Legislative Joint Auditing
State Agencies
February 12, 2026
Senator Matt McKee If you’d all join us, Representative Unger is going to lead us in prayer real quick.
Representative Steve Unger Please pray with me. Almighty God, you are the Lord of both justice and mercy. Help us as we administer the taxpayers’ money that go to the state agencies, and help us all be honest stewards of the things you’ve put in front of us. We are very grateful to live in this blessed state and in this blessed nation. Please be with us in these proceedings. Amen.
Senator Matt McKee Thank you, Representative. All right. I need a motion to adopt the minutes from January. Senator Boyd. Is there a second? Representative Meeks. Any discussion? All those in favor, say aye. Opposed, same sign. Those minutes are adopted. Mr. Bullington, would you please get us going?
Staff Yes. Thank you, Mr. Chair. Today we’re presenting two deferred reports with findings, two current reports with findings and one special report. We also have five reports without findings and these are listed on page one of the audit summary.
Senator Matt McKee Without objection those reports will be filed. Seeing none.
Staff Okay, the first report we have today with findings is the Department of Human Services FY24 report. And this report contains three findings and it was deferred from the January meeting.
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 these individuals was terminated and the agency referred all cases to the Pulaski County Prosecutors Office.
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. This individual was also terminated, and we referred the case to the Pulaski County Prosecutor’s Office. We also referred this to the prosecuting attorney and 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 of State’s office stating that a state warrant issued on behalf of DHS payable to the University of Arkansas at Little Rock had been altered and cashed and that DHS would need to begin the affidavit process to get a new 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 payee line on the redeemed warrant was altered and replaced with the name of a private business, but the warrant amount and number remained unaltered. The Deputy Director and State Comptroller at the Department of Finance and Administration became aware of the issue and notified the FBI on August 20, 2024. UALR completed the affidavit of forged warrant form on August 22, and the bank was notified of the altered warrant on the next day. The state’s forgery claim was honored by the bank and the funds were deposited into the Treasury of State’s account on November 13, 2024. This finding was referred to the Prosecuting Attorney and the Attorney General.
In the third finding, while performing an observation of assets from a current capital asset listing dated 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 be physically located, and none of these had been documented as lost, stolen, or obsolete prior to our testing.
One item presented for observation had no identifying tag number and or serial number documented on the agencies fixed asset listing. And one item was discovered to have been transferred to marketing redistribution, however the item remained on the fixed asset listing as current. Additionally, 10 of the 50 items tested had documented ASIS being last inventoried two or more years ago.
During our review of asset acquisitions, deletions, and observation, we also noted the following. Two items were not capitalized at the correct amount. One item that was still in hand was removed from ASIS 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 on four vehicles that were tax exempt. Mr. Chair, that concludes the findings for the DHS.
Senator Matt McKee Members, do you have any questions? Representative Meeks. Can we get somebody from the department? Come on down, sir. If you would introduce yourself for the record, we’ll recognize Representative Meeks so he can ask his question.
Representative Stephen Meeks Thank you, Mr Chairman. So my question–.
Senator Matt McKee Hold on, Representative, let this fellow introduce himself.
Bret Hayes Bret Hayes, Chief Deputy Counsel, DHS.
Senator Matt McKee Now you’re recognized.
Representative Stephen Meeks All right, Mr. Hayes, thank you for being here. My question relates to the $600,000 warrant that was fraudulently cashed, looks like, by a business. I’m assuming y’all know what business that was. Have they been put on a list so that we can make sure we don’t do business with them at any point in the future? Have we notified other state agencies to make sure that they don’t fall victim to the same or the Office of Procurement?
Bret Hayes It was an auto body shop out of California.
Representative Stephen Meeks That was the first red flag right there, California.
Bret Hayes This was a warrant that was intercepted in the mail. So, I mean, to my knowledge, we wouldn’t do any business with a body shop in California and I doubt anybody else in the state would. I mean, we referred it to the prosecutor and also the FBI was investigating. The answer is no, but I think it’s highly unlikely that anybody would be doing business with them.
