Legislative Joint Auditing

AI recap

Transcript

You You You Chair calls to order the legislature joint audit committee for Friday, October 9th Our Find trusty coach here. Would you like to say anything before we get started? All right. First order of business is adoption of the minutes. Do I have a motion? I have a motion. I have a second. All those in favor let it be known by I. Any opposed? Motion carries. Next up is the adoption of the reports of the executive and standing committees and up first is a representative hawk for the executive committee. Thank you, Mr. Chair. The executive committee met Thursday October 8th and adopted the minutes for the meetings held September 10th, 2026. Staff reported to the committee the audits and special reports scheduled to be presented to the standing committees and the full legislative joint auditing committee this month. Staff also noted reports that are anticipated to be completed in the coming months. In new business the committee approved the 2027 L. Jack calendar with no other business to discuss. The meeting was adjourned. The next meeting is scheduled for Thursday, December 3rd or the call of the chair. I move for adoption of this report. Thank you, representative hawk. Do we have a motion? Do we have a second? Do we have any discussion? If not all those in favor let it be known by I. Any opposed? Motion carries. Second on the list is the standing committee on counties and municipalities. Senator Stone, would you present your report? The committee adopted the minutes of the meeting held September 10th, 2026. The committee was informed that three entities have not filed their delinquent private water and sewer audits for December 31, 2023. And 19 entities have not filed their delinquent private water and sewer audits for December 31, 2024. The committee also updated that the city of box item has not filed its December 31, 2024 delinquent private city audit. The committee requested certified letters to be sent to eight water and sewer systems that have not provided proper responses to their private audit findings and inviting them to attend the December meeting. The committee reviewed 21 deferred reports and 98 current reports. Officials from ten entities were present to address repeat findings. Nine previously deferred reports were filed and 12 were deferred. So the 98 current reports reviewed nine were referred to the prosecuting attorneys and the attorney general and one was certified the government bonding board. The committee filed 96 current reports and deferred two reports to allow officials to answer questions of provide additional information at a future meeting. I move for the adoption of this report. Thank you, Senator Stone. We have a motion. Do we have a second? We have a second? Any discussion? All those in favor let it be known by I. Any opposed? Motion carries. Next up, number three is the Standing Committee on Educational Institutions, Senator Dees. Would you present the report? Thank you, Mr. Chair. The committee met October 8, 2026 and adopted the minutes from the September meeting. Six education audit reports were included on the committee's agenda for review. Officials from Texarkana, Arkansas School District and Institute for Creative Arts School were present and answered questions from the committee related to findings in their respective audit reports. For the University of Central Arkansas and Vermont School District, contained findings that were referred to the applicable prosecuting attorneys and attorney general in other business in response to a motion made during the September meeting the prosecutor coordinator from the Arkansas prosecutor coordinator's office was present and discussed audit referral process with the committee. The committee filed the six audit reports that were brought before it and Mr. Chair, I move for adopted this report. Senator Dees, we have a motion. Do we have a second? Have a second? Any discussion? If not, all those in favor of adopting this report let it be known by I. Any opposed? Motion carries. Final report, number four standing committee on state agencies and representative Meeks, would you present that report? Thank you, Mr. Chairman. Nine reports were on the committee's agenda yesterday. The following findings were presented. The Department of Health did not properly bid a service contract and the Department of Labor and Licensing made travel payments to an employee in violation of state travel regulations. Various agency staff members were present. To report on how the agencies intend to address the audit filings and to answer committee questions during the meeting, the committee filed the nine reports. I move adoption of this report. Thank you, Representative Meeks. Do we have a second? Do we have any discussion? If not, all those in favor of adopting the report let it be known by I. Any opposed? Motion carries. Next up are a couple of report presentations and I think what I'm going to do is call the representatives to the table from the Chico County Drainage District but hold off on swearing in until we see if we have any questions. So if the members from the Chico County Drainage District and the Chico Junction Water System would come to the table up front, we'll save the swearing in until we see if we have any questions. All right. Thank you, gentlemen, and presenting the report is Mr. Anthony Weston. Thank you, Mr. Chair. This report has issued in response to requests from the 10th Judicial District Prosecuting Attorney for legislative audit to review selected transactions of the Chico County Drainage District and the Chico Junction Water System. The PA contacted Arkansas State Police and legislative audit about possible misuse of funds at the Drainage District. Subsequently, State Police advised us to expand our investigation to include the water system. Both the Drainage District and the water system employ the same bookkeeping company to provide services including maintaining ledgers, reconciling bank accounts, depositing receipts and writing checks. This company also provided billing and collection services for the water system. These duties were carried out by the company owner referred to in this report as the bookkeeper. The first portion of this presentation will cover issues at the Drainage District which was created in 1920 and is governed by a five member commission appointed by the Chico County