Small Towns Face Accounting Personnel Problems

Arkansas has exactly 500 cities and towns, according to the 2010 U.S. census, and 446 of them have populations of less than 6,000.

(Click here to read a related story on government accounting problems in Arkansas.)

Such small towns often have budget constraints that force them to hire mainly or entirely part-time personnel and to hire from the limited talent options in town, said Diane Whitbey, city clerk and collector for North Little Rock and president of the statewide association of city clerks, recorders and treasurers.

Rarely is a small-town clerk or treasurer a credentialed accountant.

City clerks are typically elected, Whitbey said — but if only one person runs for the position, that person gets the job as long as he or she fits the state’s basic requirements: a resident of the city, at least 18 years old and registered to vote. A town clerk might also serve as a finance director, regardless of his or her education and experience, Whitbey said.

And when a new clerk-treasurer beats an incumbent at the polls, the departing city clerk is not always willing to train the inexperienced newcomer, she said.

The results can be town financial managers who don’t get trained in their jobs, don’t know state law, don’t stay up-to-date on law changes and don’t even have basic bookkeeping skills, she said.

The City Clerks, Recorders & Treasurers Association offers some remedies for those problems in the form of classes, certification programs and opportunities for mentorship from more experienced civic leaders in the state. However, participation in the association’s opportunities is voluntary.

Accounting problems due to human error tend mainly to happen in the very smallest towns, said Barbara Blackard, city clerk treasurer of Clarksville. Other problems come with fraud, she said. “Even with internal controls, it can happen,” Blackard said.

Blackard mentors less experienced clerk-treasurers through the City Clerks, Recorders & Treasurers Association.

Prevention or early detection of errors or fraud requires “commitment from the governing body,” said Bruce Engstrom, a certified forensic accountant with EGP PLLC in North Little Rock.

“You have to seriously design internal controls,” he said. “You have to fully staff it, and you have to monitor the compliance with the internal controls. You can’t create the internal controls to shut the door and walk off.”