TONTITOWN (KFSM) –A legislative audit of financial transactions by the city of Tontitown states inadequate internal controls contributed to the misappropriation and theft of more than $56,000.
Alicia Collins, who was then the city’s recorder and treasurer, was arrested Feb. 12 on suspicion of theft of property and theft of services, according to an arrest report. Authorities determined cash collections totaling $56,936, primarily in the custody of Collins, were not deposited in the city’s bank account. Further investigation showed her depositing cash into her bank account, according to the arrest report.
The Arkansas Legislative Audit released on Wednesday (April 22) covers the period from Jan. 1, 2013, to Feb. 12, 2015, and indicates the misappropriated funds weren’t detected in part because of “inadequate internal controls concerning the receipt and deposit process.”
The investigation was requested by Washington County Prosecuting Attorney Matt Durrett.
According to the audit, factors contributing to the misappropriation of the money included management not exercising proper fiscal oversight or safeguard and bank account reconciliations not being performed by a person independent of the deposit process.
The audit also shows that receipts were not always issued for revenue received, and collections were not always deposited intact or timely.
In addition, the audit shows an Excel file located on the city computer system contained all the user ID’s and passwords for all applications and systems in use, making the security of computer information inadequate.
The investigative report also made some recommendations, and Tontitown Mayor Paul Colvin said the city had made changes in response to those recommendations.
Colvin said the city separated its reconciliation personnel from the individual who is making the deposits.
He also said all deposits are now being made the next business day with the water clerk and the administrative assistant overseeing the financial journals and signing off as to their accuracy. The financial journals are then given to the bookkeeper for posting.
The department head started overseeing the deposit procedure, and every monetary transaction now has a receipt, according to Colvin. The bookkeeper has started to reconcile the daily financial journals with the bank statements to ensure accuracy.
Colvin said the city’s IT Department was told to review how passwords are stored, and the department will work with the Legislative Audit technology staff to make necessary security changes. The city is also working with a software vendor to consider additional security changes, according to Colvin.