, they have him on the docket. What they plan on doing with him, I have no idea. Go ahead. 

Representative Howard Beaty That was just my question, to see if it’d gone to a prosecuting attorney because it stands to reason for me just sitting here, and I’m not a member of the committee and I thank you for allowing me to speak, that if the city had $50,000 sitting in an account, they could have squared up a large percentage of what we’re talking about here for past past errors. 

And so, mayor, I’m going to tell you just what they told you. Take care of the current stuff. Don’t start focusing on the back stuff. Make certain you’re current on what you’ve got going on. And then take care of some of this other stuff. If they had 50,000, a lot of this should have been wiped out. 

Shawn Randall Yes, sir. Well that 50,000, that was between both accounts, the street fund and the general fund. It wasn’t just $50,000 just sitting in one fund. So he almost emptied out both funds and that’s what it basically totaled. But yes, you are right, sir. Appreciate that and I guess we have to also focus on the present issues, just like you said, and also pay some attention to what we owe too. So yes. 

Senator Matt Stone Representative Beaty, does that answer satisfy your question? 

Representative Howard Beaty It does. It’s just something the committee’s going to have to look at here probably next year. You’ll be looking at this in the next audit. 

Senator Matt Stone Well look, Mayor, no one here is unsympathetic. But sometimes life happens and when it does you can’t not do nothing. You have to gather up your resources and keep moving forward. So that’s what we’re asking of you and the City of Carthage today. And I believe Representative Ladyman has a question. Thank you, Mr Chairman. 

Representative Jack Ladyman Well, Mayor, you’ve got quite a mess here. Sounds like you’re working on it though. But do you  know what your monthly income is to the city? And do you track that every month? 

Shawn Randall Yeah, like I said, as far as, our funds are being held back on the street side. 

Representative Jack Ladyman No, no. I’m talking about how much money do you have coming in each month? 

Shawn Randall Yeah, yeah, that’s what I’m basically saying. With the tax revenue that’s coming in, just like I was stating earlier, those amounts fluctuate anywhere between 2,600, t3,200. And then the turnback money, also to the city side, like I was saying earlier, those fluctuate too. You know, some months it may not be but 500. 

Some months it may be like 1,000. So it’s never– I just can’t sit there and just tell you the exact number because I don’t even know what the checks are the next couple of months. Well, the December checks is. But yeah, we do keep up with it.

Representative Jack Ladyman You have a monthly report that you look at maybe ten days after the month ends or something like that? Do you know how much your income is after a few days? 

Shawn Randall Not right offhand. 

Representative Jack Ladyman I would suggest you do that. You figure out what your income is each month and you figure out what your expenses are each month. You can do that the 15th of the next month if you want to. And then you will know, and, like the representative said, pay your current bills. Pay your current bills.

And the amount you have left, when you subtract your expense from your income, that’s what you use to pay off your bills. That’s the only way you’re ever going to dig out of this. And it’s going to take you a long time. But if you do that, you can keep your city.  If you don’t do that, you may not be able to keep your city. Thank you. Thank you, Mr. Chairman. 

Senator Matt Stone All right, and I want to recognize Senator Mark Johnson. I believe he has a question. 

Senator Mark Johnson Thank you, Mr. Chairman. And Mayor, I commend you for being here and being candid with us and trying to fix this. Representative Beaty is a banker and a businessman and understands cash flow and things like that. So I encourage you to listen to his sage advice. Representative Ladyman is a former mayor of a small town that’s dealt with these things. 

So he’s been in your shoes and understands what you have to deal with. But Mr. Chairman, I wish I had a nickel for every situation similar to this that I’ve seen come through this committee since I’ve been a member of it. I think we could give it to the mayor and all his back payments would be covered because we see this, not just a lot, we see it way, way, way too, too much. 

And so I turn to all my colleagues on the committee and say, when you’ve seen this, they say insanity is doing the same thing over and over again and expecting a different result. I think we’ve got to find some long-term solution to this. And I’m not trying to punish any municipality or any other agency that might have this. But when you incorporate, even if it was done before you were born and all that, but being a city official, you take on certain responsibilities that you can’t just ignore. 

And as you said, in fact what Representative Ladyman just said, you may lose your city if you can’t do that. You can’t just continue to kick a can down the road and think that everything’s going to straighten out. The responsible thing for the town of Carthage is the things that Mayor’s trying to do, but the responsible thing for the General Assembly is to come up with a long-term solution for this where we’re not seeing this same same problem over and over and again and expecting a different result. 

