Audit State Agencies: Jan. 8

Representative Steve Unger … the prior meeting’s minutes that you should have received via email. Do I have a motion on accepting the minutes? All in favor, please say aye. Next on the agenda is a review of reports, and I’m going to recognize Mr. Bullington at this time. 

Staff Thank you, Mr. Chair. Today we’re presenting two reports that have findings. And we also have four reports without findings that are listed on Page 1 of the audit summary. 

Representative Steve Unger Without objection, we will file the reports without findings. 

DHS: SNAP, Medicaid, altered check

Staff Okay, the first report we have today with findings is the Department of Human Services FY24 report, and this report contains three findings. The first finding, the agency notified us of the apparent theft of almost $8,000 from the Disaster Supplemental Nutrition Assistance Program. By providing false or incomplete information to the agency, 13 employees received disaster temporary food assistance benefits related to the March 31, 2023, tornadoes that impacted Pulaski County. The employment of the individuals was terminated and the agency referred all cases to the Pulaski County Prosecuting Attorney’s Office. The improper payments have not been recovered. 

The agency also notified us of the apparent theft of $5,800 from the Medicaid program. Also by providing false information to the agency, one employee received Medicaid benefits to which they were not entitled. The employment for this individual was also terminated, and they also referred this to the Pulaski County Prosecutor’s Office. Improper payments of this one have not been recovered as well. As I said, this finding was referred to the prosecuting attorney and we’ve also referred it to the attorney general. And it was also certified to the bond board. 

The second finding, on July 31, 2024, the agency received an email notification from the Treasurer’s Office stating that a state warrant issued on behalf of DHS payable to the University of Arkansas Little Rock had been altered and cashed and that DHS would need to begin the affidavit process to get a warrant issued to UALR. However, it was not until August 21, 2024, 15 business days later, that the agency notified us of the theft of the almost $610,000 warrant. 

The pay line on the redeem warrant was altered and replaced with the name of a private business, but the warrant amount and number remain unaltered. The Deputy Director and State Controller at DFA became aware of the issue and notified the FBI on August 20, 2024. UALR completed the Affidavit of Forged Warrant form on August 22, 2024, and the bank was notified of the altered warrant the following day. The State’s forgery claim was honored and the funds were deposited into the Treasurer’s account on November 13, 2024. This finding was also referred to the Prosecutor’s Attorney and the Attorney General. 

And the third finding, while performing an observation of assets from a current capital asset listing date of April 16, 2025, we noted five of the 50 equipment items sampled with a total purchase cost of almost $59,000 could not be physically located for observation and or properly identified for audit verification as follows: Three of the items could not physically be located and none of these had been documented as lost, stolen, or obsolete prior to our sample testing. One item presented for observation had no identifying tag number or serial number listed in ASIS. And one item was discovered as having been transferred to marketing and redistribution; however, the item remained on the fixed asset listing as a current active item. 

Additionally, 10 of the 50 items tested had documented dates in ASIS as being last inventoried two or more years ago. During our review of asset acquisitions, deletions, and observations, we also noted the following: Two items were not capitalized at the correct amount. One item that was still on hand was removed from the ASIS fixed asset listing in error. 

And one item cited during observation did not match the description that was listed in ASIS. Furthermore, we noted that the agency paid over $17,000 in error for sales tax levied on four vehicles purchased that were tax exempt. Mr. Chair, that concludes the findings for DHS. 

Representative Steve Unger Are there any agency representatives here? And if so, please come to the table and introduce yourself and make any statements if you choose to. 

Renee Ikard Good afternoon. Renee Ikard, Chief Fiscal Officer, DHS. 

Brett Hayes Brett Hayes, Chief Deputy Counsel, DHS. I would like to provide a quick update on the first finding related to the disaster SNAP fraud cases. We do have an update from the time that we initially responded to DFA on these findings related to the status of those cases that were referred to the prosecuting attorney. 