Judge. Funding sources are primarily assessment fees collected by the Chico County Tax Collector and remitted to the Drainage District which maintains one bank account and seven certificates of deposit. The district did not obtain required yearly reports from a CPA regarding its books, records and last annual report of the district is required by Arkansas Code. Review of selected disbursements for the period October 1, 2020 through December 31, 2025 revealed improper disbursements from the Drainage District issued to and by the bookkeeper or bookkeepers business. These disbursements were totaled over $34,000 or an excess of authorized amounts and did not have supporting documentation as noted in Exhibit 1 on page 3. The Drainage District terminated the bookkeeper service in October 2025. Additionally, our review revealed the following internal control deficiencies for the Drainage District. In voices or other supporting documentation were not maintained for disbursements. Checks were not required to have the signature of two authorized disburseing officers. Financial accounting duties were not properly segregated and adequate compensating controls were not implemented. Required financial reports were not obtained or submitted to the appropriate entities and the governing body did not exercise proper oversight of fiscal operations. ALA recommends the Drainage District have its books, records and last annual report examined by CPA at least one time per year is required by code, maintain adequate financial records, ensure checks are signed by two disburseing officers, segregate financial duties to the extent possible. Additionally, the Drainage District's governing body should provide adequate fiscal oversight and ensure adequate internal controls are implemented. The remainder of this presentation will cover issues at the water system, which was created in September of 1977 to provide potable water to the residents living with indents boundaries. The water system has approximately 200 water connections and purchases treated water from Lake Village Waterworks and the city of Portland. The water system is governed by six member board of directors elected at the annual members meeting. Funding sources are primarily from water usage fees and the water system maintains two bank accounts. The water system did not obtain an audit or agreed upon procedures and compilation report annually is required by Arkansas code. Review of selected disbursements for the period October 1, 2020 through December 31, 2025 revealed improper disbursements from water system issued to and by the bookkeeper or bookkeepers business. These disbursements, which totaled almost $172,000, were in excess of authorized amounts and did not have supporting documentation is noted in Exhibit 1 on page 3. The water system terminated the bookkeeper service on December, in December, 2025. Finally, over a two year period, the water system made 120 payments totaling over $167,000 to a business owned by a board member to operate and maintain the water system facilities and read the water meters without a contract or other formal action by the board. Adequate supporting documentation was not maintained for 111 of these disbursements totaling $153,000. We also noted two disbursements totaling $120 to the same board member spouse and one disbursement of $100 to a second board member due to a lack of supporting documentation, the validity of these disbursements cannot be determined. Review of water system billing information and bank deposits for the period January 1, 2021 through December 31, 2025 revealed customer payments totaling over $10,000 that cannot be traced to deposits in water system bank accounts. Additionally, the previously mentioned company owned by a board member owed almost $400 in past two buildings at the end of calendar year 2025. This same company fell to make 53 of the monthly payments due on its account during the 72 month period reviewed with up to 12 consecutive months between payments. The water system also did not assess penalties for 23 months of unpaid water bills for the company owned by the board member. As of January, 2026, the wife of the board member noted above was appointed office manager for the water system. Board meeting minutes noted approval of this appointment but did not include a board resolution. We also noted that the water system did not submit a rate study prepared by an approved rate study provider by July 1, 2024, as required by Arkansas Code. The Arkansas Department of Agriculture notified the water system on July 9 of last year of this noncompliance and as a result placed the water system in fiscal distress. Our review revealed the following internal control efficiencies for the water system. In voices or other supporting documentation were not maintained for disbursements. Checks were not required to have the signatures of two authorized dispersing officers. Financial accounting duties were not properly segregated and adequate compensating controls were not implemented. Required financial reports and rate studies were not obtained or submitted to the appropriate entities and the governing body did not exercise proper oversight of fiscal operations. We recommend the water system obtain an annual water audit or agreed upon procedures and compilation report as well as a rate study is required by Arkansas Code. A contract for services for the board member hired to operate and maintain the water systems facilities and read the meters. And approval of a formal resolution by the board allowing the water system to do business with the board members company and to employ the board member spouse as office manager. Additionally, the water system should maintain adequate financial records ensure checks are signed by two dispersing officers and segregate financial duties to the extent possible. Finally, the governing body of the water system should provide adequate fiscal oversight and ensure adequate internal controls are implemented. In summary, our review of selected disbursements revealed that drainage district and water system funds totaling over $206,000 were issued to and by the bookkeeper or bookkeepers business in excess of authorized amounts and without adequate supporting documentation. Also, water system customer payments totaling over $10,000 could not be traced to deposits. Several internal control deficiencies contributed to