Auditor investigation into missing $70,000 wasn't thorough and didn't uncover reason Park on the River lease wasn't collected or who failed to collect it, accounting firm says.
But city hall had no "formal procedures or controls over billings related to leases," and that failure allowed Team Summit to avoid paying its lease for more than three years.
By Jay C. Grelen, Editor
More than a year after Maumelle Council Member Christine Grunwald Gronwald blew the whistle on the approximately $70,000 missing from the city’s Park on the River account, the accounting firm that audited the 2021 budget can’t say how the debt piled up or who allowed it to happen.
Maumellians don’t know anymore today than they did when Ms. Grunwald Gronwald sounded the alarm at budget meetings in December 2022.
Representatives of the FORVIS firm reported to the city council at its last meeting of 2023 that the city of Maumelle had failed to implement “formal procedures or controls over billings related to leases.”
“As a result,” FORVIS said, “a lessee was not properly invoiced.”
That lessee was Team Summit, an events company that Gloria Timmons owns. Team Summit has leased Park on the River from Maumelle almost from the day the city purchased the property in 2005.
Since late summer, Council Member Steve Mosley has been asking the auditors to investigate the situation to determine what happened. In his relentless questioning of the FORVIS representatives at the meeting, Mr. Mosley elicited their admission that their investigation wasn’t in-depth. After interviewing the mayor, treasurer, city employees, and former finance director Liz Mathis, they said, they still don’t know what happened.
“We didn’t do a thorough investigation, a forensic audit or anything,” said David Coleman of FORVIS. “We did what we thought we needed to do to issue your audit opinion.”
“But not necessarily to find out exactly what happened?” Mr. Mosley asked.
“Right,” Mr. Coleman said. “It didn’t affect our opinion.”
In April 2021, during the period that Team Summit wasn’t paying its lease, it purchased a church for $3.8 million to use as an events center. No one at city council meetings has asked why Team Summit hasn’t paid its bill to the city when it has the resources to line up a loan for nearly $4 million. Mrs. Timmons signed a six-page document that outlined, among other things, what would happen if Team Summit didn’t meet its obligations. The list did not include reduction of or forgiveness of debt.
After Ms. Timmons failed to supply her Park on the River financials to the city for a year, in December she promised the city she would supply the information after December 23. Last week City Attorney Andrew Thornton indicated to a Democrat-Gazette reporter that he still doesn’t have it.
Maumellians don’t know why Team Summit didn’t pay its monthly lease for more than three years.
Residents, who pay the salaries of elected officials who are supposed to keep track of such things, have no clue why nobody in city hall discovered the failure to pay.
Mayor Caleb Norris; Hizzoner says he doesn’t know what happened. He has said he takes full responsibility for that failure, but apparently he thinks saying the words is sufficient; taking responsibility doesn’t require him to actually do anything, such as aggressively go after the money or pay it out of his own pocket.
City Clerk/Treasurer Tina Timmons; Ms. Timmons says she doesn’t know what happened.
Former Finance Director Liz Mathis is one of the mayor’s hires; she was in charge during some of the time the bill wasn’t collected; she said she has no idea. When Ms. Mathis left the city’s employ to count beans for DeWafelbakker, Maumelle was woefully behind on its audit reports. The city missed the June 30, 2023, deadline for 2021, and barely made the December 31, 2023, deadline. Mr. Coleman of FORVIS told the city council that his firm needed nearly two months to untangle the city’s audit work before FORVIS could establish a base line to begin its work.
Gloria Timmons, owner of Team Summit, isn’t talking. But thanks to a report from Arkansas Business, however, we do know that Team Summit apparently wasn’t hurting for money in the year after COVID. Arkansas Business reported that in the summer of 2021, Team Summit bought Oasis Church at 7318 Windsong Drive in North Little Rock for $3.8 million, a purchase backed by a 25-year loan from Southern Bancorp of Arkadelphia. Team Summit wanted another events center. (Would Southern Bancorp would add $70,000 to the loan so that the residents of Maumelle can recoup their money?)