So there were 13 cases that were referred to the prosecution attorney. Seven of those have been closed with restitution ordered. Some of those are convictions. Some of those are agreed-to settlements. The restitution totalled $4,165. And we have collected $3,408 of that and have active claims on all those cases. 

We have four cases that are still pending with the Pulaski County Prosecutor’s Office, and we have two that were dismissed. Those cases were sent back to us. And we’re in the process of issuing notices of overpayment so that we can collect those funds that were improperly paid. 

Representative Steve Unger Thank you. Committee, do you have any questions? Mr. Meeks. 

Representative Stephen Meeks Thank you, Mr. Chairman. My question is on the finding three, the five items that were missing. Can you give us an update? I’m curious. Have those items been found? And do we know what those items are? I mean, if you’re missing like a stapler, that’s one thing. But if we are missing a car, that’s obviously a whole different category. I’m just curious what those items are. 

Brett Hayes So three of those items were IT server equipment that hasn’t been used in quite some time. It’s likely that those were disposed of when they were no longer being used. So we don’t currently have those items on hand. One item was a piece of sewage treatment equipment that wasn’t tagged. It’s since been tagged and documented in ASIS. And the final item was a vehicle. It had been transferred previously to M&R. It just had not been updated in our fixed asset listing. 

Representative Stephen Meeks Okay, so everything’s been accounted for then? 

Brett Hayes That’s correct. 

Representative Stephen Meeks Excellent, thank you. 

Representative Steve Unger Representative Richardson. 

Representative Jay Richardson Thank you, Mr Chair. Going back to number one, I was curious. Out of the 13 employees on finding one that received disaster food assistance and Medicaid, were any of those the same employee or same people? 

Brett Hayes So on the 13 cases, I don’t know specifically if any of those people were receiving Medicaid. But I can tell you that, because of these reviews that we did, we made the decision as an agency to review all of our employees that are receiving any type of benefit that we administer. But, no, I do not know specifically if any of the 13 were receiving other services. 

Representative Steve Unger I do have a question on finding number two. With the 15-day lag time, who dropped the ball on that? 

Brett Hayes So that was a misunderstanding on the part of our finance department. One of our staff members was notified by the Treasurer’s Office of the fraud and that the Treasurer was going to handle the affidavit of forgery. 

The misunderstanding on our part was that that included the notification to Legislative Audit. It would have been about 15 days after that, that our agency CFO, Ms. Ikard, was made aware of the forgery. At that point, we knew that we needed to notify Legislative Audit, and at that time we did so. 

Representative Steve Unger What corrective actions has been taken in this oversight? 

Renee Ikard Yes, sir. We’ve instructed our– it’s our accounts payable team that was notified initially. So they’ve been instructed to any sort of event like this that occurs from now on, their first call will be to the chief fiscal officer. 

Representative Steve Unger Committee, do you have any other questions? Mr. Gonzalez. 

Representative Justin Gonzales Thank you, Mr. Chair. Why are you paying UALR $600,000? 

Renee Ikard That’s a DCFS contract. I don’t off the top of my head remember what that is. Brett, do you? 

Brett Hayes I believe it’s for training of our caseworkers. I’m not sure on the specifics. But if you’d like that information, we can get it to you. 

Representative Justin Gonzales It doesn’t have to be specific. I was just wondering what that was generally for. Thanks. 

Representative Steve Unger On finding number 3, with the sales tax for the vehicles that were purchased, that kind of seems like a big deal that whoever was authorized to make that purchase should know that. 

Brett Hayes So, it’s my understanding from our DDS finance staff, when we went to purchase the vehicles, we have a card, essentially, that shows that you’re a tax-exempt organization. When we were purchasing those vehicles, we presented that card to the revenue office. We were denied, required to pay the sales tax. It’s my understanding that since then we’ve purchased vehicles and we have not had to pay sales tax going forward. And currently we’re working with DFA to resolve that situation to get the refund that we paid on that sales tax. 

Representative Steve Unger Are there any other questions? Representative Tosh. 

