McDaniel asked to review two audits

Licensing board, geological survey at hub of civil-penalties-review request

The Legislative Joint Auditing Committee wants Attorney General Dustin McDaniel to review the possibility of seeking civil penalties against the former director of the state's Fire Protection Licensing Board and the current director of the Arkansas Geological Survey over possibly violating the state's budget laws, the committee decided Friday.

Without debate, the panel approved a recommendation from its Committee on State Agencies to ask McDaniel to review Legislative Audit Division audits of the two agencies to determine whether legal action is appropriate.

The attorney general has authority to file a civil suit in circuit court against a public officer or employee violating the state's fiscal responsibility and management laws. If the public officer or employee is found by a judge to have knowingly violated these laws, a judge "shall impose" a civil penalty of between $100 and $1,000 for each violation. Offenders can also be liable for damages.

Auditors said the Fire Protection Licensing Board incurred $4,525 in rental expenses for a three-month period at the end of fiscal 2012 and lacked the spending authority to pay the expenses. The board paid the bill in fiscal 2013 during July out of fiscal 2013 funds, Deputy Legislative Auditor Jon Moore said.

State law allows agencies to pay carryover obligations up to 45 days after the end of the fiscal year, but the carryover obligations "shall be charged against appropriations and fund cash balances in the fiscal year in which the obligations were incurred," he said.

In a written response to the audit, the board said there were mitigating circumstances that contributed to this problem.

Among other things, the board responded that the agency underwent numerous changes during late 2010 and 2011, including the death of its executive director. The new director had not received sufficient training, the board said. Funds were short because the board rented additional needed space and had "six months of higher rent to absorb in our existing budget," the board added.

The board's former executive director, Catherine Gray, resigned before a special board meeting April 25 after $15,426 was improperly charged to her state credit card in violation of state policy, state records show.

Auditors said another agency also improperly spent money that was reserved for one fiscal year to pay expenses from another fiscal year.

The Arkansas Geological Survey made a payment of $23,788 in fiscal 2012 for expenses incurred in fiscal 2011, Moore said.

"Supporting documentation indicated that the agency and the vendor intentionally delayed the billing of a portion of the fiscal year 2011 expense so that it would not be recognized as an accounts payable at June 30, 2011 [the end of fiscal year 2011], but would be treated as a fiscal year 2012 expense since all of the 'adjusted' appropriation and funding for fiscal year 2011 had been used," he said.

In response, the geological survey said it didn't have the funds to pay "the last balance of a grant" with the U.S. Geological Survey to fund Arkansas' water-quality, stream-gauging and ground-water survey programs, after the agency's state budget was cut late in fiscal 2011. Moore said the state pays funds to the federal agency to do certain work under a cooperative agreement.

"There was concern that the lack of money would affect the cooperative funding of the grant," the agency said.

Arkansas Geological Survey Director Bekki White "realizes this was not the proper way to handle the situation," and "will make sure this will not happen again," the agency said in a written response to the audit.

White declined to comment Friday about the committee's decision to forward the matter to the attorney general's office.

Metro on 06/08/2014

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