both the misappropriation of funds and the lack of timely detection of the misappropriation. Additionally, a business owned by the water system board member was paid over $167,000 without a contract or other formal action taken by the board. Attiquate supporting documentation was not maintained for 153,000 of these payments. In non compliance with Arkansas Code, the drainage district did not obtain annual financial reviews and the water system also did not obtain yearly audits or agreed upon procedures reports. Additionally, the water system did not obtain rate studies required by Arkansas Code and as a result was placed in fiscal distress in July 2025 by the Arkansas Department of Agriculture. As of report date, the water system had not submitted the required rate study. This report was forward to the 10th judicial district prosecuting attorney and the attorney general, the bookkeeper was charged with theft of property in June of this year. This concludes my presentation management responses from the drainage district and the water system are provided and appendices A and B respectively representatives from both entities are present to respond to committee questions. Thank you Mr. Weston. I do not see anybody in the queue with questions. You gentlemen came and I will give you the opportunity to speak if you'd like to speak and address anything to this body. If not, sorry. I spoke too soon. We had to have two here. Are the representative long? Are these for these or for the staff? For the board member, Mr. Chairman. Okay. Very good. I'm going to go ahead then and ask you to stand and state your name, employer and position, and then we'll swear you in. So if you would press the button there in front of you. Board Chairman, Shiko County, drainage district. All right, and you sir. David McNamara, president of the board, Shiko Johnson water system. All right. Represented long to that. I think I just took. Would you get back in the queue and I'll put you in there. I think I hit the. All right. If you would raise your right hand. Do you solemnly swear that the and affirm that the testimony you're about to give will be the truth, the whole truth and nothing but the truth. Thank you. Now let's do it. All right. I think I got you right now to represent it long. Thank you, Mr. Chairman. Gentlemen, we're going on the board when all this was taken place. Yes. Did you not have a feel for something maybe was wrong? None whatsoever. What what have y'all done so far since you got this report to make sure this never happens again? The the drainage district, of course, we've. Would you could you just a little get here a little bit closer to you, please. The Shiko County drainage district we we definitely hired a CPA. Now we have two signatures on the checks. We do our audit once a year and we've got greater access. All the board members have an access to the bank accounts that they can access if they want to and where before we just. We were kind of in the dark and it was it was when I got on there. I mean, this was it was just business as usual. This is the way it was done and I didn't question it and you know and it happened that way. So it's it's been an eye opener for sure. Is the the board member that was also running the operation? Is he still on the board? No, I think that's directed to the water system. The board member in question died this past year so he's not on the board anymore. Thank you, sir. All right. Senator Hammer, you're recognized. Thank you. I think I just heard the answer to I'm over here too far left. I just heard the answer to the question. The the employee that is under investigation was married to a board member correct. Is that correct? No. No. The employee under investigation was not was not married to anybody on period. Okay. Maybe I misread the report. What was the interaction between the board member? And this or did I misread the report or not here real well? Is there was a connection between a board member? And we we hired the board members wife to be our office manager after the fact after the fact. Yeah. Okay. Then did I notice in the report too? I was reading it real quick. Did I notice in the report that y'all still need to do the board resolution? Or have you taken care of that or those two things even related to each other? We have taken care of that. You have taken care of that. And on the requiring of the two signatures, those are both required to be original signatures. One can't be a stamped signature. Is that correct? That's correct and that's taken care of also. Okay. Thank you. Appreciate it. Mr. Raul, you're recognized. Try it again. Go ahead and get back in there second. Thank you, Mr. Chairman. Guys, this is very, very important what you guys are doing. You know, that stretch is all the way from pick it up. It's all the way down to the bottom part of the state. The Corps of Engineers plays a big part in that. Isn't that right, sir? Did they notice anything that was wrong with this before y'all actually found it yourselves? The Corps interacts with the drainage district only when they are asking us for right away or acquisition of property or information to landowners, things like that. They don't attend our meetings. They don't look at our finances. I mean, that's that's the only way they interact with us is when they're doing a project and they need, say, right away, acquisition property or information about the area. Thank you, sir. And, you know, that's very, people don't realize how important this really is because, you know, back in 27 and 1937, that was the great flood, you know, that we all heard about. And without these components that you guys are playing a part in, boy, it could really be a serious thing. So appreciate y'all doing the right thing. Thanks, sir. Yes, sir. Representative Meeks, you're recognized. Thank you, gentlemen. Right here in front of you. Appreciate y'all driving all the way up here. So my question is, is it sounds like the gentleman that was doing a lot of the work for the water system is the one that the prosecuting attorney has implicated in some of this. And so the question that I have is, do you have a new company that's taking care of the water system now, someone new? So tell us how you've gone from what was happening to how we're moving forward to make sure that the citizens in that area are going to have safe, secure water. Well, first of all, he hasn't