The Arkansas County prosecuting attorney and the IRS are investigating the misappropriation of more than $31,500 in county funds, state legislators were told Friday. County Clerk Cathy Orman resigned June 30 and agreed to reimburse the county after the irregularities turned up in a state audit, the Legislative Joint Auditing Committee was told. An audit of the clerk’s office, covering the period from Jan. 1, 2009, to May 31, 2011, indicated Orman issued $18,283 in county funds to several county vendors or to herself for non-county expenses.
The loss of the funds could have been prevented if the county had exercised proper fiduciary rules of procedure. We know Arkansas County is not the first unit of local government to fall victim to not utilizing proper safeguards and won’t be the last.
Auditors discovered Orman had altered payroll records and overstated federal and state payroll tax withholding by $13,364 for herself and her husband, Mark, northern district county road foreman. She admitted to auditors to having used county credit cards for personal expenses, issued herself checks without property claims for personal expenses, overstated mileage on claims for reimbursement and forged the county judge’s signature authorizing payments on some county claims.
Orman resigned in June after a routine legislative audit found the discrepancies, and agreed to reimburse the county $31,647. She has paid back $19,918 and still owes $11,720. No charges had been filed against Orman, with Prosecutor Robert Dietrich of Stuttgart awaiting the audit report. The prosecutor indicated formal charges will likely be filed this week.
Orman served as deputy clerk and chief deputy clerk for 23 years before being elected county clerk in 2009, County Judge Glenn “Sonny” Cox said, and also spent all of the couple’s savings, including money she received from cashing in IRAs. Dittrich said there was no indication her husband was aware of the scheme.
Independent reporting for Pine Bluff & Jefferson County since 1879.
The audit indicated that on IRS W-2 forms Orman prepared for herself and her husband, the former clerk overstated how much federal and state payroll taxes were withheld from their paychecks by $13,364 during 2010. She altered her paycheck stubs, according to the audit, and did not actually withhold state or federal taxes from most of her paychecks during that period. To reconcile the payroll taxes remitted to those reported to the IRS, she understated withholdings on W-2 forms issued to 43 other county employees. Auditors recommended that initiating, receipting, depositing, disbursing and recording of cash transactions be disbursed among several county employees rather than having one person responsible for all. Samples of recent state audits carry the warning that financial safeguards were lacking. County and city officials seem to ignore the warnings year after year.
Legislators were told that Orman’s office had been using an antiquated computer system that was easy to manipulate, with Cox explaining she had refused to upgrade the office’s computers.
The county clerk’s office now has a new computer system and checks and balances included in the procedures, with different employees writing and signing checks.
We can’t help but recall a trusted bank vice president responsible for the customer service department at her institution. She would not take vacations and often placed bets at the $100 window at the greyhound track in West Memphis. Both were warning signs that were ignored.
When she became sick and was hospitalized, the red flags started popping up when her temporary replacement discovered irregularities.
Trusting employees is not a mistake, but elected and appointed officials have a responsibility to verify financial data. That’s why we have audits that sometimes are anything but routine.