STEUBENVILLE - The woeful condition of Smithfield's financial records should be a cautionary tale for other small, cash-strapped communities, state Auditor David Yost said Thursday.
Yost's office recently declared the village's books unauditable due to missing records, and gave the village a list of the documentation required of them in order to complete the audit. The village has 90 days to "make a substantial effort to comply" with state law and provide the auditor's office with that data or face the possibility of legal action.
Yost, in town for the Jefferson County Republican Party's annual Lincoln Day Dinner at the Steubenville Country Club, said having their books labeled "unauditable" means so much information is missing from the public record that auditors can't do their work.
DINNER SPEAKER — State Auditor David Yost, left, meets with Dr. Brian Wilson, chairman of the Jefferson County Republican Party, before the start of Thursday’s Lincoln Day Dinner at the Steubenville Country Club. -- Linda Harris
"It's a real problem," Yost said. "It doesn't mean they're missing a few pieces of paper or a few receipts - it means their records are such a mess you can't make heads or tails of them."
Because it's an ongoing investigation, Yost said he was limited in what he could say about the situation, but noted that, with proper training and oversight, the village could have avoided any and all problems.
"We offer training through our local government services section," he said. "But (the former fiscal officer) didn't come in and do the training we offer ... we were told (the village) couldn't afford it. The truth is, you can't afford not to train your financial officer."
Smithfield's books had been deemed unauditable once before, but Yost said they eventually were able to straighten things out. "It should never have gotten (to that point) again," he said, pointing out "books don't become unauditable overnight."
"If you're on council, demand to see a monthly bank reconciliation," he advised.
"If you can't see it, that means it probably hasn't been done, so it's important for council to demand to see it."
Yost said legislation is slated to be introduced in the Ohio Legislature sometime in the next two weeks that would allow the state to withhold a portion of a local government entity's funding if its books "become unauditable and stay that way."
Yost, meanwhile, told the party faithful his office continues to use performance audits to help state and local government "skinny down," or reduce costs, during an era when resources and funding are limited.
According to the skinnyohio.org Web site, since 2007 the auditor's office has done 119 performance audits that identified more than $193 million in annual cost savings measures with a potential return on investment of $23 for every dollar spent to conduct an audit.
"We're finding millions of dollars (in potential savings) for state and local government," he said, citing as an example the switch to computer software to schedule school bus routes in Youngstown, which he said saved the city school system "$236,000 in overtime and fuel costs every year."
"Private sector protocol is you go in and measure costs and duration of process, why things take so long and look at how you can make it cheaper, faster, better," he added. "The private sector has been doing it for a long time, they have to. They don't get to raise taxes and it's hard to raise prices in the kind of economy we've had. They've had to get better, faster, cheaper - now we're bringing those tools to state and local government."
He also said that, with the November election so near, it's time to unite.
"We can't lose sight of the big picture," he said, reminding those in attendance that Lincoln himself once warned that "a house divided against itself cannot stand."
"Over the last year or two we've had some very robust disagreements in our party," Yost said. "We've argued, we've debated, we've fought. We cannot afford to be divided anymore. We need unity going into the fall - I'm not (saying) we need uniformity. Uniformity and unity aren't the same thing. We need the tea party, we need independents. We need social conservatives and we need the fiscal conservatives. Fighting for a balanced budget and focusing on getting this economy going does not hurt the fight for life or traditional family values."