Will she or won’t she? That will be the question for the Eureka Springs City Council for the next handful of days.
At its regular meeting held Monday, July 28, the council voted to hold yet another workshop with members of the city’s hospital commission to discuss lingering financial questions.
This time, however, the council is requesting that Cynthia Asbury, the hospital’s chief financial officer, participate in the workshop and answer specific questions from council members.
“… We need to ask questions directly of the CFO about what is going on,” council member David Avanzino said.
That eventually led to a motion requesting a workshop between the council, hospital commission and Asbury, but not before a back-and-forth about which council setting was more appropriate, and if the body has the authority to require the CFO to attend.
“We’ve called [hospital chair] Sandy [Martin] in here before. Can we motion to ask the CFO to come and answer some of these questions directly?” Avanzino asked after a presentation from council member Rachael Moyer pointing out ongoing issues and questions she has with the hospital’s financials.
“I think that probably goes beyond asking for reporting as far as a motion or a demand, but I think you could ask for it,” said Tom Kieklak, one of two lawyers currently fulfilling the duties of city attorney. “I think it makes sense …” Mayor Butch Berry was a bit more direct about the council’s request.
“We can’t require them to have the CFO here,” Berry said. “You can have the motion. You can do that all you want …” Avanzino responded: “What’s the difference in having like [CAPC director] Mike Maloney here?”
“We can ask,” Berry replied. “We can ask if they’ll show up, but as far as requiring a hospital employee to show up is beyond the scope of this council.”
Having Asbury meet with the council and provide information will hopefully clear up questions, council member Susane Gruning said.
“… I like David’s idea, bring in the CFO and let’s have her answer questions and be done with it,” Gruning said. “ … I think we try to get the CFO in, who should be aware of all of these [questions] anyway, and forthcoming in my mind.”
“We can ask her to come here, but we can’t require her to be here,” Berry reiterated.
“I understand,” Gruning said. “But we can ask.”
Avanzino, who said he was surprised representatives from the hospital weren’t at the council’s last workshop on the topic, originally requested that the hospital commission and Asbury attend the next regular council meeting, but Kieklak urged it to be a workshop instead.
“I’ve been going to meetings … for over 30 years,” Kieklak said. “I do feel like city council meetings are pressure-filled situations. Sometimes that’s good, but not for discussions. …” Council member Terry McClung agreed.
“I think you’d have a better response out of [hospital representatives] in an informal workshop,” Mc-Clung said. “I think if they were coming to a council meeting, then they might feel intimidated. I could definitely see that.”
Berry also interjected to explain why he felt a workshop was the best route to go.
“I would think that we’re wanting a workshop,” the mayor said. “We’re trying to get to the bottom of some stuff and work together. That’s the whole point of the city and commissions, to work together, whether it’s CAPC, or parks, or the hospital, which is what we’re talking about.
“A hospital workshop would, to me, be the logical solution.”
Michael Akins, city finance director who has assisted the council in going through some of the hospital’s financial information in the past couple of weeks, said he would meet with Asbury ahead of any workshop.
“I could meet with the CFO from the hospital, address some of our concerns, ask some of the questions and see if I could get some of the answers and then report them back to you prior to the workshop,” Akins told the council. “Kind of see if we could bridge the gap that would not be such a high-pressure environment.
“It would be more of a CFO to CFO type conversation and try to answer some of those questions. I’d be more than willing to do that. I want to facilitate to help in this if there’s any way that I possibly can.”
MORE QUESTIONS
The topic of a possible meeting or workshop including Asbury came after Moyer brought up new questions with the budget after reviewing June numbers provided by the commission.
“The positive news is that there’s finally some awareness to the hospital financials, and we have a basic financial reporting formalized now, and we’ve created some accountability,” Moyer said. “In the workshop, we were able to confirm that there is more than $3 million in liability, which probably should have money reserved and set aside for it.
“And for the record, the balance sheet still doesn’t balance, but we’re getting closer.”
Moyer mentioned a bank account that she recently learned about that was in the name of the commission — not the hospital — with a balance of $16,000 that was recently closed.
“That [account] has never been reported to us,” Moyer said. “My understanding is that they have closed that account as of the last commission meeting.”
Moyer said she still had “some concerns” after getting a chance to look at the hospital’s financial report dated June 30.
“… The first balance sheet we received showed $6.9 million in total cash,” she said. “And then they made an adjustment just hours before our workshop which they explained, and then reported $5.5 million in cash as of 5/31 and $5.6 million for 6/30. So, that’s on the balance sheet. The adjustment functionally, I went back and looked and added and subtracted numbers. It functionally shifted approximately $1.3 million from cash to accounts receivable. So, they just removed it from cash and equivalents to the next line, accounts receivable. So, that results in what they’re currently reporting as $3 million in accounts receivables.
“So I went back — that seems like a lot of money, but I looked back at the accounts receivable history that was provided by Michael at our workshop, the thing that he passed out to us, and $3 million is definitely historically high. My question is: Did we just move money from one line to another, or are there things to verify that we actually have $3 million in accounts receivable?”
Moyer also questioned why no “bad debt” has been reported in 2025.