City Clerk/Treasurer Tina Timmons is the daughter-in-law of Team Summit’s leader Gloria Timmons.
We are printing the transcript from a portion of the last city council meeting. The back-and-forth between Mr. Mosley and the FORVIS representatives reveals how little anyone knows about what was going on during those years. The unanswered questions, and the vaguely answered questions, should be answered before the city proceeds to determine how much money Team Summit owes.
The transcript reveals the mayor’s gift of rambling so that when he has finished speaking, you aren’t certain what he has just said or whether he has answered the question. He has a knack for minimizing the significance of mistakes. Sometimes, he blames others, such as former Finance Director Shannon Vega, who left the city three years ago and wasn’t at the meeting to defend her name.
His answers often are vague, such as this response: “... but I feel like I had a discussion with someone at some point in time, and it may have been Liz, where we discussed ... That sounds like it could be familiar ...”
The mayor admits that things have gone wrong because he and the city clerk don’t communicate well: “There was an occasion where I think I had said yes or no to something, and then Tina had said the opposite, because we weren’t communicating, it was just a small mundane thing, and I think we realized that we were getting gamed a little bit.”
The transcript reveals that the mayor accused a former finance director of gaming Ms. Timmons and him, and blaming her for problems:
The mayor also admits he doesn’t know how certain parts of the city are supposed to operate: “I see the finance department as reporting to the mayor not to the treasurer. I’ll open that up if you want to confirm or deny or disagree. Because I think that we’ve, not always necessarily agreed a hundred percent on how that should work.”
Mrs. Timmons supports the mayor’s belief that they failed to communicate, and that their failure created some problems: “We did have a situation where the mayor and I, we weren’t communicating effectively, and so there was some issues in regard to supervising. But we have collaborated and decided we will move forward in a better direction of supervising the areas where I’m tasked with fiduciary responsibilities.”
Mrs. Timmons summed up the division of labor like this: “The mayor, primarily, he is the supervisor of the finance director. I am the treasurer. I am responsible for my fiduciary responsibilities.”
Here is that portion of the transcript. We have put significant information in boldface type.
Transcript:
Mr. Mosley: Let’s go back and talk about the Park on the River deficiency. You had mentioned a minute ago that you thought the billing had fallen off on that in 2019 due to COVID?
Mr. Coleman: I don’t know why it was done. What we did on that is, we interviewed a lot of people, we talked to the attorney. We got his report. We looked at it. I don’t know exactly why it happened. From what we were looking at, we didn’t find any evidence that we would think it was intentional.
Mr. Mosley: Let me ask you, did you interview accounting personnel ...
Mr. Coleman: Yes we did.
Mr. Mosley: ... to compare notes? How about the person who was actually doing the billing? Did you guys go that deep?
Kyle Mr. Elmore: Kyle Mr. Elmore here. I worked on this and did a lot of the interviews. It was kind of difficult because we were talking about 2019 and 2020 when a lot of this activity was going on. We interviewed the entire accounting personnel, the city clerk, the mayor, and the former finance director to see if there had been any guidance [for the city] not to bill and nothing of that came up from those interviews.
Mr. Mosley: You didn’t ask the actual accounting person that had been doing the billing?
Mr. Elmore: I think we did. We interviewed both of the accounting personnel who are still here. As I understand it, that was the people at that time ... I’m not really sure. I think there was a different finance director at that time. It’s hard to say ...
Mr. Coleman: Yeah, we can’t just call somebody that’s not here. We don’t have subpoena [power].
Mr. Mosley: Would you call ... I had asked y’all to do an investigation. Would you say this was a very thorough, in-depth investigation or would you say this is just kind of normal that you would do if you identified a deficiency?
