DES MOINES — To reduce the potential for fraud at city halls statewide, Iowa Auditor Mary Mosiman is distributing a video to educate new city council members about their financial responsibilities.
Mosiman, who said Tuesday that her office has about 28 fraud cases pending “with new situations being identified every week,” hopes the seven-minute video will help council members taking office this month understand their basic fiduciary duties, highlight the importance of verifying the public purpose for every expenditure, and outline what they can do to provide oversight, transparency and accountability of taxpayer dollars.
“I said early in my tenure that I wanted to more than report on fraud. I wanted to do something to reduce the potential for fraud happening,” Mosiman said at a Statehouse news conference.
Her office issues about 25 fraud reports involving all levels of government each year, she said.
Nationwide, fraud in government and public administration is second only to fraud in the banking and financial services industries, Mosiman said, adding that cities have had approximately twice as many fraud cases as other types of government since the Auditor’s Office began tracking in 1996.
By educating new council members roughly 1,500 every two years, according to the Iowa League of Cities, Mosiman hopes to shrink the “fraud triangle” of motive, rationalization and opportunity.
“There’s not much anybody can do to impact motive and rationalization, but one can impact the opportunity for fraud taking place,” she said. “The opportunity is significantly reduced if proper oversight, accountability and transparency is present.”
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Council members can improve oversight by reviewing city bank statements and other financial documents periodically and randomly to “make sure there is a second set of eyes providing the necessary checks and balances.
Alan Kemp of the League of Cities collaborated with Mosiman on the video that will be distributed to new council members, city clerks and county auditors.
He and Mosiman pointed out that a 2013 change in Iowa law requires cities to have either an annual audit, an annual financial examination or a periodic examination, depending on the size of the city. Larger cities must have annual audits, but cities of less than 2,000 people — Iowa has more than 700 — are required only to have periodic examinations. Annual audits would be a “serious financial cost” to smaller cities, Kemp said.
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