So I just say that in general for the members of the committee to consider. I certainly don’t have a solution on the tip of my tongue, but I think collectively that we can make some pretty good progress toward it. And I encourage all of us to work together on it. But Mayor, thank you for being here and trying. Keep trying. But you got some good advice today, and I encourage you to listen to it. 

Shawn Randall I will chair. I will. I will. 

Senator Matt Stone Mr. Archer, I think you want to weigh in on it. 

Staff Thank you, Mr. Chair. To Representative Beaty’s point, on page seven, the first finding under the mayor, as of report date, Arkansas Legislative Audit and law enforcement agency are in the process of investigating certain financial transactions within the city to be included in a successful report. 

We don’t comment on ongoing investigations. This happened after our audit year, but we did think it was pertinent enough to include it in the report so that the reader would know that we were aware of it, but we can’t operate on it. But very soon, January, February meeting, we’re going to have it here. But thank you for pointing that out. 

Senator Matt Stone All right. Well, Mr. Mayor, I think that concludes everything. But just make sure nothing that’s said or action taken here today is punitive in nature. We’re just looking for solutions to help get you back into compliance with the law. 

Shawn Randall Yes, sir. Thank you. 

Senator Matt Stone Do I have a motion to file the report? Motion. Second. All in favor? All opposed? Motion is passed. File the report, please. 

Staff Going moving on to item C on the agenda, discussion of non compliance with municipal accounting law for the city of Adona. With the chair’s permission, I’d like to go ahead and present their report from page five, please. 

Senator Matt Stone Please do. 

City of Adona

Staff On page five, under reports referred to the prosecuting attorney and the AG’s office for the City of Adona 2024. Under the recorder treasurer, county procedures for municipalities are set forth in Arkansas Code Annotated 1459-101 and 119. The city was in non-compliance with these codes and other proper accounting procedures as noted below. A review of disbursements revealed inadequate supporting documentation for tested disbursements totaling almost $2,400. 

Subsequently, the city provided documentation to support $207 of these disbursements. However, the validity of these remaining almost $2,200 cannot be determined. This is a repeat finding in the previous three reports. Cash receipts and disbursement journals were not properly posted to include all items of income and disbursements. This is a repeat finding in the previous three reports. 

Fixed asset listing was established, but records were not updated. In addition, the city has not adopted a fixed asset policy. This is a repeat finding in the previous two reports. Bank reconciliations, bank accounts were not reconciled on a monthly basis. This is a repeat finding the previous three reports. I believe Mayor Mark Cossey and recorder treasurer Carolyn McAllister is here to answer questions. 

Senator Matt Stone Mayor, would you and your associate state your name and position for the record, please? 

Mark Cossey Yeah, my name is Mark Cossey, Mayor of the City of Adona. 

Carolyn McAlister And I’m Carolyn McAlister, Recorder and Secretary or Treasurer of Adona. I’m not a city clerk. I was just hired as a secretary treasurer. 

Senator Matt Stone All right, thank you. Mayor ,do you have a statement to make? 

Mark Cossey Well, I really don’t. Just figure out what we need to do to make it right. 

Senator Matt Stone All right. Members, do you all have any questions? All right, Senator Hammer. 

Senator Kim Hammer Thank you. And thank you all for being here. Do you guys work with the Municipal League very much as far as getting guidance from them or reaching out to them? Or do they reach out to you?

Mark Cossey  We’ll reach out to them as needed. Yes. 

Carolyn McAlister Well ,may I say something please? All of this has to do with the bookkeeping accounting part. So that’s me. And I was informed about this last year. And I did, I thought, what was correct and like creating a journal. And our disbursements that don’t have receipts, they’re like from Amazon orders we had. And we did not make copies from the Amazon orders to show a receipt. We had the visa bill, but not the receipt for the particular items. So I’ve been informed by this auditor of what I need to do. And I can explain each one if you would like me. 

Senator Kim Hammer Oh, I think that’d be all right. I mean, the tone is, you want to get it right and that’s the right tone to have. I was just curious if, when you have questions, do you initiate reaching out to the Municipal League or to your auditor that you work with from Legislative Audit?

Carolyn McAlister This time I had like four or five different ones that I talked to. But Mrs Smeckin Becker, I spoke with her today. And now she has informed me that I can call her at any time to find out any situation that needs to be corrected. 

Senator Kim Hammer That’s great. Okay. Thank you. 

Carolyn McAlister So I’ll start with the first item. 