Representative Stephen Meeks So since it was in California, have we notified any state officials over in California just as a courtesy to let them know, Hey, they did this to us, make sure they don’t do it to you.
Bret Hayes To my knowledge, we did not.
Representative Stephen Meeks Okay. All right. Just curious. All right. Thank you.
Senator Matt McKee Thank you, Representative Meeks. Any other questions? Very good. Okay, without objection, we’ll file that report. Thank you, sir. And we’ll move on.
Staff The next report with findings is the Department of Parks, Heritage, and Tourism FY24 report. And this report contains two findings, and it was also deferred from the January meeting. 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 our report date, no criminal charges had been brought against a former employee. This finding was referred to the Prosecuting Attorney, the Attorney General, and 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, the $100 in camping drawer funds could not be located by park staff at the time of our audit. And at War Memorial Stadium, it was discovered at the time of the audit that the change fund had an $80 overage. War Memorial Stadium’s change fund is unique because it has both a cash portion and that’s held in a commercial bank account. And this amount can be adjusted throughout the year based on the size of events and the need for additional change funds.
The overage has 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 our findings for Park, Heritage and Tourism.
Senator Matt McKee Very good. Members, do you have any questions for the department? Seeing– Representative Unger. Can we get somebody from Parks, Heritage and Tourism to come forward, please? And if you will all introduce yourselves for the record, we’ll let Representative Unger ask his question.
Shea Lewis Good afternoon. Shea Lewis, Secretary of the Arkansas Department of Parks, Heritage and Tourism.
Chris Medlin Good afternoon, I’m Ranger Chris Medlin, Arkansas State Parks.
Representative Steve Unger Thank you, gentlemen. I’m repeating a question that I think Representative Richardson asked a couple of months ago. Can you guys go to just be cashless and start using credit and debit cards so we don’t have to worry about money floating around in a drawer?
Shea Lewis It’s something that we have looked into specifically. We still have a percentage of customers that do prefer using cash. We have been looking at and considering testing at War Memorial Stadium specifically because other locations such as Reynolds Stadium at the University of Arkansas has recently gone cashless as well.
And something we’re considering, we do have the infrastructure now within the stadium and the credit card machines, as well as the data lines that can manage that volume of credit card transactions now. So it’s under review and consideration. But we still have to be mindful of our guests that want to pay with cash and have taken that in consideration. As we kind of look forward to the future there, noted giving our guests that have games at War Memorial Stadium, putting a notice for that would be a key part.
Senator Matt McKee Thank you. McAlindon?
Representative Mindy McAlindon Thank you, Chairman. Did you say, were the funds recovered from the employee that was terminated?
Shea Lewis So since our last meeting when we were here last month, I do have an update associated with that. Since that time, a new prosecuting attorney has been assigned to the investigation through the Pulaski County Prosecutor’s Office.
We were able to confirm that the statute of limitations for any misdemeanor charges has expired since the investigation has taken so long. But since that time, the investigation is continuing, is ongoing. A subpoena has been issued for additional evidence and we hope that that will lead to a prosecution.
Senator Matt McKee Very good. Any other questions? I’m going to go to Senator Boyd next.
Senator Justin Boyd Thank you, Mr. Chair. So, if you went to a cashless system, is there any way to evade that at all? I mean, would you still potentially have some kind of risk somewhere?
Shea Lewis I don’t know if I have the expertise to know. I’m sure there are certainly ways that credit cards can be compromised. I know that our system within Arkansas State Parks, currently, we have not had many transactions.
But even the case that we’re mentioning under investigation involved credit cards, involved personal accounts and use of a credit card in a different way. So I assume that there’s always an opportunity for fraud. It would be our place to put controls in place to ensure that we protect the state funds as best as possible.
