- Associated Press - Wednesday, November 5, 2014

LITTLE ROCK, Ark. (AP) - A northern Arkansas mayor created an illegal account related to the city’s water and sewer department, an audit found.

The Division of Legislative Audit recently released its report on Marshall’s financial management and found that Mayor Jim Smithson violated state law in creating the account.

Smithson told the Arkansas Democrat-Gazette (https://bit.ly/10vDzqN ) that he opened the account, which has about a $335,700 balance, in April to set aside funds for the city’s ongoing dispute with the Ozark Mountain Regional Public Water Authority.

The city is planning to appeal a Circuit Court ruling that requires Marshall to pay charges to the group for providing water from a new waterline running from Bull Shoals Lake since last September.

Marshall officials have said they want out of a contract with the authority because they want to go back to the city’s spring-fed water system.



Auditors found Smithson opened the account named “City of Marshall, OPRA” with himself as the only person authorized to use it. The report states the mayor transferred money into the account from the water and sewer bank account, which had about a $137,400 balance as of June 30.

State law says two officials must be authorized to sign checks from water and sewer accounts and that they must be handled in the name of the city’s water and sewer department. Auditors said the account created by the mayor didn’t meet those standards.

Smithson said he responded to the report by adding a second city official to the account. He said didn’t know the account violated state law until the auditor’s report.

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Information from: Arkansas Democrat-Gazette, https://www.arkansasonline.com

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