Senator Kim Hammer Well ma’am, for my part, if you’re doing that because of questions I asked, I’m okay. 

Carolyn McAlister Oh, okay. 

Senator Kim Hammer Unless the chair wants to hear. 

Carolyn McAlister Okay. 

Senator Matt Stone No, I believe we’re good. Well, members, I believe– Senator Johnson, you’re recognized.

Senator Mark Johnson Thank you, Mr. Chairman. I’ll be brief. This may be a staff question. Mr. Archer may know. On the finding about the mayor and recorder treasurer being compensated  with a 1099 NEC rather than a W2. And I understand the logic. However, the question to the staff is does the IRS allow that? 

They define what an employee is. And it doesn’t matter if that employee is paid one dollar a year or a hundred thousand a year. You have to file. They’re a W2 employee. Am I correct on that assumption? 

Staff We’re not IRS experts, but that’s our understanding. That’s our understanding, yes. The W2 is required. That is correct. 

Senator Mark Johnson Okay. And all I’m saying to advise the recorder treasurer and the mayor, H&R B block didn’t do you any favor. 

Carolyn McAlister No. 

Senator Mark Johnson Because they don’t have the right to make that decision. And I know it might cost you a little more in the administrative side to have it 1099 and simplify things but you gotta follow the law. And that really jumped out at me, and I just wanted to make sure I was reading it correctly and not being tough on them. Thank you, Mr. Chairman. Thank you, Mayor, Recorder Treasurer. 

Carolyn McAlister Yes. Mr Chairman, every time I took the things to H&R Block, they said, you don’t need a W2. I said, Yes, I do, because the auditor said I did. And they did not do it. So I have reached out because of Mrs. Smackenbecker to the Arkansas Municipal League and we have a call in and they are going to return the call to me and let me know how to deal with this instead of being $1,000 out of the city’s pocket for H&R Block to do W2s. 

Senator Matt Stone All right. Senator Johnson has a follow up. 

Senator Mark Johnson Just a quick follow-up, Mr. Chairman. I seem to recall years ago that H&R Block’s TV ads said that if they make a mistake that costs you a penalty or interest, they’ll pay that penalty and interest. So you might check back with them. They’re a big company, probably could cover this cost of fixing some of these things for you if their guarantee that I remember from years ago still applies. 

And I would almost bet that it does. This is clearly, you said, I need this. And they said, no, you don’t. So they were incorrect. And some supervisor would probably stipulate to that and maybe help you out. Thank you, Mr. Chairman. 

Senator Matt Stone All right. Well, I would just say remember one thing. When you’re talking to H&R Block, they’re working for you. You’re not working for them. So get them to do it like you want it. That way you know you’re in compliance. And don’t draw down the ire of the IRS and have another problem. Representative Rye, do you have a question.

Representative Johnny Rye Yes, sir, I do, Senator. I think I’ve got something that will help them. I was speaking with Joe a little earlier, and each county– and I thought cities were basically the same way– but a fixed asset list. In other words, we used to have something like five hundred, I think it went to $1,000. 

In other words, if you buy anything that’s $1,000 up and above, then that has to be put on a list. And that list is given to the auditors every time they visit the office. So all you gotta do is keep up with that as you go, and I believe that would really help you. 

Carolyn McAlister Yes, the last mayor, we had the asset list from him. And then when the auditor contacted me we tried to fix that and give it to the auditor. 

Representative Johnny Rye Shouldn’t be hard. Shouldn’t be hard. 

Carolyn McAlister I don’t know, I’m dealing with a bunch of men. You know? I try. 

Senator Matt Stone Motion. Do we have a second? All in favor, say aye. Any opposed? The ayes have it. I’m saying y’all have 60 days to get your house in order or your turnback money will be held. 

Carolyn McAlister Okay, and we contact Mrs. Smeckenbecker, is that correct? 

Staff That is correct. Any time between now and the 60 days, which will be February 11. And then at that time, if not, you’ll be asked to come back. So at any time. And she can show you exactly what we’re looking for to get you on the right track. 

Carolyn McAlister Okay. Thank you. 

Senator Matt Stone Thank you. You’re dismissed. I need to make a motion to file the report. Motion. Do we have a second? Second. All in favor say aye. No, any opposed? Please file the report, Mr. Archer. 

Town of Blue Eye

Staff Mr. Chair, we’re down to item G, review of reports. Starting on page one, we have 11 reports deferred from the previous report of the previous meeting. On page one, we have the town of Blue Eye, 2024 and 2023. Under the mayor, the annual financial statements were not published or posted as required by Arkansas Code. This is a repeat finding. Budgets were not adopted as required by code. 