been him. He was never implicated by the prosecuting attorney at all. He was, he was our water operator. Right. And everything, everything it's in there about him is strictly because the bookkeeper just wasn't keeping adequate records of his payments. And I mean, he would send invoices to her. Plus, he was paid. The biggest thing was that we did, we did all of this without a contract with him. He was hired, but we didn't, we didn't have a contract with him. So he was doing everything on the oven off? He was fantastic. Our water system was in a terrible shape when he took over his operator. And he did a great job at doing what he was doing right up to the day he died. And so I couldn't, I can't say enough about how good of an operator he was for our system. It's just unfortunate that the bookkeeper wasn't doing her job. And we put all of our trust along with the drainage district. The whole problem here is we just put too much trust in our bookkeeper. And she pretty much was handling all the responsibilities for pretty much everything that was listed here. And I think we're pretty well got it all covered now. We're back on the right track. Good thing. Glad to hear that. Thank you for being here. Okay. I co-chair representative, how could you like to? Thank you, Mr. Chair. Guys, real quick. One thing I want to ask about is the rate study. Where are we at as far as getting a provider and getting that rate study done for the water system? We contacted our course, both of us are using the same CPA firm. And we just contacted somebody here recently to start working on doing a rate study. The rate study should have been done and there again. It's right back to this. It all still comes back to the same thing, you know, with our lady. She was taking care of our books and all this came down. We were trying to get a grant from USDA. And we had to have this rate study done to do that. And she just, she drove her feet until they ended up putting this in a position where they just dropped our project altogether. But we are in the process of getting a new rate study done. Thank you. Representative Tosh, you're recognized. Thank you, Mr. Chair. And I appreciate you allowing me. I really don't have a question. I guess you just support a clarification for the staff maybe is. I'll go back in 2017. I passed legislation and our sponsored legislation that would require any county entity that they would have to do a check and balance that they could not just sign off individually with any deposits from, you know, that they've received putting into a fund. You know, the county treasure or, you know, for retirement for the county employees. That, that law all kind of covered, but I'm not sure that it covered the drainage districts, you know. But it did count, it can't, a cover any county office that were there had to be a check and balance. So I think it would be good for someone to review that for especially for this legislative body to see if that legislation passed in. It actually would cover this situation here where that would actually become a violation of the law because they didn't follow the procedure that was laid out in that legislation. Or if we need to look at that legislation and need to make it a little broader to prevent incidents like this from occurring. That's just what I would suggest to staff. Representative Rae, you're recognized. Yes, thank you, Mr. Chairman. Gentlemen, you know, in Craighead and in Poinsett and Mississippi County. All these counties that are along the Mississippi River, they are actually, as far as I know, they're collecting that on the local level at the treasure's office after the assessor puts the value on. And I just wonder if that's going on with y'all, and if it is, that's a good thing, but if not, it would be a great place to do your checks and balances. That's correct. You know, we have a millage for the Chico County, drainage district. It's collected by the county, and it is, they still, it's not direct deposit, they send us checks and we deposit those checks. I will say that, you know, when I was on the pointed to the board, the county clerk made me very aware that each year you submit your financial statement and what you did during the year. That was the check and balance I thought was, and it was my understanding that the bookkeeper was doing that. From time to time, I would get a question from the clerk asking, well, each year we have to declare whether we're going to maintain this millage, increase it, decrease it, whatever, whatever we voted on. And there were a couple of years where bookkeeper didn't send that letter in and the clerk contacted me and I sent it in. So, I guess I'm saying that there were some things that we thought were being done, that were not being done. And now we have the controls in here to make sure that every year they are done. And that's the financial report to the county clerk, you know. Thank you, Mr. Chair. President Richardson, do you recognize? Thank you, Mr. Chairman. A couple of questions for clarification, gentlemen, you both are on the board, right? And both of you serve in leadership positions on the board, is that correct? Yes. I guess I've listened to the testimony here and I have a couple of concerns. I mean, the board has the fiduciary responsibility to ensure the financial status of that particular entity is in good shape. And all I've heard in your testimony is that this bookkeeper, this bookkeeper, this bookkeeper has been a problem. But ultimately, the responsibility is the board's responsibility to ensure the financial circumstances are handled correctly, the reports are filed on time that you guys are following the letter of the law. And I haven't heard any of that from you. So I just wanted to make sure that you guys understand that ultimately this responsibility is yours, not the bookkeepers. And so the failure, of course, is yours. So are we on the same page? So the bookkeeper was on the Shiko County Drain's District Board. You know, otherwise she was considered, you calling it a bookkeeper in here, but she was the secretary who handles the financials. The other district, that was something different, but yeah, she was on the actual Shiko County Drain's District Board. And I appreciate that, but just for clarification, the understanding is that that is the board's responsibility, not an individual member of the board. The board is a whole. Each of