Senator Justin Boyd Right, and it sounds to me like you’re also keeping in mind that often Arkansas taxpayers are coming to purchase things, and you’re keeping them in mind on that front as well, and trying to find a right balance between safety and inevitably somebody’s going to try to game the system somewhere, right?
Shea Lewis That’s right. Safety and service. That’s right.
Senator Matt McKee Representative Unger.
Senator Matt McKee Thank you, Mr. Chair. I believe I asked you last month, have you done any research on, can we actually put a lien on an ex-employee’s taxes to recoup the stuff they stole?
Shea Lewis So one of the questions last month was related to even withholding final paychecks. We were able to confirm through the office of personnel management that that is not the case, that due process must continue through that. Perhaps Ranger Medlin could help understand in the event that a court order happens and then– what is it called when you garnish someone’s wages for the collection of a fine or for–
Chris Medlin Yes, so if there’s a judgment made by the court for the reparations in that regard for the restitution, as it were, then they can hold against their taxes. The courts can. As an agency, we wouldn’t do that. But the actual Pulaski County Court would make that determination.
Senator Matt McKee Representative Richmond, did you have a question?
Representative Marcus Richmond I think I misunderstood you or misheard you. Did you say that the statute of limitation has run out on the misdemeanor during the investigation?
Shea Lewis Yes, the timing for the statute of limitations has expired for that while the investigation was ongoing. But for a felony, that time limit extends further.
Representative Marcus Richmond All right, thank you.
Senator Matt McKee Is the benchmark there $5,000? Once it gets over 5,000, it becomes a felony?
Chris Medlin It’d be 1,000. Anything over 1,000 becomes a felony, a class D felony.
Senator Matt McKee Members, any other questions? Seeing none, thank you, gentlemen. Without objection, this report will be reviewed.
Staff The next report we have with findings is the Department of Corrections FY24 report. And this report contains two findings. The first finding, the agency reported to us unauthorized purchase on the department’s fuel credit card after an employee of the Division of Community Correction was observed purchasing fuel for personal use with a state-issued fuel card.
This information was forwarded to the department’s internal affairs section, which investigated and identified numerous potentially fraudulent purchases between July 2022 and August 2024 totaling about $4,500. The employee who made these purchases was terminated in September 24, and the department’s investigation was forwarded to the Arkansas State Police. 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, the ability of the Department of Corrections to provide essential services to Arkansas Corrections and law enforcement and criminal justice agencies relies heavily on the availability of an IT system partially supported by the Arkansas Division of Information Systems. Any number of events can interrupt the availability of those systems, including equipment failures, unforeseen natural disasters, or malicious cybersecurity attacks.
When these events happen, the department should have reliable backups of its systems and data, as well as a comprehensive plan to recover its most critical systems quickly. The department conducted a test of its disaster recovery plan in August of 2022 for its offender management software.
However, testing scheduled for the fall of 2024 did not occur due to ongoing DIS projects. Testing the disaster recovery plan is vital to evaluating whether the plan would be effective in an actual disaster. Mr. Chair, that concludes the findings for the Department of Corrections.
Senator Matt McKee Thank you, Mr. Bullington. Members? Representative Meeks. Is there some folks from the Department of Corrections here? You guys come to the table, please. Welcome. If you would introduce yourself for the committee and the record. We’ll let Representative Meeks start with his question, and we’ll move to Representative McAlindon.
Wade Hodge I’m Wade Hodge, Chief of Staff for the Department of Corrections. And depending on which finding you have that you want to ask questions about, we may have different staff that we need to come to the table.
Representative Stephen Meeks All right, thank you, gentlemen.
Eddie Powell I’m Eddie Powell. I’m the Assistant Director with the Department of Corrections also.
Representative Stephen Meeks There for a second I thought you said we would have different answers to the question.
Wade Hodge But you never know.
Representative Stephen Meeks You never know, right, exactly. This is more on information. So on that disaster recovery plan, I know DIS was going through a lot of upgrades at that time and it looks like the B team’s on their way up here.
Wade Hodge We’re going to call in the A team with your permission.