It’s a repeat finding in the previous five reports. The government body did not review the prior report or accompany comments at the first regular scheduled meeting following the receipt of the report as required by Arkansas Code. This is a repeat finding. Adequate supporting documentation was not maintained for all disbursements as required by Arkansas Code. Similar finding was issued in the previous report. I believe we have Mayor Sondra Ebbie here today to answer questions. 

Senator Matt Stone Mayor, would you state your name and position for the record please? 

Staff Ebie. My apologies. 

Senator Matt Stone And you’re the mayor? 

Sondra Ebie Yes. 

Senator Matt Stone All right. Thank you. Do you have a statement that you would like to open with, please? 

Sondra Ebie I do not. I’m just here to ask for forgiveness on the things I did not know.

Senator Matt Stone Well, that sounds like a statement. All right, members, are there any questions of the mayor? All right, Senator Hammer, you’re recognized. 

Senator Kim Hammer Mayor, thank you for being here. I’ll ask you the same question I asked the previous. Do you know who to contact when you have questions, as far as Municipal League or who the auditor is? Do you know who that is now? 

Sondra Ebie Yes, I do now. I wasn’t aware that I could contact my auditor before he comes and picks up all my stuff to make sure I had all my ducks in a row. So that is my fault. So I’m going to use him to the best of his ability next year and throughout the year. 

Senator Kim Hammer Okay. I have a question of staff, please. 

Senator Matt Stone Sure. Proceed. 

Senator Kim Hammer Does Legislative Audit notify the municipalities of who their point of contact is if they have a question? Or is it just call into the number and it’s randomly assigned? Or what’s the communication link between Legislative Audit and these municipalities if they got a question? 

Staff We’ve divided the state up into– we’ve changed it– I think it’s seven districts now. And there’s a supervisor over each district. That supervisor assigns all the engagements in there in that district and they assign a particular auditor as needed in there. But the supervisor is over all engagements and that individual is very knowledgeable of all their engagements within that district. So that would be their point of contact throughout the year.

Senator Kim Hammer How long have you been mayor, madam? 

Sondra Ebie Three years. 

Senator Kim Hammer Three years. Did you know in a three year period who you were supposed to contact or was it as a result of this that–?

Sondra Ebie Well, I knew that we would be audited. But they just said they’d pick up the paperwork. The auditor did call and we became friends, and he said, I’ll pick up your stuff. And I said, Okay. But I wasn’t aware of all of the repetitive that I needed to do. There was no class that I went to. I’m a volunteer. 

So this isn’t a paying job for me. But I love my little town and I don’t want it to be dissolved. So I’m learning, and he’s been very patient. And he’ll be like, No, you needed to do two receipt books and these are what we were messing up is just the I’m like, we have one. You know, I thought common sense would play into that a lot for such a small town. And now I know that everyone has to have two receipt books and you have to put down that you talked about the audit in the meeting. I just assume that would be public, like that you would know that we talked about the audit. So yeah. 

Senator Kim Hammer That’s fine. Part of the reason I asked that line of question is because, and we can have an offline discussion, is making sure that the municipalities know who it is that they’re supposed to contact. So when, if there’s a doubt in your mind, you know who to reach out to. That’s the reason. And I appreciate you being here and appreciate the tone. Thank you. 

Senator Matt Stone Representative Ladyman.

Representative Jack Ladyman Thank you, Mr. Chairman. Mayor, have you ever gone to the Municipal League meetings, like the annual meetings? 

Sondra Ebie I’ve attended two so far. Since I am a volunteer, it has to fit in with my work schedule as well. But yes, and I have reached out to them on several occasions and they’ve always been more than gracious. 

Representative Jack Ladyman Yeah, well, you learn a lot from the other mayors if you go to those meetings. 

Sondra Ebie Yeah, in our small area we’re up by the state line. I have reached out to the other mayors and they’re always more than willing to give me advice on things, but this is a learning process. 

Representative Jack Ladyman So how big is your city? 

Sondra Ebie We have 34. 

Representative Jack Ladyman So do you have an income? 

Sondra Ebie Yes, we do. We do have some. It’s a very small income. But our city might not be big, but we have lots of things going on in that town. And so we have to keep the money flow coming so that we can keep the soccer fields for the kids and the square for the community.

Representative Jack Ladyman Well, the Municipal League is a very good source if you have a question. 

Sondra Ebie They are. 

