Small City Audit and Examination Fund

This week, the Government Oversight Committee I chair passed an important bill designed to help prevent fraud within small cities. In recent years, there has been an unfortunate increase in mismanagement of funds within small city budgets, and the bill helps to add additional audits and periodic examination of those smaller city budgets.

Obviously, the vast majority of small Iowa cities do a great job of managing public money, but too often, the lack of oversight, training and resources opens the door for fraud and abuse.

According to the State Auditor’s office there were 32 cases of embezzlement from 2006 to 2011 in cities of fewer than 700 people, which is up from only seven cases in the five previous years.

One example of this abuse comes from nearby Dexter, where that City Clerk misused $131,392. In other cases, city clerks have used city money to purchase whiskey, beer, laptops, grills, pies, cat litter and self-help books for themselves.

Under this bill, 570 of Iowa’s smallest cities would have the opportunity for increased audits and periodic examinations. To pay for these audits or examinations, each city will be required to pay a small fee to a fund the state based on the size of their budget.

The subcommittee members assigned to the bill worked with both the State Auditor and the Iowa League of Cities to amend the bill. The bipartisan amendment to help reach consensus on the bill addresses concerns about the frequency of audits or examinations, limits on the size of the fees paid, and makes sure that fees collected over a set amount be directed toward education and training to prevent fraud.

I feel confident that this bill will be a useful tool to help prevent some of the fraud that is occurring in small city budgets. I am pleased to see the committee work in a bipartisan fashion to make this legislation better for all concerned parties.