Legislative Audit
State Agencies
December 11, 2025
Representative Steve Unger Ladies and gentlemen, it’s 1:30. I call this meeting to order. And in just a second, I’m going to hit this thing one more time and we are going to adjourn for exactly 15 minutes. At 1:45, we will come back, so that we can play Santa’s helper up in the Old Supreme Court. Witnesses, please bear with us. Apologize for the heat. Some lunatic had cranked it up in the high 70s before we got here. Can’t tell you why. We’re adjourned for exactly 15 minutes.
[Recess]
We are back in session. You should have received a copy of the minutes. Does anyone make a move to adopt the amendments? Is there a motion? I hear a motion. Second. All right. Without objection, we approve the minutes. I now recognize Mr. Bullington.
Staff Thank you, Mr. Chair. Today we are presenting three reports with findings and one special report. We also have twelve reports without findings and these are listed starting on page one of the Audit summary.
Representative Steve Unger Without objection, we will file the reports without findings.
Department of Commerce Findings
Employee spree to St. Thomas
Staff Okay, Mr. Chair. The first report with findings is the Department of Commerce FY24 report, and this report contains two findings. The first finding, the Arkansas Securities Department notified us in May of 25 that an employee of the enforcement section used an agency travel card to make $2,900 in unauthorized personal purchases. The employer was authorized to attend a conference in Fort Lauderdale, Florida, as part of his continuing education.
While at the conference, the employee made unauthorized purchases of airfare for himself and another person to fly from Fort Lauderdale to St. Thomas using the agency travel card. The employee also made additional unauthorized charges on the agency travel card to prepay for lodging in St. Thomas. A police report was filed by the agency and the individual’s employment was terminated.
This finding was referred to the prosecuting attorney and the Attorney General, and it was also certified to the bond board. The second finding, DFA’s financial management guide states that agencies must properly record amounts due for delivery of goods and services, licenses, unpaid taxes, student loans, special assessments, accounts receivable, notes receivable, and capital leases receivable.
It also states that agencies are to develop and follow written criteria for the determination of uncollectible accounts. Arkansas Code allows the insurance commissioner to issue assessments on Arkansas Insurers to produce the additional funds needed by the Arkansas property and casualty guarantee fund to cover the claims of insolvent insurers. On June 17, 2024, an assessment was issued, but the agency failed to properly record the almost $20 million receivable during its year in closing book process.
Also, the agency failed to properly calculate the gross receivable due from insurance companies in receivership, resulting in an understatement of more than $640,000. Additionally, the agency failed to follow their methodology for calculating the allowance for doubtful accounts for three receiverships, resulting in an understatement of the allowance of almost $195,000. The net effect of these errors is an understatement of the net receivable by about $446,000. Mr. Chair, that concludes the findings for the Department of Commerce.
Representative Steve Unger If the representatives from the agencies are here, would you please come to the table and identify yourself?
Susannah Marshall Good afternoon. Susannah Marshall, Commissioner of the Arkansas Securities Department and State Bank Department.
Campbell McLaurin Good afternoon, Campbell McLaurin, Deputy Commissioner of the Arkansas Securities Department.
Representative Steve Unger Thank you.
Susannah Marshall Yes, sir. We are deeply concerned about the events that led to this audit finding and the financial harm to the state as a result of the employees’ fraudulent actions. As an agency and a department, we strive to execute our duties with the utmost care and integrity. We have identified the situation as an isolated incident. We have implemented corrective action that will help mitigate the risk of any future losses of state funds. Happy to answer any questions.
Representative Steve Unger Members, do you have any questions? Representative Gazaway.
Representative Jimmy Gazaway Thank you, Mr. Chair. On the trip to St. Thomas, did this fellow pay the money back or what happened?
Susannah Marshall So when our review uncovered the situation, Deputy Commissioner McLaurin immediately began work to try to identify the situation, the funds, the properties, the specifics, if you will. He worked tirelessly to identify and discuss with management of the property, the hotel property on the island, and he worked diligently to get a good rapport with that gentleman.
And ultimately, the hotel management worked with us to refund the money, the hotel fees. We recovered approximately $1,866.42, which was the entire hotel fee minus the booking fees. The airfare was charged through a third party travel site, travel application. Therefore we were unable to contact them, unable to work with them on any type of recovery.
Representative Jimmy Gazaway All right, thank you.
Representative Steve Unger Well, I have a question. Was this gentleman charged and arrested?