Representative Jack Ladyman Thank you. 

Sondra Ebie Thank you. 

Senator Matt Stone Are there any more questions? So what is the will of the committee? Motion to file. Do we have a second? Second. All in favor, say aye. All opposed? Motion passes. 

Sondra Ebie Thank you. 

Senator Matt Stone Thank you. You’re dismissed. 

Staff Continuing on page one through page three, we have seven private reports that were previously deferred because we were waiting on good responses. We’ve received those responses for Compton; Dermott, 24, 23, and 22; Evening Shade, 23, Franklin, 24; and Franklin, 23. Staff recommends we file these reports. 

Senator Matt Stone Motion to file the report. Second. Second. All in favor, say aye. Aye. All opposed. File the report. 

Staff On page three, we have three reports deferred from the previous report that we still have not received proper responses for. Staff recommends we defer these three reports. 

Senator Matt Stone Motion. Second. All in favor? All opposed? Motion passes. Defer, please. 

Referrals to Prosecuting Attorney

Felsenthal

Staff On page four, we have one report that we’ve certified to the bond board and referred to the prosecuting attorney and the AG’s office. And that is the town of Felsenthal, 2024 and 2023 under the recorder treasurer. In 2024, the recorder treasurer paid herself almost $1,800 in excess of appropriated salaries without supporting documentation in non-compliance to Arkansas Code. No budget was provided for 2023, therefore we were unable to determine the authorized salary for the recorder treasurer. If there are no questions, staff recommends we file this report. 

Senator Matt Stone Motion. Second. All in favor? Motion passes. File the report. 

Staff We have 13 reports referred to the prosecuting attorney and the AG’s office starting on page five. We have the Buffalo Island Regional District, which is for June 30 of 2025. This is a private report. During our audit, it came to our attention that two employees were overpaid in the form of additional payroll checks and unauthorized overtime by approximately a total of $15,000. If there are no questions, staff recommends we file this report. 

Senator Matt Stone Motion. Second. All in favor, say aye. Motion passes. File the report. 

Alexander

Staff Going to jump down to page six of the city of Alexander, 2023, under the recorder treasurer. The city did not have adequate supporting documentation. The city did not have adequate internal controls relating to the use of credit cards and other expenditures. Our examination of disbursements revealed the following. A council member who is not an employee of the city obtained a credit card in their name. According to the council member, the card was given to the police chief for purchases. 

From May of 23, when the card was activated, to November of 23, when the card was closed, the city paid over $8,000 for purchases made using the card. Of the $5,500 in payments we examined, over $5,000 of it did not have proper documentation to support a business purpose. Other disbursements examined totaling over $4,000 did not have adequate supporting documentation throughout. 

Therefore, the validity of these transactions could not be determined. That finding has been referred to the prosecutor attorney and the AG’s office. We have an additional finding for the district court clerk. And Clerk Janet Guest was invited today, but she’s in court today. So therefore, staff would recommend we defer this report. 

Senator Matt Stone Motion? Motion. Second. All in favor? Aye. Motion passes to defer the report, please. 

Delight

Staff We’ll jump down to page 10, town of Delight, 2024 and 2023. Review of disbursements revealed inadequate supporting documentation for tested disbursements of almost $24,000 and over $13,000 for 24 and 23, respectively. Subsequently, the town provided documentation to support these disbursements. 

Legislative Audit obtained documentation directly from the vendor. In addition, the town did not provide supporting documentation for disbursements of over $1,700 and $161 in 2024 and 2023, respectively. Due to the lack of documentation, the validity of these disbursements could not be determined. This report’s been referred to the PA and the AG. Staff recommends we file it. 

Senator Matt Stone Motion. Second. All in favor? Motion passes. File the report. 

Melbourne

Staff Page 11, City of Melbourne, 2024 and 2023, under the mayor. In July of 2023, a council member purchased eight acres from the city for $8,000. Prior to the purchase, in October of 22, the city advertised the sale of the property and solicited bids. The only bid received, which the city rejected, was from the council member. 

Nine months later, the council member verbally offered the city a higher amount, the $8,000, and the city accepted the offer. Recording of council meetings indicated the council member did not leave the room during the vote regarding the sale, and no documentation was available to confirm whether the council member participated in the vote. 

In addition, the city did not adopt authorizing ordinance allowing business to be conducted with the council member as required of Arkansas Code. So if no questions, staff recommends we file this report. 

Senator Matt Stone Without objection, we’ll file this report. 