Representative Dwight Tosh Thank you. Thank you, Mr. Chair. I just want to follow up. I think you said a while ago that the employees had been notified that in the future, that they would also make someone aware. I’m just curious. I kind of took that to mean that– I guess my question is, has that been documented? 

Or have you come up with a new policy procedure? Or do you just verbally tell them, Hey, in the future, this is what we’re going to do? Or did you make it where it’s part of your policies where they know there’s no flexibility there, that they have to follow those policies and guidelines or rules of regulations, however you refer to them? How did you handle that? 

Renee Ikard Right. I believe, as Mr. Hayes says, it was a misunderstanding. Our AP team that received the original call, Treasury told them that they would make notifications. And I believe our AP team thought that they were also notifying Legislative Audit. When we found out that they hadn’t, I verbally talked to them. It’s the head of our accounts payable unit. She got the notification. So we will do that going forward. 

Representative Dwight Tosh Okay. And I guess, Mr. Chairman, my concern, that’s a verbal notification. So, somebody replaces them– and I’m just curious, why it was not put into your policies and procedures manual to make it mandatory instead of just a verbal notification?

Renee Ikard And we’ll certainly make that change. 

Representative Dwight Tosh You will do that? 

Renee Ikard Yes, absolutely. Yes, sir. 

Representative Dwight Tosh One more follow-up, Mr. Chair. And on the first finding, I think you said a while ago that two of the cases had been dismissed, if I understood you correctly. Why were they dismissed? Was it lack of evidence, or just what was the reason for the dismissal? 

Brett Hayes I’m not sure on the specifics as to why the prosecutor didn’t pursue it further. 

Representative Steve Unger Do you have a standard operating procedure employees who are trusted with purchases have to know? 

Brett Hayes Can you repeat that? I didn’t quite catch the middle of that question. 

Representative Steve Unger Well, I’m just an old Navy guy. And so we have a thing called SOP, Standard Operating Procedures, that you really needed to be familiar with, particularly when you’re trusted to spend money. Do you guys have something, like a three ring binder, that says, when you get to this level of employment and you’re going to be spending the people’s money, you have to know these things? 

Renee Ikard Yes, sir, we do follow procurement law. And yes, it’s all written in binders. Everybody gets training when they reach those levels. 

Representative Steve Unger And so I believe you’re going to incorporate what Representative Tosh said about putting it in your training in the future. Without objection, I’m going to defer this to the next meeting so you can come back and tell us that it’s actually written down. 

Renee Ikard Absolutely. Yes, sir. 

Representative Steve Unger Thank you. You’re dismissed. Thank you. 

Parks and Tourism: Daisy State Park, Mosaic Templars, War Memorial

Staff Okay, Mr. Chair, the next report we have with findings is the Department of Parks, Heritage, and Tourism FY24 report. And this report contains two findings. The first finding, the Arkansas Department of Parks, Heritage and Tourism notified us in April 2024 of the loss of receipts totaling almost $3,500 from one of its museums. 

An employee was terminated, and as of the report date, no criminal charges have been brought against the employee. This finding was referred to the Prosecuting Attorney and the Attorney General, and it was also certified to the bond board. 

In the second finding, during our review of the agency’s various change fund cash accounts, the following exceptions were noted: At Daisy State Park, $100 in camping drawer funds could not be located by the park staff at the time of our audit. 

And at War Memorial Stadium, it was discovered at the time of audit that the change fund had an $80 overage. War Memorial’s change fund is unique because it has both a cash portion and a balance held in a commercial bank account. And this amount can be adjusted throughout the year based on the size of events that they’re holding and the need for additional change funds. 

The overage had not been previously discovered because the agency did not have procedures in place that would consider both cash and bank balances together when verifying the change fund. Mr. Chair, that concludes the findings for Parks and Tourism. 

Representative Steve Unger Thank you, sir. If there are agency representatives here, please come to the table and introduce yourself and make any statements as needed. 

Jamie Fisher Jamie Fisher, CFO for Parks, Heritage and Tourism. 