Representative Stephen Meeks And y’all maybe, my question was just basically since those– well, I’ll let you guys introduce yourselves.
Nicholas Stewart Nicholas Stewart, Deputy Chief of Staff Department of Corrections.
Clay Causey Clay Causey, Chief Information Officer, Department of Corrections.
Representative Stephen Meeks Okay, so Chief Information Officer, you’re probably the guy that I need to direct this at. DIS, I think, has pretty much completed a lot of those upgrades that they were going through. And so have you been able to do this backup check since then? Or is it something we’re just putting off until the next opportunity? What’s kind of the status of it?
Clay Causey Yeah, right now we’ve done one for the training environment, just the test out, and all this new equipment they needed was up in the data center north in Lowell. They’ve got that now, so we actually have a full production DR scheduled for Saturday after next, the 21st, and we will do our production system on that. And at that time we will have a report on how the DR went.
Representative Stephen Meeks Okay, perfect.
Representative McAlindon.
Representative Mindy McAlindon Thank you, Chairman. I had a question on finding one.
Wade Hodge Is that the credit card? We’re gonna swap.
Senator Matt McKee And gentlemen, let’s go ahead and introduce yourself again for the record.
Wade Hodge Wade Hodge, Chief Staff for the department.
Eddie Powell Eddie Powell, Assistant Director for the Department.
Representative Mindy McAlindon Thank you. I just had a quick question. It looked like you had just two or three employees managing over 800 vehicles. And it mentions in here you’ve got a new system in place that will prevent that. Can you just elaborate on what that is?
Wade Hodge Yes, ma’am. At the time we only had two personnel going over the transactions for 839 cards using the WEX system. One of our employees actually stumbled on it at about the same time when it all came down, but we realized we were a little overworked. We were too understaffed in that situation. So at that time, the Secretary allowed for us to move another position into that location. And now we have a person that’s dedicated, that all they work on is just the Wex cards.
Representative Mindy McAlindon Okay, can I follow up? In here it mentions a new telematic system. Is that going to change the way that they’re managing that?
Wade Hodge Yes, it’s coming through that new I-4– S-4 HANA. Yes, DFA has got a whole new project coming down for all of our vehicles through our fleet management system. That will all be now handled. We’re putting electronic monitors on all of cars. So we’ll be able to quickly identify how many miles between fill-ups, when someone uses a card. So that we can see if it’s using too much gas, you can start kind of feeling that they’re over-using the card.
Nicholas Stewart Yes ma’am, that’ll be a system that’ll be in place for all departments, not just the Department of Corrections.
Representative Mindy McAlindon All right, thank you very much. Thank you, Chairman.
Senator Matt McKee Members, any other questions for the Department of Corrections? Seeing none, thank you gentlemen. Without objection, this report will be reviewed and we will move on.
Staff Okay, the next report we have a finding on is the Department of Veterans Affairs FY24 report. And this report contains three findings. The first finding, on June 3, 2025, the agency notified us that in May of 24, four employees of the Fayetteville Veterans Home were believed to be checked in but were not actually at work. After an investigation by the agency it was determined that the individuals were paid a total of $561 for about 26 hours that they were not actually working.
Following the investigation, the four individuals’ employment was terminated. As of report date, the improper payments had not been recovered. In addition, we reviewed three pay periods for these individuals and determined that these same individuals received unapproved overtime pay, totaling over $6,600 during the pay periods we reviewed. This finding was referred to the Prosecuting Attorney and the Attorney General and was also certified to the bond board.
The second finding, during our review of expenditures, we identified a duplicate payment of almost $1,000 to a vendor for temporary employment services. A refund was received from this vendor. And the third finding, our review of 24 instances in which employees at the Fayetteville Veterans Home received overtime pay revealed that 20 instances were not properly approved. Mr. Chair, that concludes the findings for the Department of Veterans Affairs.