you owned the responsibility equally, right? That's correct. And you know, we were given financial statements. I mean, if you look at the way this just went down, it was probably the last three years, you know, which I guess you could say that the way it all came to an head was there with large checks being deposited or wrote on the board. And we were made aware of it. And that's when we investigated it further. In other words, as David said, you know, we had the same trust in her. She was a bookkeeper. We know in our life you trusted and you find out it. Your trust was misplaced, you know. Well, thank you for your testimony. Thank you, Representative Richardson. And I appreciate you bringing that up because I had a note to bring that up as well to talk about board governance. And so we all sat on boards, but it's incumbent upon the board members to be engaged and not just filling a seat. And I'm not implying that either one of you were doing that. But there's a reason why there's a requirement to have a board. And it is definitely for the board governance and protection of the individuals that represented a variety I was talking about. So thank you again, Representative Richardson. Representative Baty, you're recognized. Thank you, Mr. Chair. Jim, I think you all are coming today and it's never, never a fun task to come before leg audit and discuss issues or findings. But I think what I heard you guys saying the whole time you've been there is that you accepted the responsibility for it. That's what I heard. I mean, I don't know if my colleagues didn't hear that or not. But I heard you, gentlemen, say that you acknowledge that. You acknowledge that you place too much trust and faith in an individual that you had a long-term employment and relationship with serving on the board. And that tends to be where a lot of these issues that we cover and leg audit come from. So, and then reading the report, many of the questions that were asked are covered in black and white right here in front of members. So I appreciate you submitting those responses. It appears to me that you have corrected or started the measures and procedures to correct everything that was identified in this investigative report. Is that correct? That is correct. Yes, sir. And so we're just waiting on the rate study now and any of us in this room that have districts that have performed rate studies know those take a little while. And so we look forward to getting your rate study and I appreciate you all coming down. Thank you. Thank you. Thank you, Mr. Representative Beatty. I see no other questions in the queue. Would you guys like to say any closing comments? If not, thank you for being here and you are dismissed. Thank you. These are. All right, with presentation of the report while the gentlemen are leaving, do I have a motion to accept the report? Have a motion? Do I have a second? Have a motion in a second? Any discussion? If not, all those in favor say aye. Any opposed? No. All right, motion carries. Thank you. The report is accepted. Next up is a special report which is a review of selected policies, procedures, and transactions for the seven regional solid waste management districts. For the period July, July 1, 2023 through December, 2024. And Representative, I mean, presenting that report will be Mr. Charlie Camp. Thank you, Mr. Chair. Arkansas Code requires legislative audit to review selected policies, procedures, and transactions of Arkansas's regional solid waste management districts. For this report, we randomly selected seven districts for review. The objectives of this review were to determine if the districts adhere to laws and regulations pertaining to districts in their boards of directors, competitive bidding, payroll, landfill use, and transactions involving board members. Administrators and employees. Other objectives were to disclose internal control deficiencies that came to our attention related to our review of cash, revenues, receding, and disbursements. Arkansas Code requires the districts to obtain an annual audit of their financial statements from a private CPA firm. The private audit reports for the Carroll County, East Arkansas, Upper Southwest, and West River Valley districts contain no findings. The report for the Boston Mountain and Northeast Arkansas districts contained one finding related to lack of segregation of duties, due to limited resources. And the report for the White River District contain one finding related to material adjustments to the financial statements. These districts are all reported on corrective actions taken. Exhibit two on page three provides a summary of the findings by both private CPA firms and legislative audit for the seven districts reviewed. We issued 12 findings for the Carroll County District, which will be presented by type. Findings one to nine and ten relate to credit card charges and other disbursements. Finding one states that a review of credit card charges and other disbursements for the period January 1, 2024 through March 31, 2026, revealed almost $15,000 in improper or questionable purchases. These included over $5,300 for meals, including alcoholic beverages without a business purpose indicated. The majority of these meals were expended within the district boundaries and were not included on the employees IRS form W2. Additionally, we noted $4800 in credit card charges with no documentation provided. A summary receipt, but not a detailed invoice, was provided for almost $4,000 in charges with $3,500 of that paid to various restaurants. Last, we noted an $821 disbursement to a meat vendor with an Ivan invoice. This finding was referred to the PA in AG. Number two notes that using a Carroll County District credit card, the chief financial officer purchased over $1,300 in fuel for her personal vehicle without a documented business purpose and in conflict with the district's travel policy. This finding was also referred to the prosecuting attorney in the attorney general. According nine states that the district was paying for charges based on receipt remitted rather than a monthly statement amount resulting in interest charges telling over $700. Additionally, cards that were not in the name and possession of an individual employee were not logged in and out. Therefore, the employee making the charges cannot be determined. During a test of 10 disbursements, we noted the following issues