Mr. Coleman: We didn’t do a thorough investigation, a forensic audit or anything. We did what we though we needed to do to issue your audit opinion.
Mr. Mosley: But not necessarily to find out exactly what happened? If it was an immaterial amount ...
Mr. Coleman: Right. It didn’t affect our opinion.
Mr. Mosley: You did as much as ...
Mr. Coleman: If you tell us you have a problem, or if there is a concern, we’re required to go and do work on that. Or to get an understanding of that, and so that’s what we did.
Mr. Mosley: What is a dollar amount you would consider material.
Mr. Coleman: That probably just depends. (pause) We typically don’t share what we think is material when we’re doing an audit to everyone. ... If you, or a member of management, or the mayor says something is material, then it’s material, right. It’s not just our decision. It’s your financial statements. We proposed a past adjustment, management signed off on it. So in their opinion, they signed the rough letter; in our opinion, we issued the opinion. There is a formula we go through to determine what we think is material, what we can live with, and this was below that.
Mr. Mosley: Okay, the Park on the River was below that. So it’s probably somewhere between fifty-thousand and a million, something like that?
Mr. Coleman: We typically don’t talk about that. I’m happy to share our reasoning on that further.
Mr. Mosley: I would assume that if something came to light, you would encourage the city to investigate something that was even below a material amount, just to find out if it’s an irregularity.
Mr. Coleman: Sure.
Mr. Mosley: Okay. Thank you.
Mayor: Can I ask what you meant by that question, Council Member Mr. Mosley? Are you saying, was your question, that based on what they said, there’s more that we should be looking into?
Mr. Mosley: I don’t know. I don’t know.
Mayor: What was your question?
Mr. Mosley: My question was, if something came along, should the city be, and the city council, should we be saying that a car that disappeared was worth less than fifty-thousand dollars, and we don’t need to even look into it because it’s immaterial.
Mr. Coleman: I’m not saying that at all. There’s a big, big difference between our tolerable error in an audit and your tolerable error ... I am not suggesting that you put a dollar amount on anything. I’m just telling you, this we could live with.
Mr. Mosley: I need to ask about the organization chart that’s in the audit. ... There’s an organization chart before you get into page one. I caught last year’s audit had a line going through ... from the city clerk down through finance, indicating there was some degree of oversight or responsibility over the finance department. This year, that line is gone. I called the auditors to ask if that was a mistake. They said we don’t know. It was probably something that the mayor or somebody at the city provided on this flow chart. Is this chart accurate, that you know of?
Mayor: It is. The city attorney asked me some questions about it, and I said, “Oh, that happened years ago.” Then I went and was looking at the previous audit .. then I was like, “When did this happen?” I searched my emails to figure out when precisely it happened. To me, it was so old hat that ... I don’t have what specifically, what was sent over, but I think it accurately portrays the reporting and the finance director in reality reports to the mayor. Under state law, the mayor hires and fires department heads. I think, in practice, the city clerk/treasurer has areas of responsibility in there, but is not the one signing the leave slips, if someone’s taking a vacation, sort of that level of management. Now there’s other areas of responsibility that fall right in the treasurer’s handbook. I don’t remember ever specifically saying change that, but I feel like I had a discussion with someone at some point in time, and it may have been Liz, where we discussed ... That sounds like it could be familiar, and I would have been supportive, because I think that more accurately reflects the reporting hierarchy there. The city clerk or treasurer is free to chime in there too. I think that change, I’m delving off the audit a little bit, but it was in the audit as provided by the city. I think when Shannon was here, late in ’19 or early in 2020, I noticed, and I think Tina brought it to my attention, that we thought the finance director was playing a little bit “mom and pop,” which is where you go to one person when you’re asking about certain things because you’ll get a more favorable answer about those sort of things, and then you go to this person, and you get a more favorable answer about that. Or there was an occasion where I think I had said yes or no to something, and then Tina had said the opposite, because we weren’t communicating, it was just a small mundane thing, and I think we realized that we were getting gamed a little bit. I think when Shannon left, um, um, the uh, Tina has been involved in the hiring process as was Liz for Beatriz, if I’ve got a finance director still here, and is consulted on a lot of stuff, but I think that, uh, I see the finance department as reporting to the mayor not to the treasurer. I’ll open that up if you want to confirm or deny or disagree. Because I think that we’ve, not always necessarily agreed a hundred percent on how that should work. If you’d like to say something.