Susannah Marshall So a police report has been filed, sir. And as Mr. Bullington referenced, it’s been elevated. But we are not aware of the gentleman’s whereabouts.
Representative Steve Unger Members, do you have any other questions? Oh, I’m sorry, Mr. Gazaway.
Representative Jimmy Gazaway Okay, so you got the hotel money back?
Susannah Marshall Yes, sir.
Representative Jimmy Gazaway The flight money, did you get that back?
Susannah Marshall No sir, because of the third party travel platform. They were unwilling to work with us.
Representative Jimmy Gazaway And that was how much money?
Susannah Marshall Approximately– just a moment. You have the number handy?
Campbell McLaurin I do. So I can step in and say initially the unauthorized charges amounted to $2,900.04. We were able to recover $1,866.42 from the hotel. So the total loss was $1,033.62. So that’s the hotel booking fee plus the airline fees.
Representative Jimmy Gazaway I guess, in terms of potential criminal charges, it would be unauthorized use of a debit or credit card.
Susannah Marshall Unauthorized use of state funds. Yes, sir.
Representative Jimmy Gazaway And I guess that’s a felony, would be my guess.
Campbell McLaurin I’m looking into it. I believe it was a felony amount. And that was the exact charge that we filed the police report under.
Representative Jimmy Gazaway Yeah. And no one knows the whereabouts of this person?
Susannah Marshall No, sir.
Representative Jimmy Gazaway Any chance he’s on the island of St. Thomas?
Campbell McLaurin We believe that he still is.
Susannah Marshall That could be the case, yes sir.
Representative Jimmy Gazaway All right. Thanks a lot.
Representative Steve Unger Members, are there any other questions? Seeing none, without objection, we will file this report and go to the next one.
State Lands
Incorrect billing rates
Staff The next report with findings is the Commissioner of State Lands FY24 report. And this report contains one finding. The Arkansas Commissioner of State Lands entered into a contract for services related to website hosting, maintenance, and development of various web applications. The contract included established hourly billing rates for services performed by the vendor staff.
We identified overpayments totaling over $28,000 and $21,000 to this vendor for services performed in fiscal years 24 and 25, respectively. The overpayments occurred when the vendor failed to update billing rates in accordance with the updated contract terms, and the agency failed to identify the improper billing rates because the rates were not listed on the invoices that were submitted. Mr. Chair, that concludes the finding for Commissioner of State Lands.
Representative Steve Unger Thank you. Are there any agency representatives here? If you’d please come to the table and identify yourselves.
Payton Murphy Peyton Murphy, general counsel with the Land Commissioner.
Sam Sparrow Sam Sparrow, fiscal director, commissioner’s office.
Representative Steve Unger Thank you, gentlemen. If you have any statements, please go ahead.
Sam Sparrow Thank you, sir. The Commissioner of State Lands acknowledges the overpayments for fiscal year 2024 and 2025 related to services billed at outdated rates. The commissioner’s office has received and recorded reimbursements from the vendor for the full overpaid amount.
The Commissioner’s Office is implementing updated procedures to ensure all invoices are reviewed, verified, and verified with current contract terms, including confirming the hourly billing rates. Additionally, all future invoices from the vendors shall be itemized and include the current billing rate to ensure transparency and accuracy. Thank you.
Representative Steve Unger Members, do you have any questions?
Representative Steve Unger My question is actually for State Audit. Do you think you catch all of these overcharges when you do your audits at some point? Or do you think this is something that probably happens more than what we would like to admit and a lot of times it’s not caught?
Staff Well, I can’t say that we catch them all. Because when we do an audit, obviously we don’t look at 100 percent of the expenditures. So I would suspect that there are other overpayments out there that we don’t catch. But when we catch them, we bring them to y’all. We report them here.
Representative Steve Unger Yes, Representative Burkes.
Representative Rebecca Burkes Thank you. So a quick question. You mentioned that all future invoices will have applicable billing rates. That’s not something that had been done in the past, is that right?
Sam Sparrow Well, we’re just going to verify that the billing rate, as far as if it’s an hourly charge, that the hourly billing rate’s the same. If it’s an itemized, like it’s X number of widgets, that those item numbers per unit are applicable.
Representative Rebecca Burkes So the invoice coming in is going to have the current applicable billing rate on it. So somebody on your staff could quickly just see that’s correct, that’s current. And that’s not a practice that had been done in the past in your agency?
Sam Sparrow On these invoices we were just invoiced for hours.
Representative Rebecca Burkes Thank you. A quick question for Audit is, is that a best practice that should be happening across all of state government?