Rison

Staff Page 12 with the city of Rison 2024 under the mayor. The city paid over $1,400 to the mayor’s spouse for bookkeeping services without an authorizing ordinance in apparent conflict with Arkansas Code. If there are no questions, staff recommends we file this report. 

Senator Matt Stone Without objection, we’ll file this report. 

Stephens

Staff Continuing on page 12, still under reports referred to the prosecutor and Attorney General’s office, we have the city of Stephens, 2024, under the mayor. On August 28, 2024, the city initiated an ACH transaction totaling just under $30,000 for an online purchase of what appeared to be an out-of-state vendor selling heavy equipment. 

The city discovered that the sale and vendor was fraudulent when the equipment was not delivered and reported the incident to Ouachita County Sheriff’s Office. As of the report date, the city has not recovered their funds. If there are no questions, staff recommends we file. 

Senator Matt Stone Without objection, we’ll file the report. 

Webbaseka

Staff Page 13 and 14 of the town of Wabbaseka, 23 and 22, under the recorder treasurer. Invoices and supporting documentation were not maintained for disbursements of almost $1,500 and over $5,700 for 2023 and 2022, respectively. Due to the lack of documentation, the validity of these disbursements could not be determined. This is a repeat finding. This finding has been referred to the prosecuting attorney and the AG’s office. If there are no questions, staff recommends we file. 

Senator Matt Stone Without objection, we’ll file the report. 

Other Reports

Williford

Staff Page 15 and 16. We have the town of Williford, 24 and 23, under the recorder of the mayor and the recorded treasurer. The payroll preparer invoiced the town and was paid $1,000 for performing additional services. These payments were not approved in the town council minutes or included in the approved budget. Additionally, we were unable to determine the amounts paid to the payroll preparer in 2024 due to the lack of payroll records. If there are no questions, staff recommends we file this report. Page 17. 

Casa Water System

We have the Casa Water System 2022. This is a private audit report. Records detailing the component breakdown of individual deposit transactions were not maintained. Therefore, we were unable to agree cash check composition of the deposits with the receipt information. Historical documentation was not maintained for customer billing adjustment transactions. We noted that the employee received an insurance supplement payment on a reoccurring basis for which management could not locate documentation specifying the terms of the agreement. 

Disbursements during the period for this supplemental health insurance payment totaled $6,000 for the year. If there are no questions, staff recommends we file this report. 

Senator Matt Stone Without objection, we’ll file the report. 

Elaine Municipal Waterworks

Staff Elaine Municipal Waterworks, 2024. It’s a private report. We found that the daily deposit amount did not agree with the daily receipt allocation reports. We selected a sample of 10 bank deposits and compared each of the corresponding daily allocation of receipts reports for agreement of total amounts. 

For the sample tested, the total amount recorded on the daily allocation of receipts reported was over $16,600. The total amount deposited for the bank records were $15,900, resulting in a difference of $735. We did not determine the cause of these differences as it is not within the scope of the agreed upon procedure. If there are no questions, staff recommends we file this report. 

Senator Matt Stone Without objection, we’ll file the report. 

Thornton Waterworks

Staff Continuing on page 17, Thornton Waterworks 2022, another private report. The following deposits totaling over $17,000 did not match the total of corresponding daily receipt reports. 

Senator Matt Stone Without objection, we’ll file the report. Oh, wait.

Representative Carol Dalby I don’t have an objection to filing, but I have just a quick question. 

Senator Matt Stone Sure, go ahead. 

Representative Carol Dalby Mr Archer, on this Thornton Waterworks, it gives the date and the deposit. Do you know how much they were off? We just don’t know or–? 

Staff The private CPA did not indicate. We have reached out on a similar incident with this CPA and he’s going to provide us, not on this report, but he’s turning one similar to that. And we’re going to get more detailed if he doesn’t. 

Representative Carol Dalby So it could be a couple of thousand. It could be a couple of hundred thousand. We just don’t know? 

Staff Well, it could be no more than $17,008 because that was the total amount there. So it’s between there and zero. 

Representative Carol Dalby I was just curious. Thank you, Mr. Chair. 

Greenwood

Staff We have eight reports with repeat findings. On page 18, we have the city of Greenwood 2024 under the mayor. The city did not solicit bids for the purchase of a street department truck in the amount of $61,000 in non-compliance to Arkansas Code. This is a repeat finding. I think we have Mayor Doug Kinslow here today to answer questions. 

Senator Matt Stone Mayor, would you come to end the table, please? Good afternoon. Can you state your name and position for the record, please? 

