Arkansas Code
Chapter 59 - Arkansas Municipal Accounting Law
§ 14-59-117. Withholding of turnback for noncompliance

(a)
(1) If Arkansas Legislative Audit determines that a municipal treasurer is not substantially complying with this chapter, Arkansas Legislative Audit shall report the findings to the Legislative Joint Auditing Committee.
(2)
(A) If a public official or a private accountant determines that a municipal treasurer is not substantially complying with this chapter, the official or accountant shall notify the Legislative Joint Auditing Committee of his or her findings.
(B) Upon notification, the Legislative Joint Auditing Committee shall direct Arkansas Legislative Audit to confirm that the municipal treasurer is not substantially complying with this chapter.
(C) Upon confirmation, Arkansas Legislative Audit shall report the findings to the Legislative Joint Auditing Committee.

(b)
(1) Upon notification of noncompliance by Arkansas Legislative Audit, the Legislative Joint Auditing Committee shall notify in writing the mayor and the city council or town council that the municipality's accounting records do not substantially comply with this chapter.
(2) The municipality has sixty (60) days after the date of notification to bring the accounting records into substantial compliance with this chapter.
(3)
(A) After the sixty (60) days allowed for compliance or upon request by the appropriate municipal officials, Arkansas Legislative Audit shall review the records to determine if the municipality substantially complies with this chapter.
(B) Arkansas Legislative Audit shall report its findings to the Legislative Joint Auditing Committee.

(c)
(1)
(A) If the municipality has not achieved substantial compliance within the sixty-day period, the Legislative Joint Auditing Committee may report the noncompliance to the Treasurer of State.
(B) Upon receipt of the notice of noncompliance from the Legislative Joint Auditing Committee, the Treasurer of State shall place fifty percent (50%) of the municipality's turnback in escrow until the Legislative Joint Auditing Committee reports to the Treasurer of State that the municipality has substantially complied with this chapter.

(2) If the municipality has not achieved substantial compliance within the sixty-day period, the governing body of the municipality shall assign specific duties outlined in this chapter to another employee or shall contract for the services to be performed by a qualified person or entity.
(3)
(A) Arkansas Legislative Audit shall notify the Legislative Joint Auditing Committee when the municipality has substantially complied with this chapter.
(B)
(i) The Legislative Joint Auditing Committee shall notify the Treasurer of State that the municipality has substantially complied with this chapter.
(ii) Upon notice of compliance from the Legislative Joint Auditing Committee, the Treasurer of State shall remit all turnback due to the municipality.

(d)
(1) If Arkansas Legislative Audit has not received a request for a review of the records from the municipality before the end of the one-hundred-twenty-day period after the first date of notification of noncompliance, the Legislative Joint Auditing Committee may notify the municipality and the Treasurer of State of the continued noncompliance.
(2) Upon notice by the Legislative Joint Auditing Committee, the Treasurer of State shall withhold all turnback until such time that the accounting records have been reviewed and determined by Arkansas Legislative Audit to be in substantial compliance with this chapter.

(e)
(1) If Arkansas Legislative Audit has not received a request for a review of the records from the municipality before the end of six (6) months after the initial notification of noncompliance, the Legislative Joint Auditing Committee may notify the municipality and the Treasurer of State of the continued noncompliance.
(2) Upon notice of noncompliance for six (6) months, the municipality forfeits all escrowed funds, and the Treasurer of State shall redistribute all escrowed turnback funds applicable to the municipality among all other municipalities receiving turnback.
(3) The municipality shall not be eligible to receive any additional turnback from the state until the Legislative Joint Auditing Committee notifies the Treasurer of State that the municipality has substantially complied with this chapter.