PINE BLUFF -- Pine Bluff officials said Tuesday that corrective actions are already taking place to rectify violations found in an Arkansas Legislative Audit report released this week concerning the finance office and the mayor.
According to the report for 2013, Pine Bluff Mayor Debe Hollingsworth received $2,189 for nonbusiness travel reimbursements for a trip to the Fallen Firefighters Memorial in Edenburg, Md., and spent nearly $17,000 for monogrammed shirts for the police and fire departments without proper authorization.
The audit states Hollingsworth paid $16,913 to Class A Apparel Graphics, owned by a city employee Melissa Johnson, without obtaining an authorizing ordinance, as required by Arkansas Code Annotated 14-42-107.
Hollingsworth was out of the office Tuesday and unavailable for comment.
Steve Miller, Pine Bluff's finance director, said the violation on the Maryland trip concerned receipts that were not properly documented at the time of the audit. He said "steps are being taken now to make that happen."
Miller said an ordinance up for a final vote when the City Council meets Oct. 6 would negate the unauthorized spending of funds for the monogrammed shirts, if the measure passes. The ordinance would make it legal for the city to conduct business with stores or firms owned by city employees.
"There has never been an ordinance on the books that allowed the city to do business with an employee," Miller said. "Class A Apparel offered the best price for the shirts, so that is why they were chosen."
Tim Jones, audit manager for the Arkansas Legislative Audit, said passing the ordinance would "properly nullify the violation."
The audit also found that the city violated Arkansas Code Annotated 14-59-115 by outsourcing its payroll to a private company. State law "prohibits the governing body of a municipality from assigning duties relating to the collecting or disbursing of funds to anyone other than an employee of the municipality," the audit states.
Miller said the city was unaware that such a law existed.
"We are working with the Arkansas Municipal League now to introduce legislation to change that law," Miller said. "If it doesn't pass, then we will start dealing with payroll at a city level. The reason we hired a firm to do that for us is because it's very efficient. They are payroll experts, and they take care of payroll tax filings and deal with the IRS for us."
In addition, the audit found "a deficiency in internal control" related to the reporting of city finances.
"To ensure the proper safeguarding of assets, financial accounting duties relating to initiating, receipting, depositing, disbursing and recording transactions should be distributed among appropriate employees," the audit states.
"The city officials ... did not segregate these duties to sufficiently reduce the risks of fraud or error and properly safeguard the city's assets, because of limited financial resources. We recommend that the financial accounting duties in each office be segregated among employees to the extent possible."
The audit report shows that city officials "responded and indicated that their offices will segregate the duties" as recommended by the state.
State Desk on 09/17/2014