Doug Kinslow Yes, sir. Doug Kinslow, mayor of the city of Greenwood. 

Senator Matt Stone Do you have an opening statement? 

Doug Kinslow Guilty as charged. I just want to try to definitely tell the committee that we’re going to do our best to keep this from happening ever again. And I take full responsibility. 

Senator Matt Stone Do any of the members have a question of the mayor? All right, Senator Hammer, you’re recognized. 

Senator Kim Hammer Thank you. And thank you for being here, Mayor. I guess my question is, had this gone out for bid, what do you think would have been the difference of a compatible truck to this one? Or do you know?

Doug Kinslow I really don’t, but I I think it would have ended up the same. I think we would have probably acquired the same type of truck for approximately the same amount of money. Yes, sir. 

Senator Kim Hammer All right. Thank you. 

Doug Kinslow Yes, sir. 

Senator Matt Stone Without objection, make a motion to file the report. Motion, excuse me, make a motion to file the report. First and second, all in favor? Any opposed? It passes. Thank you, Mayor. Appreciate you. 

Harrison

Staff Continuing on page eighteen, we have the city of Harrison, 2024. District Court Clerk Sandy Wright was invited here today. She’s in court today. She asked if we defer to the January meeting where she could be present. 

Senator Matt Stone Without objection, we’ll defer this report. 

Staff Continuing on page 18, we have Carroll County, 2024. We invited the airport manager Mark Peoples here today. He has a conflict and he also asked to be deferred until the January meeting. 

Senator Matt Stone Without objection, we’ll defer this report. 

Staff On page nineteen, we have Izard County 2024. County Treasurer Warren Sanders was requested to be here and he asked can we defer until January. 

Senator Matt Stone Without objection, we’ll defer this report. 

Town of Banks

Staff Continuing on page 19, we have the town of Banks 2024 under the recorder treasurer. A review of the town’s payroll records revealed IRS quarterly 941 reports were not prepared, and the town did not remit payroll withholdings for reporting periods dated back to 2020. On September 26, 2025, the town remitted over $2,500 to the IRS for the year 2020-2018. And on September 29, 2025, the town remitted almost $2,700 to the IRS for the year 2019. This is a repeat finding. I believe we’ve got recorder treasurer Leah Vaya here today. 

Senator Matt Stone Hello. Would you state your name and position for the record, please? 

Leah Vaya Leah Vaya, treasurer recorder of the town of Banks. 

Senator Matt Stone Do you have an opening statement? 

Leah Vaya No, sir. 

Senator Matt Stone Do any of the members have any questions of Ms. Vaya? I make a motion that we file it. Or do we have a motion to file it? See a first and second. All in favor, say aye. Thank you. You are dismissed. 

Town of Fifty Six

Staff Bottom of page 19, we have the town of Fifty Six for 2023, 2023 and 2022. The mayor Ernestine McDaniel and recorder treasure Christine Byrd were invited here, and they asked if we would defer until January. 

Senator Matt Stone Make a motion to defer. Excuse me, make a motion to defer. Let me back up. Without objection. Well. 

Hampton

Staff There you go. I’ll get straight here in a second. Page 20 with the city of Hampton, 2024 and 2023, under the district court clerk. Bank reconciliations were not prepared for the district court clerk county account and the small claim civil accounts as required by Arkansas Code. This is a repeat finding. 

Any balances in two accounts were not identified with receipts issued for cases not yet adjudicated in non-compliance with Arkansas Code as shown below. The District Court County account had $57,000 and almost $28,000 in 24 and 23, respectively, unidentified. Small claims civil account had $523 and $458 for $3 and 24, respectively. This is a repeat finding the previous two reports. District court clerk Skyelar Ray here today. 

Senator Matt Stone Would you state your name and position for the record, please? 

Skylear Wright My name is Skyler Wright,.I’m the district court heart for the City of Hampton County Division. 

Senator Matt Stone Do you have an opening statement? 

Skylear Wright No, sir. 

Senator Matt Stone Are there any questions? Representative Dalby? 

Representative Carol Dalby Thank you for being here. Have you worked with the administrative office of courts, the district courts division, to help you out getting this fixed? 

Skylear Wright Yes, ma’am. And I understand what I need to do to fix it. And it’s in the process of being fixed as we speak. 

Representative Carol Dalby Okay, I just want to make sure. They’re a great resource. I want to make sure you utilized them. 

Skylear Wright Yes, ma’am, they really are. 