Staff Well, we hope that they have that control in place where they’re checking those invoices. In this case, like he’s saying, the hourly rates were not on the invoices.
Representative Rebecca Burkes Right. So across all of state government, should the hourly rate, applicable billing rate, be on the invoice?
Staff I think that would be a great best practice.
Representative Rebecca Burkes Okay, but that’s not currently the way it works?
Staff Well, I think most of the time, if it’s an hourly charge like that, you’ll see the billing rates on there.
Representative Rebecca Burkes Okay.
Staff So wouldn’t say that it’s normal for them not to be there. I think we see that a lot of times that it is on there as well.
Representative Rebecca Burkes Thank you very much.
Representative Steve Unger Yes, Representative Richmond.
Representative Marcus Richmond There’s supposed to be somebody that checks and looks and sees that the hourly rate is actually included in the bill. Do I understand that correctly?
Sam Sparrow Yes.
Representative Marcus Richmond Who is that individual within each department? Do you have a specific individual that somebody put a finger on and said, You’re going to be the guy that checks this, and if it screws up, you’re going to be the guy I’m talking to. Have you guys done that?
Payton Murphy Generally any of our bills go of course first to our fiscal department. They conduct their own review. Now these bills from this particular vendor and from others are coming to me and I’m checking them against our contract rates.
Representative Marcus Richmond Who’s going to check them if you’re gone?
Payton Murphy I suppose that our administrator, real estate administrator.
Representative Marcus Richmond You see what I’m getting at though? I mean if you don’t put a finger on somebody and give them the responsibility, don’t expect it to happen.
Representative Steve Unger Thank you. Members, do you have any other questions? Seeing none, without objection, we will file this report and go to the next one.
Game and Fish
Stolen UTV, stolen money
Staff Okay, the next report with findings is the Game and Fish Commission FY24 report. And this report also contains one finding. The Arkansas Game and Fish Commission notified us of the following thefts of state funds and property. On September 20th, 2024, a 2018 Honda Pioneer UTV with a cost of $14,000 was stolen from an employee’s property in Grant County. An incident report was filed with the Grant County Sheriff’s Office.
And on December 18, 2024, Central Office staff were notified of missing funds at Ozark Highlands Nature Center. The Enforcement Division completed a preliminary review identifying unaccounted for funds of $554. As of August 15, 2025, the investigation concluded with no additional losses identified. A part-time employee was terminated and the gift shop has been closed. The facility no longer handles or accepts cash transactions.
And then on May 5, 2025, Central Office staff were notified of a theft from the Ed Gordon Point Remove Wildlife Management Area Facility. Multiple items were stolen with an estimated value of $13,000. An incident report was filed with the Conway County Sheriff’s Department. This finding was referred to the respective prosecuting attorneys and the Attorney General. Mr. Chair, that concludes the findings for Game and Fish Commission.
Representative Steve Unger If there are any agency officials here, if you’d please come to the table and identify yourselves.
Chris Racey Good afternoon. Chris Racey, Chief of Staff, Arkansas Game and Fish Commission.
Emily Shumate Emily Shumate, CFO.
Representative Steve Unger If you have any statements, please go ahead.
Chris Racey Absolutely. So we are absolutely committed to continuing to try and strengthen controls with regard to the two stolen pieces of property. Of course, we’re looking at opportunities to reduce those theft occurrences for the future. With regard to the nature center, as was reported out, we’ve already changed processes and increased and strengthened those controls to ensure that this does not happen again.
Representative Steve Unger Members, do you have any questions? Yes, Representative Richmond.
Representative Marcus Richmond Concerning the Honda Pioneer that was stolen, it was stolen from an employee’s property? A game warden, I suspect, and he had it at his home or some place and somebody just came there and drove it off?
Chris Racey That’s correct, sir. So the UTV was on a trailer at a game warden’s home. Of course, it’s not uncommon for game wardens to operate out of their homes inside their counties. And that piece of equipment was under a carport, backed in. It was duly locked. It had two cables around both the trailer and posts inside the structure itself.
The tongue of the trailer also had another lock on it. The individuals, to the best of our understanding, started the UTV without a key. The game warden still has both sets of keys in his possession. They were unable to back it out the back of a trailer as you normally would when you have a UTV on a trailer, and instead went over the front, did serious damage to the trailer, so we assume also some damage to the UTV as well. So, yes.
Representative Marcus Richmond Okay, thank you.
