Internal Control and Compliance Assessment Arkansas Legislative Audit

Size: px

Start display at page:

Download "Internal Control and Compliance Assessment Arkansas Legislative Audit"

Annabelle Perkins
5 years ago
Views:

Internal Control and Compliance Assessment Arkansas Legislative Audit For the Fiscal Year Ended June 30, 2014 INTRODUCTION This report is issued to inform the Legislative Joint Auditing Committee of

As discussed in the Results of Assessment section below, our procedures disclosed that the Agency had insufficient segregation of duties over cash transactions of the Loughborough Trust Fund due to a

1 Internal Control and Compliance Assessment Arkansas Legislative Audit For the Fiscal Year Ended June 30, 2014 INTRODUCTION This report is issued to inform the Legislative Joint Auditing Committee of compliance with state fiscal laws and regulations as well as deficiencies in internal controls for the. As discussed in the Results of Assessment section below, our procedures disclosed that the Agency had insufficient segregation of duties over cash transactions of the Loughborough Trust Fund due to a limited number of personnel. SCOPE AND METHODOLOGY We performed an internal control and compliance assessment of the, a department of Arkansas state government, as of and for the year ended June 30, 2014, and have issued our report dated May 26, Management of the Agency is responsible for establishing and maintaining internal controls and complying with applicable laws and regulations. The assessment included cash on deposit, cash receipts, expenditures, capital assets, and data entry to the Arkansas Administrative Statewide Information System (AASIS). The assessment consisted principally of inquiries, observations, analytical procedures, and selected tests of internal control policies and procedures, accounting records, and other relevant documents. We relied on financial data in AASIS recorded by the Agency and audit work conducted in the fiscal year 2014 State Comprehensive Annual Financial Reports (CAFR) and Single Audit Reports. The methodology used in conducting this assessment was developed uniquely for this engagement and, therefore, was more limited in scope than an audit or attestation engagement performed in accordance with Government Auditing Standards issued by the Comptroller General of the United States. RESULTS OF ASSESSMENT Assessment procedures disclosed the following internal control or compliance matter that was discussed with Agency officials during the assessment and at the exit conference: Finding: The Agency had inadequate control over cash transactions of the Loughborough Trust Fund because of insufficient segregation of duties due to a limited number of personnel. ARKANSAS LEGISLATIVE AUDIT 500 Woodlane Street, Suite 172, Little Rock, AR Phone: Fax: Report ID: SR Report Date: May 26, 2015

2 ENABLING LEGISLATION AND ORGANIZATIONAL STRUCTURE The (DAH) was created in 1975 to combine state programs and agencies dealing most directly with the discovery, preservation, and presentation of the State s cultural, historic, and natural resources. DAH seeks federal and private funding to augment its state funding. As illustrated in Exhibit I on page 2, the Agency is divided into two divisions: Heritage Museum Division preserves, presents, and interprets historic structures, objects, and natural assets. The Division s museums serve as partners in education with public and private schools throughout Arkansas. Heritage Resources Division identifies, preserves, and promotes Arkansas s rare, unique, or endangered natural resources and serves as a conduit for federal and state grant funds that conserve or develop those resources. Exhibit I Organizational Chart Department of Arkansas Heritage Director Stacy Hurst, Director (1/1/2015 present) Martha Miller, Director (1/1/ ) 1500 Tower Building 323 Center Street Little Rock, AR Telephone: Heritage Museum Division Old State House Museum Historic Arkansas Museum Delta Cultural Center Mosaic Templars Cultural Center Heritage Resources Division Arkansas Arts Council Arkansas Historic Preservation Program Arkansas Natural Heritage Commission Source: FISCAL ANALYSIS Revenues, Expenditures, and Transfers Agency revenues, expenditures, and transfers for fiscal year 2014 are provided in Exhibit II on page 3. The Agency reported approximately 22.5 million in total revenue for the fiscal year ended June 30, The primary source of these funds was the real estate transfer tax authorized by Ark. Code Ann Revenues fluctuate depending on the amount of real estate sold each year. 2