Senator Matt McKee Thank you, members. Do you have questions for the department? Is there anybody from the department here? Thank you. If you all would introduce yourself for the record and we’ll let Representative Brown ask her question. Punch your button there. You’re good to go. Oh, wait, after they introduce themselves.
Wayne Ruthven I’m Wayne Ruthven, Chief of Staff, Arkansas Department of Veterans Affairs.
Stevie Smith Stevie Smith, CFO, Arkansas Department of Veterans Affairs.
Senator Matt McKee Thank you, gentlemen. Representative Brown, you’re recognized.
Representative Karilyn Brown Thank you, gentlemen. Excuse me. So what has happened? What have you been able to do to try to help prevent this from happening again?
Wayne Ruthven Representative Brown, which finding are we speaking of?
Representative Karilyn Brown Well, the unauthorized overtime.
Wayne Ruthven We’ve changed policies department-wide for overtime, whether it’s contract agency overtime or state employee overtime, particularly in our veterans’ homes. The administrators have to approve the overtime ahead of time, preapproval. The request then has to go through the long-term care division director to Secretary Ator.
Secretary Ator is the only person in ADVA who can pre-approve overtime and he must do that in writing. And should there be an emergency or an after-hours situation, then the homes or the leadership is required to contact through the chain of command, him by phone, get verbal pre-approval and follow up the next workday with documentation to support that.
Representative Karilyn Brown Thank you very much. That’s all. Thank you.
Senator Matt McKee Okay, members, any other questions? Seeing none, thank you, gentlemen. Without objection, that report will be filed.
Staff As mentioned earlier, we also have a special report on today’s agenda related to law enforcement agencies’ adoption of racial profiling policies to present. And I’ll now recognize another one of our staff, Charlie Camp, to present that report.
Charlie Camp Thank you, Mr. Bullington. This letter is issued to inform the Legislative Joint Auditing Committee that for the 2025 reporting period, with the due date of November 1, 2025, Arkansas Legislative Audit has received responses from 203 of 383 law enforcement agencies regarding adoption of a written policy prohibiting racial profiling under Arkansas Code 12-12-1403.
ALA forwarded the attorney general a copy of each law enforcement agency’s response containing an updated policy prohibiting racial profiling. 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 12-12-1403. The attorney general has indicated that he has notified the 108 law enforcement agencies that failed to respond that they are not in compliance with the law. Mr. Chair, this concludes my report.
Senator Matt McKee Thank you, sir. Representative Meeks, you have a question?
Representative Stephen Meeks Yes, sir, I just noticed that the date on this letter is December 16th. Two months have since passed. Any updates from the Attorney General’s office on getting these others into compliance?
Charlie Camp Nothing other than that they have contacted all those law enforcement agencies. We have had an uptick in response from this report compared to the last. So we hope that trend will continue.
Representative Stephen Meeks Okay, all right, thank you.
Senator Matt McKee Representative, you’re recognized.
Representative Jay Richardson Thank you, Mr. Chair. So what’s the plan? Do we know what happens if nobody still responds to that?
Charlie Camp Legislative Audit’s only responsibility in this is to collect the policies that are remitted to us and then turn any updated policies over to the AG. We do not solicit any policies and we do not solicit people that do not turn in policies.
Representative Jay Richardson Follow up. Do you have a list of the people who have still not responded or completed that?
Charlie Camp Yes, sir, we do.
Representative Jay Richardson Can we get a copy of that, Mr. Chair?
Charlie Camp Yes.
Representative Jay Richardson Thank you.
Senator Matt McKee We’ll get that to the committee. Any other questions? Seeing none, without objection, we will file this report. Thank you, sir. All right, members, that’s everything on the agenda. Is there any new business? Seeing none, our next meeting is scheduled for March 12th.
With the work going on down in the basement, there’s a good chance that there will be work going on in this room next month. So currently, the meeting will be scheduled to be held in Mac B on March 12. So y’all will get notified up front, but just want to give you a heads up on that. All right. Any other comments from committee? Hearing none, we’re adjourned.