Mrs. Timmons, City Clerk/Treasurer: Well it would just be just agreeing with what you said. We did have a situation where the mayor and I, we weren’t communicating effectively, and so there was some issues in regard to supervising. But we have collaborated and decided we will move forward a better direction of supervising the areas where I’m tasked with fiduciary responsibilities. I do focus on those. And if needed in a supervisory role, then I step in, But I, we have collectively agreed that it’s probably best to have that primary contact. That was resolved awhile ago.
Mr. Mosley: So you all made that change awhile ago. It’s not just recently?
Mayor: That started when Liz came in, because when Shannon was going out is where we kind of noted, and also what it did is, there were certain areas that if it was a department wholly under my responsibility, I might have caught or paid more attention to, this was pre-Liz, so, I don’t know when she came, it was pre-Liz. The um, um, and I think that Tina thought that that was something that I was managing, there’s not like a guide book that said it. What happened was in the past you had a former mayor and a former city treasurer that had kind of developed a practice, uh, and so, in an effort to minimize some of those things, um, occurring, we functioned like that. There’s never really been anything in writing except that one line being removed, which I think had happened, thought had happened, years ago. But it, it was there at least in a uh org chart that was sent between me and my chief of staff in, I want to say early 2020. Sometime between then and and uh now. To answer your question, I think it more accurately reports um (pause) like supervisory responsibilities. I I I think that there are still areas that under the law um the treasurer has responsibility of those projects. In the private world, as you probably know, it’s not uncommon to have a sort of chain of command, but then somebody be on another team that is, has its own project manager, and sort of within the scope of that project, they’re reporting to someone else, but their day to day and the way that works is they’ve got that chain of command.
Mr. Mosley: I would mention, I went to the city web site, and was looking, and it says the city clerk/treasurer, their duties are ... the clerk’s responsibilities are one thing. They say city treasurer responsibilities; “I’m involved in much of the day-to-day operation of the city. I’m the city treasurer, and oversee the accounting department.” That’s kind of a confusing statement. If you’re overseeing it, there should be a line, I would think.
Mayor: On the web site?
Mr. Mosley: Yes.
Mayor: I don’t think that’s an accurate statement that’s on the website. (Mumbles) You’re free to chime in, if you want. I don’t think.
Mrs. Timmons: I think we’ve answered your questions. Is there something specifically that you would like to know if I do. I feel like we’re going in a circle. The mayor, primarily, he is the supervisor of the finance director. I am the treasurer. I am responsible for my fiduciary responsibilities. That is how we’ve operated. If there is a grammatical or error or something on the website ...
Mr. Mosley: That’s it right there. I passed it up. You can take a look.
Mrs. Timmons: I’m aware of it.
Mr. Mosley: You may want to change that because it’s confusing. That confuses the issue, I would think.
Mrs. Timmons: I would be happy to do that.
Mayor: It’s not accurate. It sounds like something that’s good to do.
Mrs. Timmons: I’ll be happy to do that.
Mr. Mosley: Okay. (To FORVIS) Do you agree with what we’re talking about, do you have an opinion on this organization chart, whether that should be in there or not?
Mr. Coleman: No.
Mr. Mosley: You don’t have an opinion? I knew you’d say that because you all said that was not under your audit. But I was looking for input.
Mr. Coleman: I mean, I I don’t think a lot of our municipalities, the city clerk manages the finance director. We don’t see that very often.