Benton County receives "poor" rating in new report released by Auditor Fitzpatrick

A regularly-scheduled audit conducted by the office of State Auditor Scott Fitzpatrick gives Benton County the lowest possible rating of "poor" and finds county officials intentionally disregarded and violated state law to overtax residents by approximately $200,000. The new report, which is a downgrade from the previous audit released in 2016 that gave the county a rating of "fair," also finds the Benton County Public Administrator made questionable payments to members of her family for tax preparation services for wards without considering other vendors and ensuring the services were obtained at the lowest cost, and identifies lacking financial controls and procedures for the county.

"It's disappointing to see the county's condition has worsened in the eight years since our last audit and it's important for taxpayers to know about the issues that have persisted over the years as well as the new problems identified in this report," said Fitzpatrick. "The fact the county willfully disregarded state law to overtax residents by approximately $200,000 is completely unacceptable. While I'm pleased the county is now taking steps to return that money to taxpayers, it's something that should never have happened in the first place."

The audit report found the county did not sufficiently reduce the property tax levy in its sales tax rollback calculations to offset 50 percent of the sales tax money received in 2020 through 2022. The over collection of property tax amounted to approximately $200,000. County officials were aware that state law required the county to reduce property taxes based on the percentage of sales tax collected, but opted to keep their property tax rate at a level that was higher than allowed in an effort to ensure enough property tax money was available to fund county programs and services. The report also notes the county did not properly report the property tax levy reduction to the State Auditor's Office in 2022, did not reduce the tax levy for sales tax collections for 2023, and did not accurately calculate the property tax reduction required for 2024.

The report also found the county has inadequate financial controls and procedures that includes the failure of the County Treasurer to ensure bank reconciliations are accurately prepared and agree to book balances. The bank reconciliation performed for January 2023 was reviewed, and a significant difference of $7.4 million was identified between the reconciled bank balance and the book balance. A review of bank reconciliations performed for December 2022, November 2023, and December 2023, noted significant differences ranging from $127,672 to $586,068 between the reconciled bank balances and the book balances. The report also found neither the County Clerk nor the County Commission adequately review the financial activities of the County Treasurer, and the county has not implemented the recommendation made by the independent auditors who have performed the county's financial statement audits to adequately track cash and fund balances.

Another finding in the report highlights the decision of the Benton County Public Administrator to pay her family's accounting and tax business a total of $4,075 from the accounts of 38 wards during 2022 and 2023 for tax preparation services. While the Public Administrator believes her family's accounting and tax business has the lowest rates in the area for tax preparation services, the report notes she has no documentation to support her claim. According to the report, the appearance of conflicts of interest creates a situation that could prevent the Public Administrator from objectively performing her duties to protect wards' personal assets and bank accounts, and make decisions for the benefit of her wards. Additionally, a review of 25 active cases, chosen judgmentally, with annual settlements due in 2023, found the Public Administrator did not file the annual settlements by the required date for 9 cases tested. Both of these issues are similar to findings from previous audit reports.

"Given the important nature of the work done by the Public Administrator and the trust placed in her to responsibly manage the finances of her wards, it is concerning that she made decisions that directly benefited her own family," said Fitzpatrick. "Going forward, I hope she will take our recommendations to heart and avoid these apparent conflicts of interest."

Other findings in the report include a mid-term salary increase for the Sheriff that violates constitutional provisions, a failure by the County Commission to always comply with the Sunshine Law, a violation of state law by the Senior Citizens' Services Board for failing to enter into written contracts with the not-for-profit entities to whom funding was provided, and inadequate electronic data security for the County Assessor, County Collector, and the Recorder of Deeds. The audit also found the county's Road and Bridge department does not charge sales tax on dust control products sold to county residents for gravel roads, and the Sheriff's office does not charge sales tax on electronic cigarettes and nicotine pouches sold to inmates as required by state law. Additionally, the county does not report personal commissions received by the County Collector for the collection of city taxes as employee compensation to the Internal Revenue Service, resulting in an underpayment of taxes by the Collector and exposing the county to penalties and interest for failure to properly withhold taxes, and the Sheriff's office does not prepare a monthly list of liabilities for the general account, and consequently, liabilities are not agreed to the reconciled bank balance.

The full audit report is available here.