“If you look at the income statement for 6/30 you’ll see that there’s been no bad debt reported for the entire year. No bad debt reported … since December of last year. My guess is that when someone makes that adjustment, revenue will show $1.3 million less than what it currently shows.
“Again, what does this mean? I believe this is further evidence that the financials are not adequately being overseen. I maintain that the CFO who reports to the commission and/or the commission are all responsible for steering the ship, but things aren’t really adding up in a way that makes me feel comfortable. So, I ask myself, why isn’t the commission having these discussions? Why aren’t they asking the same questions? Should they be asking these questions of the CFO? If it’s true, as some people would argue, that the commission is a group of volunteers and they’re just simply reporting what’s given to them, then where it lies, where the responsibility lies is with the CFO. And if you look at last year’s financials, something as simple as bad debt was reported and recorded every month and has not been recorded at all this year. Very simple bookkeeping functions do not show up in the report.”
Moyer questioned why the topic of a midyear budget review has not been brought up by the hospital commission.
“If I were a commissioner, I would be insisting on completing a mid-year budget review,” she said. “I think that is absolutely a number one priority to guide future spending. I would be asking lots of questions. All the ones that I’m asking, all the ones you guys are asking, and probably more questions. And I don’t hear those happening at the commission meetings. That concerns me. Loose financial reporting, historically low patient visits, ongoing spending, they just hired another person, clinical director. I feel it’s just, it may be a moot point months from now, I don’t know. But again, I feel like it’s our responsibility to say something.”
Moyer said she was considering asking the council about a resolution asking for a “formal request for aging accounts receivable schedule,” along with bank statements.
“Aging accounts, receivable schedules, should show $3 million in accounts receivable,” Moyer said. “I did share this with Michael and the mayor. There may be some HIPAA violation issues, but I think that the name on the account can be redacted in a way that would comply with HIPAA requirements and allow us to see if there is, in fact, an aging accounts receivables schedule January year to date, if we decided to do that.
“Of course, the copies of all bank account statements, and I would say formally all bank account statements, both those that the hospital and the hospital commission are responsible for. I didn’t realize we had to make that distinction when we asked for that before, but I would ask for that. Actual statements with account information hidden is fine, but a copy of an actual statement, not report, of all accounts and proof of closed accounts, as well as a report of where the $16,000 went.”
RFP ON REVIEW APPROVED
While the council is hoping for more answers from hospital staff and the commission over financial numbers, they did approve drafting a Request for Proposal on having a review done of financials for the first half of 2025.
“… A motion to institute an RFP for an independent review and reconciliation of hospital financials for the period of January 1, 2025, through June 30, 20205 …,” Avanzino said.
Moyer went over a list of items that she would like to see in a review, which seemed to get the support of the entire council, minus Harry Meyer, who was absent.
Akins told the council that there are fullfledged in-depth audits and there are “Agreed Upon Procedures” reviews of public entities, something that is approved by Arkansas Legislative Audit.
“AUP is where they come in and kind of just do an overview, and they do some of these proofs of cash and some things like that,” Akins said. “They don’t actually go in and look at every bill, every payment, that kind of stuff. It’s more of an overview. It’s not as in-depth as a yearly audit that you’re going to have from like Forvis or from Legislative Audit.
“Legislative Audit does approve you to be able to use these kind of audits, so we’ve used them for several years for our water department since it’s an enterprise kind of like the hospital.”
Many of the questions the council has been asking should be answered with an AUP audit, Akins said.
“The main question that’s kind of asked is if cash has been accounted for, and it’s been accounted for in a right way,” Akins said. “So, you could do some proofs of cash with your bank statements. When you have an audit, and I was telling Rachael this earlier, when you have an audit, the very first thing they usually ask us for is our bank statements with the reconciliations on them. So, it would be interesting to see if those reconciliations are up to date at the hospital. …” Monthly reports submitted to council from the hospital commission are generated system reports, not something that has been audited, Akins reminded council members.
“The things that they’re giving you are not audited financials,” he said. “The audited financials you get are from Forvis. They’re the ones that you have for ’21, ’22, and I believe ’23. They’re saying ’24 is going to be out in August, so those will be audited. But, the things that they’re giving you at the workshops and stuff, those are what they’re printing out of their systems, which I’m not saying there’s anything wrong with them. I’m just saying that those aren’t audited financials.”
With the expectation that the 2024 audit from Forvis will be released within the next month or so, Akins said the council could go ahead and start the RFP process on a 2025 financial reconciliation. Then, if the 2024 audit eases the minds of council members and the need for the 2025 review right now isn’t needed anymore, then the process could be halted, he said.
“If we go ahead and do the RFP, it’s not going to cost us anything to do that,” Akins said. “We could go ahead and send it out. It’ll take a little while for those to come back in, because we’ll have to give them a deadline of when we want it back in. But that … gives time for the Forvis audit to get here. Then, maybe they coincide at the same time. Then we look at the Forvis audit and go: ‘Hey, everything looks great. We don’t think we’re going to need to move forward.’ Or we say: ‘Yeah, we still want to look at ’25, even though this audit,’ and then we’ve already got it ready to go. …”
