After a rise in cases involving embezzlement from city coffers, the state auditor’s office has implemented a new audit schedule that aims to combat fraud in Iowa’s smallest towns. State lawmakers approved the new audit schedule, which went into effect earlier this year.
State Auditor Mary Mosiman says as of July, cities with populations of fewer than 2,000 people will be audited on the basis of risk. “So, if they have annual budgeted expenditures of one million (dollars) or more for two consecutive years, they are going to be subject to an annual examination,” Mosiman says. “If they do not have one-million or more for two consecutive years, they’ll have a periodic examination. That’s new this year.”
Starting in July, towns with budgets of more than one-million dollars will get audited every year, and those with smaller budgets, at least every eight years. Mosiman says some towns never had anyone from the outside look at their books. “Prior to July of this year, cities under the population of 700 never had to have an annual audit, and if there was a fraud in the government, it was typically one of those,” Mosiman says. “That’s something we hope helps with mismanagement and basically fraud in our smallest of cities.”
The auditor’s office counted 32 cases of small town corruption in Iowa between 2005 and 2011. In the town of Halbur, population 246, for example, Mosiman says the city clerk leveraged her position as a bank employee to embezzle more than $290,000. In another example, the city treasurer of McCausland wrote checks to herself and her husband to the tune of $187,000, or about $650 per resident.