3 Arkansas Legislative Audit Agency expenditures totaled nearly 25.7 million for the fiscal year ended June 30, Salaries, capital outlay, and assistance, grants, and aid comprised 36.3%, 25.4%, and 15.1%, respectively, of Agency expenditures for fiscal year The Agency had net transfers in totaling 7.1 million for the fiscal year ended June 30, Transfers consisted mainly of interagency transfers of state and federal funds. The majority of the 3 million variance in net transfers between 2014 and 2013 was a due to decreased funding requests from grantees during the year, which are made on an as-needed basis. Assets and Liabilities Agency assets and liabilities at June 30, 2014, totaled million and 1.1 million, respectively. Increases in assets have generally been due to the acquisition of land and museum artifacts. Asset and liability balances at year-end for fiscal years 2010 through 2014 are presented in Exhibit III on page 4. Fund balances were reconciled to the State Treasury without exception. Exhibit II Revenues, Expenditures, and Transfers For the Years Ended June 30, 2010 through 2014 Fiscal Year Revenues Real estate transfer taxes 19,629,192 18,114,351 15,449,165 13,908,027 15,765,203 Federal grants and reimbursements 1,651,918 1,502,166 1,429,150 2,067,370 1,895,356 Mineral lease royalties 964, , , ,090 1,621,801 Other income 248, , , , ,450 Total Revenues 22,494,269 20,353,378 17,657,821 16,810,852 19,607,810 Expenditures Salaries 9,327,939 9,033,812 8,873,473 8,390,101 8,235,953 Capital outlay 6,518,409 3,898,971 7,898,397 4,514,368 5,560,688 Assistance, grants, and aid 3,864,891 3,572,100 2,940,843 3,789,596 3,838,491 Other expenses 5,952,768 6,045,737 5,687,936 5,616,366 5,502,404 Total Expenditures 25,664,007 22,550,620 25,400,649 22,310,431 23,137,536 Net Transfers In (Out) 7,108,820 2,949,388 4,899,070 2,640,761 2,476,435 Source: Arkansas Administrative Statewide Information System Trial Balance (unaudited by Arkansas Legislative Audit) 3

4 Exhibit III Assets and Liabilities For the Years Ended June 30, 2010 through 2014 Fiscal Year Assets Cash in State Treasury 33,979,196 29,990,634 29,150,696 32,437,211 35,356,804 Cash in bank 450, , , , ,988 Fixed assets 105,350,603 98,662,120 94,706,703 86,628,555 77,931,207 Other assets 323, , , , ,184 Total Assets 140,103, ,467, ,654, ,770, ,939,183 Liabilities Accounts payable 34,948 18,876 21,675 64, ,045 Accrued leave 789, , , , ,899 Payroll liability 191, , , , ,073 Other liabilities 124, , , , ,393 Total Liabilities 1,140,289 1,143,332 1,053,726 1,419,926 1,485,410 Source: Arkansas Administrative Statewide Information System Trial Balance (unaudited by Arkansas Legislative Audit) GRANT PROGRAMS Grants totaling 11.2 million were distributed to recipients during fiscal year 2013, as illustrated in Schedule 1 on pages 5 and 6. The top 15 grant recipients from each DAH agency are listed separately. All other recipients are shown in aggregate. Central Administration receives an appropriation from the Conservation Tax Amendment 75 each year, and each DAH agency is allocated a portion of the budget. The grants/aid line item is allocated to Central Administration for Heritage Month grants as well as two pass-through grants to the Arkansas Humanities Council. Any remaining balance of the grants/aid line item is allocated to the Arkansas Arts Council and may be used to fund related grant programs. The Arkansas Arts Council administers both federal and state funds, financial aid, and state art grants for programs and services benefiting Arkansas arts organizations, schools, and artists. Federal funds are appropriated by Congress to the National Endowment for the Arts which, in turn, grants funds to the Arkansas Arts Council. State funds for art grants and the Arkansas Arts Council are awarded annually. The Arkansas Historic Preservation Program administers or assists grant programs that seek to preserve the State s historic resources. Financed through state general revenues, proceeds of the State's real estate transfer tax, and/or federal funds received from the National Park Service or Department of the Interior, these programs provide assistance to governments, organizations, and individuals seeking to preserve historic Arkansas. The Arkansas Natural and Cultural Resources Council (ANCRC) manages and supervises grants and trust funds for the acquisition, management, and stewardship of state-owned properties acquired or used for ANCRC-approved purposes. The grants are funded through the State's real estate transfer tax. Grants from this fund are for projects that protect and maintain state-owned natural areas, historic sites, and outdoor recreation. 4