resulting in finding 10. Adequate supporting documentation was not provided for cleaning services tolling $2,600 and $1,500 in 2025 and 2024 respectively paid to the executive director's spouse and violation of the cleaning contract between the spouse and the district. Authorization or approval for payment was not indicated on all invoices and meals and lodging were paid in excess of the amounts allowed by district policy. Signings four and five relate to issues regarding compensation. Carroll County district employees were allowed to receive pay for unused vacation before the leave was earned and for amounts in excess of what district policy allows. These payments told $19,000 and included $9,500 paid to the executive director for 40 days and $4,000 paid to the chief financial officer for 19 days. Also noted $3,900 paid to the deputy director for 17 days with some of this amount being paid after we notified the district of this violation. Additionally, $810 was paid to the executive director's child for five days and $700 was paid to the executive director's spouse for five days. The executive director's child and spouse were also paid for holidays during their period of part time employment and violation of district policy as a result each individual's overpaid approximately $1,000. Furthermore, the district terminated the employment of the executive director to spouse and his child in January of this year. As of our report date, these overpayments had not been recouped by the district. This finding was referred to the prosecuting attorney in the attorney general. As noted in finding five, it came to our attention that the executive director was employed as a full-time bus driver by a neighboring school district from August 2025 through termination of his employment with the Carroll County district. Additionally, the executive director's child clocked in at the district on Saturdays and Sundays. These activities appear to be in direct violation of district policy, which requires employees to work hours of 7 a.m. to 4 p.m. Monday through Friday. This finding was referred to the PA in the attorney general. Finding number three relates to a conflict of interest and was referred to the prosecuting attorney in the attorney general. The district made payments tolling $1,900 and $3,000 in 2026 and 2025, respectively, to a business owned by a district employee without board approval. In addition, the executive director hired his child and spouse as full-time employees in August 2025 without approval from the board. A similar finding was issued in a prior report. Finding number six related to the public purpose doctrine and was also referred to the prosecuting attorney in the attorney general. We noted that the district made contributions tolling $500 and $750 in 2025 and 2024, respectively, to two charities and another organization. These expenditures do not align with the purpose of regional sideways management districts provided an Arkansas code in the public purpose doctrine. Finding number seven, eight, 11, and 12 relate to non-compliance with accepted accounting practices as well as internal control deficiencies. As noted in finding seven, the Carroll County district did not issue pre-numbered receipts for all income received. A similar finding was noted in a prior report. Finding number eight states district did not establish an electronic funds payment system with written policies and procedures for internal accounting controls and documentation for audit and accounting purposes. Meeting minutes were not initially provided for all board meetings as noted in finding 11 minutes subsequently provided were not signed. Therefore, board approval of the minutes could not be verified. Finding 12 states that the district's board meeting minutes did not document the review of the prior audit report as required by Arkansas code. The remaining slides present the findings for the other districts. For the West River Valley district, we issued three findings. First, the district did not issue pre-numbered receipts for all income received. A similar finding was noted in a prior report. Second, six unauthorized withdrawals to link $6,000 were made from a district bank account in September of 2024. District personnel discovered the unauthorized withdrawals and funds were recovered from the bank. Third, the district paid the Arkansas Department of Environmental Quality of fine of $3,400 for operating on an expired waste-tired processing permit. For the East Arkansas district, we issued two findings. First, although transactions with a company owned by district employee were approved by the board, competitive bids were not solicited for the use of equipment to haul recyclables for the total cost of over $80,000. Additionally, no contract for services or other documentation was available to substantiate the rate paid per mile for the use of the equipment. Second, as of January 1st, 2025, the East Arkansas district board assumed operating responsibility from the East Arkansas Planning and Development District. And as of February of this year, the district had no personnel policy, travel policy, or written job descriptions in place. For the Boston Mountain District, we issued one finding, competitive bids were not solicited for the disposal and hauling of waste hires in the amount of $1.37 million in non compliance with Arkansas Code. We also questioned whether a contract for tire processing with a 25-year term is allowable. Finally, we issued no findings for the Upper South West, Northeast Arkansas, and White River Districts. Mr. Chair, this concludes my presentation. The district's responses to the findings are contained throughout the report. As noted in this presentation, six findings for the Carroll County District were referred to the 19th Judicial District East prosecuting attorney in the Attorney General. Both the Carroll County and West River Valley Districts had repeat findings and representatives from these districts are present to respond to the committee's questions. Thank you, Mr. Camp. I see no one in the queue just yet, but I believe Senator Mark Johnson had a few comments to make. So if you would get in the queue there. Senator Johnson, you're recognized. Thank you, Mr. Chairman. I won't belabor this, but as other members have mentioned, the kind of things we see in previous witnesses, you have people in a position of responsibility, often