(a) The Department of Education shall:

1. (1) Conduct a random audit of EFAs to ensure funds were used only for expenses that were approved or allowed at the time the expense was made; and
2. (2) Maintain a copy of the audit plan and all associated audit reports.

(b)

1. (1) The Department of Education shall conduct a random financial audit of participating schools and service providers.
2. (2) If selected, a participating school or service provider shall submit to a financial audit conducted by a certified public accountant within six (6) months of the most recent fiscal year.

3. (3) The auditor shall include in the report a statement that the report:

   1. (A) Is free of material misstatements; and
   2. (B) Fairly represents the participating school or service provider’s maximum total tuition and fees.

(c)

1. (1) The Department of Education shall establish an anonymous fraud reporting service.
2. (2) Individuals may notify the Department of Education of any alleged violation by an account holder or participating school or service provider of state laws, rules, or procedures relating to the Arkansas Children’s Educational Freedom Account Program.

3. (3)

   1. (A) The Department of Education shall conduct an inquiry into any report of fraud or make a referral for an investigation to the Attorney General or the Secretary of the Department of Inspector General.
   2. (B) Individuals making a report of fraud shall be informed that their reports of fraud must be credible, and, at a minimum, be backed by some reasonable suspicion of wrongdoing.
   3. (C) If an account holder or participating school or service provider is found to have violated any state laws, rules, or procedures related to the program, they shall be ineligible to participate in the program and any unspent EFA funds shall be returned to the Department of Education.

(d) The Department of Education may contract with a third party to:

1. (1) Conduct the audits; or
2. (2) Establish an anonymous fraud reporting service.

(e) The Department of Education shall forward to Arkansas Legislative Audit:

1. (1) All audits conducted under this section that identify a potential misuse of EFA funds; and
2. (2) Any reports of fraud, substantial misuse of account funds, or both that the Department of Education investigated or referred for investigation to the Attorney General or the secretary.