5 Arkansas Legislative Audit Schedule I Grants Awarded to Recipients For the Year Ended June 30, 2014 Funded by Central Administration (0865) Arkansas Humanities Council, Inc. 200,000 Main Street Russellville 75,000 The Museum of Discovery 59,481 Theatre Squared, Inc. 34,001 Texarkana Regional Arts and Humanities Council 33,298 Central Arkansas Library System 32,394 Tricycle Theater for Youth 31,064 Crittenden Arts Council, Inc. 28,366 Walnut Ridge Army Flying School Museum 25,000 Fort Smith Symphony Association 23,255 The Foundation of the Arts for NE Arkansas, Inc. 21,418 The Arts and Science Center for South Arkansas 20,584 Mid-America Arts Alliance 20,000 Arts Center of the Ozarks 19,963 Arkansas Children's Hospital Foundation 19,400 Other grant recipients 701,924 1,345,148 Funded by Arkansas Arts Council (0870) Walton Arts Center Council, Inc. 55,088 The Arts and Science Center for South Arkansas 51,338 The Rotary Club 99 Foundation 50,722 Illinois River Watershed PTR 50,000 Muses, Inc. 50,000 Mid-America Arts Alliance 39,400 Opera Theatre at Wildwood, Inc. 34,653 Texarkana Regional Arts & Humanities Council 33,618 South Arkansas Arts Center 33,333 Crittenden Arts Council, Inc. 32,900 University of Arkansas at Fayetteville 26,165 Learning Through the Arts 25,287 Tricycle Theater for Youth 23,686 Batesville Area Arts Council, Inc. 22,367 Arkansas Children's Hospital Foundation 19,400 Other grant recipients 293, ,629 5

6 Schedule I (Continued) Grants Awarded to Recipients For the Year Ended June 30, 2014 Funded by Historic Arkansas Preservation Program (0877) Boone County 117,586 Monroe County 109,159 Greene County 107,784 Izard County 94,657 Logan County 91,674 Miller County 75,000 Cleveland County 65,832 Union County 65,760 Madison County 65,114 Independence County 52,600 City of Sherwood 50,000 Historic Preservation Alliance of Arkansas, Inc. 50,000 Lonoke County 45,000 Scott County 45,000 Wood Avenue Presbyterian Church 42,116 Other grant recipients 689,861 1,767,143 Funded by Arkansas Natural and Cultural Resources Council (0887) Department of Parks and Tourism 3,175,000 University of Arkansas at Fayetteville 845,785 Arkansas State University - Jonesboro 827,195 Secretary of State 800,000 Arkansas Agriculture Department 459,484 University of Arkansas for Medical Sciences 248,699 University of Arkansas at Little Rock 196,000 University of Central Arkansas 156,529 Henderson State University 154,315 University of Arkansas at Monticello 106,772 Arkansas Tech University 89,100 Southern Arkansas University 66,700 Dept. of Parks and Tourism - History Commission 48,500 Arkansas Building Authority 30,000 South Arkansas Community College 25,688 Black River Technical College 23,239 7,253,006 Source: Arkansas Administrative Statewide Information System Trial Balance (unaudited by Arkansas Legislative Audit) 6

HENDERSHOT, BURKHARDT & ASSOCIATES CERTIFIED PUBLIC ACCOUNTANTS

Young Marines of the Marine Corps League Financial Statements for the Year Ended September 30, 2016 and Independent Auditors Report Dated March 8, 2017 HENDERSHOT, BURKHARDT & ASSOCIATES CERTIFIED PUBLIC