the bookkeeper of some kind that break the law, that steal, that do these things, and the board doesn't find out about it to laugh to the fact. Mr. Chairman, we see this in a lot of things, but on these solid waste management districts, I think the volume and the problems seem to be a little bigger. I spoke to in our own district here in Pulaski County that they've had some problems, and we filed that report in the Standing Committee yesterday. But I have a lot of concern that we may have not just some people problems, we may have some systemic problems. We create these boards by statute, and they, in this case, they make up sort of a county judge and the mayors of cities of a certain size within that district. And that seemed like a logical thing to do. The problem being having spoken to three board members in Pulaski County who are the mayors, they admit and lament the fact that, you know, as all the other things they have on their plate, they can't give this a kind of attention that it deserves. Now, I'm not sitting here this morning with a solution, but I think we as a General Assembly that created this, have a couple of ability in that respect, in that we didn't create a system that had the proper checks and balances to avoid this kind of thing. So I would just mention to my colleagues here and throughout the General Assembly that in 2027, maybe we need to take a long hard look at how they're organized and come up with something with a lot more accountability than what we've seen so far. And I'm not picking on a single mayor or county judge or anyone else that's in this chain of command that I'm just simply saying that I don't think we created a very good system to avoid these kinds of problems. And I just wanted to bring that up to my colleagues and appreciate all of you taking a look at it in your areas. You may find other situations where we need to do something similar to that, but oversight and transparency are important. And the thing about the Solid Waste Management Districts is they move a whole lot of money and a whole lot of stuff. And we see this in a little bit of towns and we slap the hands of mayors and recorder treasures in the standing committee on counties, municipalities, but in this is where the big money is. And certainly, the taxpayers are at some point in time covering this. And so I believe this kind of rises to the level of importance that maybe we all all need to take a good look at it in 2027 again. I don't propose an answer, but I think we need to find one. Thank you, Mr. Chairman, for letting me make that comment. Thank you, Senator Johnson. And that's a good reminder that the reason that we do what we do, the reason we create some of these things that we create is ultimately transparency and protection of the public. But we don't always do it the best the first time. So thank you for your comments and we'll look forward to seeing whatever occurs in 2027. With that. Okay. Representative Longer recognized. Thank you, Mr. Chairman. I had a question for staff. I think it was the last slide. It was talking about somebody who had done a 25-year contract and it's stated that it may not be allowable by law. I was wondering who would we need to talk to to find out if that's allowable by law because that seems like a really long time for a government or quasi-government organization to commit to something. Thank you for the question, Representative Long. Emily, why legislative audit? When we looked at the reconciliation between portions of code, we just had some questions in our mod as to whether or not that would be allowable. So talking to staff, we decided to frame it in that way and I think that maybe something that this body could also look at moving forward in this next session. That's what I was getting at. Thank you very much. Thank you, Representative Long. Okay. Now seeing no one. Do I have a motion to accept the report? Have a motion? Have a second? Have a motion to second any further discussion? All those in favor? Let it be known by eye? Any opposed? All right. Motion is carried and report is accepted. The gentleman that we're here, you're welcome to just make any statements you've made the trip. We appreciate that and would give you the opportunity if you'd like to make a presentation or a statement. We need to see someone travel and not get an opportunity to say what's on their mind. So if you would, just remain standing and. Okay. We're going to relieve you since we've already accepted the report of the swearing in and just allow you to make a brief statement and we'll go from there. So if you would have a seat and then you can introduce yourself and then make whatever statement you want to make. Thank you, sir. I was Roger Minor and up until last Friday, I was the interim director of the Carroll County Solid Waste Authority. I was hired about eight months before that after the leadership of that organization was terminated. I was the original director of Carroll County Solid Waste Authority before it was a district and really kind of started the whole thing back in 97. They hired me back to try and get the rudder back in the water, so to speak. And I was just going to work for three months or so, but it wound up being eight months. And as you saw from the report, there were a lot of things to address. I brought with me the new director, Mr. Monty Nance, who has been the director for a week now. And so we came to answer questions that are raised by the legislative audit to go through them item by item. If you need that to talk about the things that we have put in place to prevent problems coming up in the future. And so that is why we are here. As an overarching theme, I would tell you that in response to comments made, the thing that I encountered when I came on was a culture that had really strayed. And the very first thing we did was to have a study session with all of the employees, a group meeting. Everybody that I encountered that was working had begun talking about the district. It really didn't use that name district. They talked about the company. And it kind of alarmed me. And indeed, there was a culture that saw the enterprise, the public enterprise, as kind of a private enterprise. And a lot of comments were made back and forth about the company's director had a lot of discretion. And could make choices that really were independent of the controls that were there