By John Lyon
Arkansas News Bureau

LITTLE ROCK — More than 10,000 graduating high school seniors in the state were notified today that they have been awarded Academic Challenge Scholarships for the upcoming school year, state higher education officials said.

The notifications were made by e-mail to 10,454 students. Shane Broadway, interim director of the state Department of Higher Education, said the department hopes to notify all recipients among this year’s senior class by July 1 and all non-traditional students and students already in the program by July 31.

Broadway said higher education officials began processing scholarship applications earlier this year than last year, when applications were still being processed up to the start of the school year and ADHE was swamped with questions and complaints from students and parents.

“Any time you do something for the first time, you’re going to have those situations that come up, and so we’ve tried to look at all of them that came up last year and tried to address them in our plan for this year,” Broadway told reporters after testifying at a hearing of the legislative committee that oversees the lottery.

More than 31,000 Arkansas students received lottery-funded Academic Challenge Scholarships during the 2010-11 school year, out of about 91,000 who applied. Between 60,000 and 70,000 are expected to apply this year, Broadway said. The deadline to apply is June 1.

New recipients will receive $4,500 per year to attend a four-year school or $2,250 per year to attend a two-year school.

Also today, the Arkansas Lottery Commission met and approved a three-year audit plan presented by the lottery’s internal auditor, Michael Hyde. The plan identifies 41 areas of the lottery for potential auditing, of which at least eight will be audited annually, Hyde said.

The commission also authorized Hyde to pursue hiring a part-time employee for the internal audit staff.

A three-year audit plan is required under a state law that the Legislature passed this year in response to a 2010 audit by the state Division of Legislative Audit that found multiple problems with the lottery’s internal controls.

One of the problems identified in the 2010 audit was a failure to prepare an annual financial report in accordance with generally accepted accounting principles, or GAAP, as they apply to state law. Today the Lottery Commission approved a proposal to invite companies to bid on a one-year contract to prepare the lottery’s next annual financial report and train its employees on GAAP.

Newly appointed commissioner Bruce Engstrom of North Little Rock, a certified public accountant, said it seemed strange that the qualifications listed in the proposal were not required “when you hired your current internal accounting department, who apparently does not know how to do this.”

“This is a governmental agency,” Engstrom said. ‘When you were hiring internal accountants, I would have thought that you’d go through these types of qualifications to make sure that they had governmental GAAP experience.”

Engstrom also asked if it would be more efficient to hire someone permanently to prepare the lottery’s annual financial reports.

Lottery Director Ernie Passailaigue, who previously ran South Carolina’s lottery, said his goal has been to fill lottery jobs, whenever possible, with Arkansans and train them in the lottery business. The lottery already has “a good deal invested” in its current employees, he said.

Passailaigue also told the commission the lottery has grossed $382.7 million so far this fiscal year, netting $79.7 million for college scholarships. The lottery is on track to net $100 million for the year, he said.