Skylear Wright Okay, thank you. 

Skylear Wright Thank you. 

Senator Matt Stone All right, without objection, we’ll file the report. Seeing none, you are dismissed, please. 

Perla

Staff Continuing on page 20, we have the town of Perla, 2024-2023. Under the mayor, total disbursement for the general fund in 2023 exceeded appropriations by over $25,000 or 32% in non-compliance of Arkansas Code. A similar finding was issued in the prior report. I believe we have Mayor Raymond Adams here today to answer questions. 

Senator Matt Stone Mayor, would you state your name and position for the record? 

Raymond Adams Yeah, my name is Raymond Adams, and I’m the mayor of Perla since 2007. 

Senator Matt Stone Do you have an opening statement, Mayor? 

Raymond Adams Well, I really don’t have an opening statement. I understand that this got out of hand, and there have been problems. The reason why things have got out of hand, but I think I am back on the right track. And I would like to say, truthfully say, that I lost my wife and my only son within the last year or so. And it’s just only me now. 

So I’ve been going through a lot. So she’s been sick for about three or four years. So I’m back kind of strong now. So some of that had something to do with me not keeping up with what’s going on. I’ve been depressed and wondering about myself. But now I feel like I’m back on the track and I’m able to stand the test. 

Senator Matt Stone Are there any questions from the members? With no questions, I make a motion we file the report. Mayor, you’re dismissed, please.

Staff We have six reports with findings. On page 21 of Eureka Springs Water and Waste Department 2023, a private report. We have since received a good response for Eureka Springs for Pendleton Pea Ridge Water Association. Staff recommends we file both of these port reports if there are no questions. 

Senator Matt Stone Without objections, we’ll file both these reports. 

Staff That leaves us four private reports lacking proper responses. That’s Fulton 23, McRae 24, Montrose 24, and Whelen Springs 23. Staff recommends we defer these reports. 

Senator Matt Stone Without objection, we’ll defer these reports. 

Staff On pages 202 through 32, we have 43 reports with resolved findings. Staff would request that members take a minute to look through them, see if you have any questions. If we don’t, staff recommends we file these reports after no questions. 

Senator Matt Stone Do y’all need any more time? Representative Dalby? 

Representative Carol Dalby Yeah, just give me another minute. 

Senator Matt Stone Okay. Representative Dalby. 

Representative Carol Dalby Thank you. Thank you, Mr. Chair. For the staff, there’s some awfully big numbers in some of this. I mean, it kind of jumped out. We’ve got one city, $500,000, $300,000 and all of that. Are you working with them to, if it’s turned back to start getting that paid? Because, whoo, there’s–  

Staff Which one are we talking about? Like Lake Village?

Representative Carol Dalby Yeah, Lake Village stuck out to me. 

Staff The normal operating procedure of this committee is, if the officials are in the first year, we accept their response and give them a pass if they answer how they’re going to fix it. Well, the Lake Village officials are in their first year. So but, yes, we’ve worked extensively with Lake Village. And they’re  gotten a lot of help from the Municipal League, and they’ve actually reached out to some other cities around them that I’m aware of to get a great deal of help. 

Representative Carol Dalby Thanks. That’s good to hear. That just jumped off the page. So thank you. 

Senator Matt Stone All right. Are there any other questions? Hearing none, I move we file this report. 

Staff On pages 33 through 35, we have 118 reports with no findings. Staff recommends we file these reports. 

Senator Matt Stone All right. I’ll give everybody a few minutes to review. There’s no findings? 

Staff No. 

Senator Matt Stone So without objection we’ll file the report. Our next meeting will be January 8. We’re dismissed. Oh, well, I’m sorry. I didn’t see you. But I don’t mind if you want to make a comment. You’re not going to hurt my feelings. 

Representative Stan Berry That’s okay. It was simply a question to the staff, I guess. Of the reports that we refer to the prosecuting attorney, is there a percentage or how do we know how many of those are satisfied? 

Staff On an annual basis, Michelle actually does an annual report to the full committee and it’s scheduled for January or February, I believe. But she can step to the microphone–. Yes, she concurs with what I said. We do an annual report of all the ones that– we summarize them. And every year, Michelle does a report to the full committee on Fridays. And it’s usually scheduled for the early spring. 

Representative Stan Berry So I’m about to find out?

Staff  Yes, sir. Hopefully, real soon. 

Representative Stan Berry Thank you, Mr. Chair. 

Senator Matt Stone Thank y’all. If there’s no other comments, we’re adjourned for the day.