Representative Steve Unger Members, do you have any– yes, Mr. Gazaway, go ahead.
Representative Jimmy Gazaway So on the UTV, do these UTVs have any special markings on them that identify them as Game and Fish property?
Emily Shumate Yes, sir. They do have property stickers and are marked as Game and Fish property.
Representative Jimmy Gazaway Okay. I would think whoever stole it, it’s kind of an interesting position to be in running around with a Game and Fish UTV that has Game and Fish UTV markings all over it. But anyway, very good. Thank you.
Representative Steve Unger Members, do you have any other questions? Yes, Representative Richmond.
Representative Marcus Richmond More of a statement than a question. When I first come here and started in and was on State Agencies, there was a lot of weapons stolen out of game wardens’ vehicles, and things like that. I haven’t seen that in a while that I’m aware of. What did you guys do to help correct that?
Chris Racey I think our folks have worked diligently to take extra steps inside their vehicles to ensure those weapons are secure. And then certainly, as they’re carrying those weapons, they’re also being extremely diligent and taking care of understanding what that means for us and, again, strengthen those controls based on past experience.
Representative Marcus Richmond Okay. Follow-up? Considering the stolen UTV on this, is there anything that you can look at and say that you can do additional beyond what this gentleman, what the game warden tried to do? I mean, I understand that’s pretty, I’ll use the word gutsy, to come up there and do what they did and get away with it.
And I think Grant County, I don’t know whose district Grant County is in, but I feel sorry for you, whoever it is, on this. Because it seems like a lot of this kind of nonsense goes on down around there on this thing. But hopefully there’s some lessons to learn that you can give to everybody else.
Chris Racey Representative, we’ll certainly look at it again with that lens. I know our folks are poring over what you can do to keep these thefts from happening. I think in this case, this game warden was extremely diligent in ensuring locks were used, keys were not available. It was very difficult to pull this off and they were dedicated to getting that UTV. It’s hard to stop a thief like that. But we will continue to look for opportunities to make sure we’re controlling state property.
Representative Steve Unger Members, are there any other questions? Seeing none, without objection, we will file this report and move to the next one.
Staff Thank you, Mr. Chair. And our last item on the report today, as I mentioned earlier, we have a special report related to law enforcement agencies’ adoption of racial profiling policies. Should be copies of this in your packet as well. And we’re going to present that to committee today. And I’ll now recognize Charlie Camp, who’s also part of our staff, to present that report.
Racial Profiling Policies
Charlie Camp Thank you, Mr. Bullington. This letter is issued to inform the Legislative Joint Auditing Committee that Arkansas Legislative Audit has received responses from 182 of 384 law enforcement agencies regarding adoption of a written policy prohibiting racial profiling under Arkansas Code annotated 12-12-14-03. ALA forwarded the Attorney General a copy of each law enforcement agency’s response.
Furthermore, ALA submitted to the Attorney General the names of law enforcement agencies we believe failed to comply with the requirements outlined in Arkansas Code 12-12-14-03. The Attorney General has indicated that he has notified the 202 law enforcement agencies that failed to respond that are not in compliance with the law. This concludes my report, Mr. Chair.
Representative Steve Unger Thanks, sir. Members, do you have any questions? Mr. Richardson.
Representative Jay Richardson Thank you, Mr. Chair. Do you have a list of the agencies who have not responded?
Charlie Camp Yes sir, we maintain that list.
Representative Jay Richardson Okay. Is that available for Staff?
Staff I would assume it would be. We need to check with the Legislative Audit to make sure. We provided that to the Attorney General’s office. Charlie, correct me if I’m wrong.
Charlie Camp It was provided to the AG’s office, yes.
Staff Which is the extent of what we were supposed to do in that case.
Representative Steve Unger Representative Gazaway.
Representative Jimmy Gazaway Thank you, Mr. Chair. So what exactly is required of the law enforcement agency to adopt the policy? Is this something that they do internally and send proof to you that they’ve added it to their policy book? Does this require, if it’s, say, a municipality or a county sheriff’s office, that the quorum court or the city council pass an ordinance or resolution adopting the policy? What is required for law enforcement agencies to adopt the policy?
Charlie Camp I’m not sure the answer to that question. Legislative Audit’s only involvement in this is to collect the reporting form and remit it to the Attorney General. And then the Attorney General determines whether or not that agency is in compliance.
Representative Steve Unger Okay, thank you. Members, are there any other questions? Seeing none, without objection, we will file this report. The next meeting will be on the 8th of January 2026. And we are adjourned.