Shea Lewis Shea Lewis, Secretary of the Arkansas Department of Parks, Heritage and Tourism. Thank you, Chairman Unger. The Arkansas Department Parks, Heritage and Tourism takes all audit findings very seriously. And since these findings have come forward, we have implemented action plans, and controls have been put in place to address the specific issues. We’ve also provided our information and responses through a management response letter that’s also a part of the packet. And be glad to take whatever questions that you have. 

Representative Steve Unger Committee, do you have any questions? I see Representative Meeks. 

Representative Stephen Meeks Thank you, Mr. Chair. Two questions, one on each. The $3,500 from the museum, do we think that was just misappropriated? Was it stolen? Do we know? 

Shea Lewis We believe it to be stolen. 

Representative Stephen Meeks And it says there’s no criminal charges have been filed to date. Is that still an ongoing investigating or are we just writing off our losses and moving on? 

Shea Lewis The statute of limitations have come to a conclusion on that. We did refer it to the Pulaski County Sheriff’s Office, as well as the prosecuting attorney’s office during the time period that the statute of limitations expired. We were waiting approval for a subpoena to CashApp for additional information, and that led to the time period expiration.

Representative Stephen Meeks How short is that? That seems like this only happened in 2024. I mean, if you don’t know off the top of your head. I’m just kind of curious. It seems like it was a pretty short time period to try to react to that. 

Shea Lewis I don’t know it off the– the exact length of time– off the top of my head. 

Representative Stephen Meeks My second one’s for War Memorial Stadium. And I was never a fan of the state taking over a football stadium. I just didn’t think that was a proper role of state government. But obviously I was overruled at the time when we voted on it. And so now you all have this stadium. 

My question is, it’s been in the state’s possession now for a couple of years. Was there no controls on this change account this whole time? And I mean, I’m glad we found $80 more than we were supposed to have and not the other way around. But it just seems to me that as long as War Memorial Stadium had been operating over the decades that this is not something that was in place before now. 

Jamie Fisher Yes, sir. There have been mechanisms in place. This, as we mentioned, is very unique because there is a combination of the amounts left in the checking account, as well as cash that fluctuates depending upon events. I will say at the time of this counting, it was right after the Razorback game. So they had a significant amount more in cash on hand. So that led to the overage. But, yes, now we’re reconciling that after every event with my staff. 

Representative Stephen Meeks And that’s all being done electronically, I’m assuming, correct? 

Jamie Fisher Yes. 

Representative Stephen Meeks Okay, thank you. 

Representative Steve Unger Mr. Secretary– oh, I’m sorry. Ms. Brown. Sorry, okay. 

Representative Karilyn Brown Thank you, Mr. Chair. Am I on? It’s red. Okay. I’m trying to find the language in here. I heard mentioned that something had been referred to the bond board, so I’m try to find where that’s written. But so are all of these parks, are they all protected by a bond? I mean are the money’s protected by the bond? Is that what that’s referring to? I didn’t quite follow. 

Shea Lewis I’m not sure. 

Representative Karilyn Brown It’s up at the top of Page 4. Certified to bond board, referred to prosecuting attorney, AG. What is the bond board? 

Staff Yeah, the bond board insures all state employees. So they provide coverage for state employees. If there’s something like this, they’ll cover– and I’m looking at Kevin. I can’t remember the amounts, but there’s an amount that they’ll cover up to and reimburse the state if there’s a loss of state funds like that and it involved a state employee. 

Representative Karilyn Brown So have we been reimbursed or not? 

Staff At this point, no. We’re just now referring it to the bond board. 

Representative Karilyn Brown Okay, thank you. 

Representative Steve Unger Mr. Secretary, before the meeting I sort of heard a plain language explanation– this is in finding number one– of how this money disappeared. Could you share with the rest of the committee exactly how that happened? 

Shea Lewis It’s my understanding, at the museum itself, we have rental space available as a rental facility. And the employee was taking money for the rent of the facility but never being entered into the cash register for that. And so was using, our understanding, different online payment options for that so the customers would pay that. Since that time, we have implemented a point-of-sale system and a reservation system that allows for the tracking of this appropriately. 