by rule and by legislative authority. So we had a big employee meeting and that's where we began was to take the public purpose that's at the center of the enabling legislation for solid waste districts and put it front and center. And to remind the employees that they worked for a governmental unit, a special purpose governmental unit. And that there were very strict rules and laws that set out a framework for how we could operate in contrast to a lot of the districts that exist in Arkansas. Carroll County Solid Waste District is really a robust enterprise. It has a big hauling company and halls most all the trash in Carroll County and all of the cities in Carroll County. And as an enterprise, it operates like a business should. There are thousands of customers. They are billed by the district and by the cities. And so the business that is conducted daily feels like a business enterprise. And to run it efficiently, you know, there are characteristics of it that feel that way. But it's not a private entity and that was at the base of where a lot of bad practices got started. So the very first thing we did was to remind everyone and go into great detail about the nature of our enterprise. It's very much akin to like a big water system where you have a big billing base, thousands and thousands of transactions. But it's still public and the stakeholders are public. And so the fiduciary responsibility ultimately is to the public. So there are a lot of things that grew out of that that we counseled the employees about those things, the rules that govern them, and how they had to start doing things differently. The board, recognizing that something wasn't, couldn't be right, took a bit of a leap of faith and recognized people at the top of the organization that that situation was simply not salvageable and they terminated them from service. And that really was evidence of the board saying, we really are responsible. We're supposed to be overseeing this thing and they took that step and in their circumstances, they didn't have a whole lot of detail. But they made that step and it was the correct one and it got things going on the right footing. So I have brought the, there were quite a few findings and the staff of the audit constructed their findings on a spreadsheet basis with everything listed down the left hand side and line by line each finding. They gave the detail of what they found. So when we responded to those findings, we expanded that spreadsheet and put all of our answers and narrative about each one of the findings and what we've done about them. So I would have that open and be prepared to respond about that if you, if it's your pleasure. So I think, I think the report reflects a summary of those findings and the responses and I would say that there was no questions. And so at this point, I wouldn't say that that was necessary. I appreciate you offering that Senator Johnson, they are not sworn in. Is this for staff? Okay, all right. You're recognized. Thank you, Mr. Chairman. Mr. Minor, thank you for your comments. I can tell that there's a whole lot of progress being made just having you doing this. You heard a moment ago what I said to the committee about our responsibilities legislators and I appreciate as your response to that. I'm going to make us an open-ended question, not something you have to say. Oh, I can tell you everything you need to know to answer your question today. But I'm looking for solutions. People that have been on the ground as you have are the people we need to help us find those solutions. Is there any particular systemic thing that you could say today? And again, it's an open-ended question. If you want to call me in a week or a month or in the spring when we're in session and say, oh, I thought of something else, that's fine. But is there anything that jumps out to you that we can start the process of doing to reform this where we have better accountability? And that's a two-way street. It's not just we're telling the districts how to do things but where they can tell us what they need to accomplish these things for the grip, but most efficiency to the taxpayers is anything that jumps out at you that maybe we should look at. I, by the systemic nature of the enabling legislation, the special purpose unit of government creates an animal that left unobserved and with regular dialogue between the legislature that created it and the districts themselves can grow its own culture. And these special purpose units of government were patterned, I think, originally after the New York Port Authority. New Jersey and New York couldn't share a port and they figured out we need a special purpose unit of government. It's not the cities, not the states, it's a special purpose, but it's still government. That's what I found. I found that because of the special nature of the districts and especially in our case because of its robust enterprise nature, the fact that it was daily making money and spending money at a very fast pace and thousands and thousands of transactions, it became kind of an entity unto itself forgetting its public nature. A little bit, not completely and believe me, there's plenty of dedicated employees that saw themselves as public servants as they should. But still, just if you talk about something systemic, the fact that you create a special purpose government creates a little different atmosphere than just walking into the offices of what we all think of as a governmental agent. So I think there's training that could be done to reinforce the public nature and the public purpose of everything people do when they're in the employment of that agency. They just need to be reminded and especially the employees, they need to know that their leaders are acting in a public role. They're not acting as private executives in a company. So I think that would go a long way to prevent this kind of situation that we've had. I thank you very much for your comments Mr. Minor and I expect in the future to be reaching out to you, think about these things and again we're searching for, we don't have a perfect union, we're told in the preamble to create a more perfect union. Thank you sir, thank you Mr. Chairman. Thank you Senator Johnson, thank you gentlemen. Seeing no other business, the next meeting of the legislative joint audit will be on December 3rd and 4th. 2020-26 and with that we are adjourned. You