An Arkansas State Police investigation has been requested by 17th Judicial District Prosecuting Attorney Rebecca McCoy for the city of Beebe based on the findings of Arkansas Legislative Audit for 2018 of “unaccounted-for funds” totaling nearly $5,000.

“I don’t know if he has been assigned yet but Maj. Mark Hollingsworth with Arkansas State Police is over all that section and told me he would assign somebody, and that is when I contacted him in May,” McCoy said.

According to McCoy, some investigators are “a little quicker than others” and in this case it will depend on how much they have to get into bank records and receipts “and all of that stuff.” She said she has had some investigations that took only a couple of months once an investigator got started on it and some took a year to complete.

Beebe Deputy City Attorney Tess Stewart told the Beebe City Council on Monday night that the legislative audit ending December 2018 showed that manual receipts that were issued by the police department and the district court revealed the unaccounted-for funds.

Reed requested the state police investigation after receiving “those findings,” Stewart said.

“The city has been and will continue to be fully cooperative with the auditors and the state police during the investigation,” she said. “I personally have contacted the Arkansas Sate Police for an update and I am still waiting a call back from the investigator that is heading up that investigation and we will update you as we receive further information.”

According to the audit, the unaccounted-for funds, totaling $4,781 were uncovered during a review of manual receipts issued by the police department and district court from Jan. 1, 2018, to Sept. 11, 2018.

“These receipts, which consisted primarily of cash, were not entered in the computer system and were apparently not deposited in the District Court bank accounts,” Legislative Auditor Roger A. Norman wrote in the report filed earlier this year.

City Clerk/Treasurer Carol Westergren said the problem stems from “a checking account in the police department that was used for years when we, they, had an office that collected money.”

“We no longer have that office anymore because all fines are now collected in the court clerk’s office and so nobody was actually taking care of this account,” she said, adding that there is “no money missing out of it. Nothing like that; just nothing was being done with it. That account has now been moved into my office and now that the audit is completely done, I have permission, I’m going to close that account out and the funds will be moved into the general fund.”

The audit also found that the city paid $61,844 to companies “owned by various related parties.” A company owned by a city employee (not mentioned by name) was paid $40,005 for car repairs. A company owned by an unnamed council member was paid $19,403 for the cost of advertising. The amount of $2,436 was paid for furniture to a company owned by Beebe Mayor Mike Robertson.

The audit stated that “although the council passed an ordinance in June 2012 allowing the city to conduct business with aldermen, council members, officials and municipal employees, the ordinance did not specify the extent of this authority, as required by Ark. Code Ann. 14-42-107. To correct this issue, the city passed another ordinance in 2019; however, the ordinance again did not specify the extent of this authority.”

Beebe Mayor Mike Robinson brought up changing the ordinance during Monday’s meeting.

“We have amended this ordinance – drafted and amended this ordinance – as per the legislative audit since 2012 and it seems like things keep changing on that, so we are changing the ordinance once again,” Robertson said. The council passed unanimously an updated version of the ordinance allowing the mayor, council members and city employees to do business with the city of Beebe.

Another finding showed “the city paid $13,750 and $7,000 for entertainment and fireworks display services, respectively in advance of the services being rendered, in apparent conflict with Ark. Const. Art. 12, 5.”

Westergren said the city pre-pays on its Fourth of July celebration. “That is still in debate with the audit and we are also seeking an attorney general’s opinion on this as to whether this is a reportable finding or not,” she said.

Under the clerk/treasurer section of the audit, it stated, “The bank discovered three unauthorized withdrawals totaling $6,488 made from the City’s bank accounts during the period November 28 through December 18, 2018. Subsequently, the city recovered these funds from the bank. City personnel discovered another unauthorized withdrawal of $2,081; however, this amount was not recovered from the bank because the city’s November 2018 bank reconciliation was not performed timely.”

Westergren said Beebe, like most cities in the state, was hit with fraudulent checks.

“The money was recovered from the bank except for one set of money from the street fund,” Westergren said. “It wasn’t caught in time for it to be recoverable money.

“This is nothing we could have done to prevent this. The check came through and we found it when we balanced our checkbook. We had an FBI investigation put out by the [Arkansas] Municipal League. Just about every city in the state of Arkansas got hit with fraudulent checks.”

Findings against the court clerk indicated that the bank reconciliations were not being prepared and now, Westergren said, that is being taken care of and “cash received and cash disbursement journals are being properly maintained and reconciled with bank deposits and withdrawals each month.” Another finding was that receipts were not being deposited in a “timely intake.” Westergren said this is also being corrected. “They are making deposits every single day.”

The audit discovered that all copies of voided receipts were not being maintained. Westergren said in response, all copies of receipts are being maintained with “void” written on them when necessary. Manual receipts are no longer being used by the court clerk’s office. The clerks now have a computer system that they use to input items just like the city clerk does.

In response to individual citation and completed citation books not being reconciled, according to the audit, Westergren said the district court clerk is now performing these activities and clerical duties as required. All payment and fine collections are being taken by the district court office only.

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