Representative Steve Unger Thank you. Was this a single point of contact employee that was taking all the money for bookings, or were there other employees who handled bookings? 

Shea Lewis I would imagine different employees handled bookings throughout the year, but primarily this person was stationed at the front desk where those reservations would have happened. 

Representative Steve Unger Okay. One more question and I’ll let Ms. Burkes have it. The question I had is, let’s just say we were doing bookings in January and February. And in March, somehow they just disappeared and everybody wondered what happened. Was there a supervisor there that took note that something was off?

Shea Lewis  And that is an issue at hand that we’ve made corrections to as well, to make sure that there is verification versus payments collected versus the reservations or bookings that take place. There was a failure, a service failure there. 

Representative Steve Unger That just seems so common sense. Representative Burkes.

Representative Rebecca Burkes Thank you. Which museum was this? 

Shea Lewis At Mosaic Templars Cultural Center. 

Representative Rebecca Burkes In Little Rock? 

Shea Lewis Yes, ma’am. 

Representative Rebecca Burkes And do all of the museums have the ability to rent out the facilities, or is that the only one that does that? 

Shea Lewis I believe they all do. 

Representative Rebecca Burkes Okay, and now at this time, is there a central office that can see or have transparency into that money coming into each of those museums? 

Shea Lewis Yes. Through that point of sale system that has been implemented instead of a manual system, it does allow oversight 

Representative Steve Unger Mr. Secretary, have you had any further contact with the prosecuting attorney on this matter? 

Shea Lewis We have stayed in contact and requested updates along the way. And we’re waiting approval for that subpoena and did find out at the last update that the statute of limitations had run out. 

Representative Steve Unger It had run out? 

Shea Lewis It had run out. 

Representative Steve Unger Do we have the ability as a state to put a lien on this person’s taxes? 

Shea Lewis I do not know the answer.

Representative Steve Unger Representative Gonzales. 

Representative Justin Gonzales I’d just like to say that I’m glad that y’all found the $100 at Daisy State Park and that state park is able to stay open and serve the great people of Arkansas. So it’s a great deal. 

Representative Steve Unger Representative Lundstrum. 

Representative Robin Lundstrum On the employee that stole the money from the Mosaic Templar, did they withhold the last paycheck? 

Shea Lewis Not that I’m aware of, no. 

Representative Robin Lundstrum Could we have something in the rules or in your regs that if you’re fired for absconding with funds, your last paycheck should be withheld and those funds taken from that paycheck?

Shea Lewis I do not know if we could create a rule like that. That seems like DFA or Shared Administrative Services would have to create something like that through the Office of Personnel Management. 

Representative Robin Lundstrum I’ll follow up. It seems like that should be a Captain Obvious thing, regardless of what agency. All right. Thank you. Yeah, a private business would do it, so I’m not sure why you don’t have that authority to do it. 

Representative Steve Unger Mr. Bullington has some updated information on the prosecuting attorney. And I recognize him to speak to us. 

Staff Thank you, Mr. Chair. Our office was in contact with Will Jones’ office yesterday about this shortage at Parks and Tourism. And that criminal investigation still remains open, according to him, and it’s active. And according to Mr. Jones, as recently as November of ’25, his office had requested additional information from Parks and Tourism and is awaiting receipt of that information. 

Representative Steve Unger Committee, do you have any other questions? Representative Burkes. 

Representative Rebecca Burkes I’m sorry, did you just say that they’re waiting for information from the agency? 

Staff That’s what we were told from the prosecutor’s office yesterday. Yes, ma’am. 

Representative Rebecca Burkes Are you aware of that? 

Shea Lewis Not aware of that. That’s news to us. But we can certainly follow up with them. 

Representative Steve Unger Are there any other questions? Without objection, we will defer this report to the next meeting because I would like to hear how this crime drama closes out. Thank you. You are dismissed. New business, our next meeting will be on the 12th of February, 2026. And we are adjourned.