By Caleb Taylor

A recent arrest of a Craighead County Clerk for theft of public funds shows the importance of improving the online transparency of county governments in Arkansas.

Craighead County Clerk Kade Holliday resigned last week and was charged with 13 felonies related to theft of public funds — estimated at $1.6 million —after auditors alerted officials to suspicious activity, according to .

Holliday was charged with 12 counts of felony theft of property and one count of abuse of public trust.

Holliday was elected as county clerk in 2012.

Online transparency helps the public guard against cases of alleged fraud like this one.

New Research On Educational Attainment and Fraud

According to a , internal and external audits are responsible for the detection of  only 19% of occupational fraud.

“State Government Internal Auditing, Education Attainment, and Occupational Fraud Control” by ACRE Economic Policy Analyst Dr. Mavuto Kalulu and BT����Assistant Professor of Accounting Ashley Phillips, published in the Volume 41, Number 2 edition of the Southern Business and Economic Journal of Auburn University in April examines the effectiveness of public sector internal auditing in reducing public sector corruption. 

Kalulu and Phillips find that state internal auditing laws and practices have been ineffective in reducing public sector corruption. They recommend states emphasizing other ways of controlling corruption such as “improving education standards” since states with a higher percentage of the population holding a bachelor’s degree have fewer corruption conviction cases.

Kalulu and Phillips write:

We argue that more educated states are more capable of scrutinizing how public officials are managing public resources and are able to hold them accountable. Public officials become afraid that the chances of being caught are higher when people are watching them, and this deters them from engaging in corrupt activities. On the basis of our findings, we recommend that states focus on policies to improve education quality, since this is the only variable that is consistently negatively related to public sector corruption.”

The paper was published before Holliday’s arrest.

Craighead County’s Online Transparency Score

Craighead County ranked ninth in overall online transparency in the second edition of Access Arkansas: County Web Transparency, produced by ACRE Policy Analysts Mavuto Kalulu and Joyce Ajayi, in December 2019.

The index ranks counties on a score from 0 to 1 by combining the three types of transparency listed above: fiscal, administrative, and political. Fiscal transparency is the disclosure of financial information. Administrative transparency relates to the openness of government activities and processes, while political transparency relates to the transparency of elected officials and quorum courts.

According to the index, Craighead County publishes online 47.5 percent of the important public information tracked in the index. According to the authors, 67 of the 75 Arkansas counties publish less than 50 percent of this information online.

To see more of our work relating to this topic, you can go here.

By Mavuto Kalulu

Public corruption exists at all levels of government. The impact of the abuse of public services may be strongly felt at the local government level because of the direct contact these government officials have in the provision of services. In Arkansas, for example, county governments are responsible for  When public officials misuse public resources, it means less resources to provide such services.

Quantifying the amount of resources abused by public officials is not an easy task. By its nature corruption is secretive and hence the known cases may be but a fraction of the whole. Despite that, it is important to attempt to quantify the level of resource abuse taking place using previous cases. To do so for Arkansas I relied on information obtained from various Prosecuting Attorneys Disposition of Matters Referred by Legislative Joint Auditing Committee reports. Under the  Ark. Code Ann. § 10-4-419, the Legislative Auditor is required to notify appropriate prosecuting attorneys of transactions reflecting “ evidence of apparent unauthorized disbursements or unaccounted for funds or property by a public official or employee.” The reports prepared by the Legislative Audit provide a summary of the disposition of matters referred to the Prosecuting Attorneys of the State’s 28 judicial districts. Table 1 includes the total number of matters that Legislative Audit referred to the Prosecuting Attorneys at all levels of government in Arkansas in each year between 2010 and 2017. A total of 1,856 matters were referred to the Legislative Joint Auditing Committee over the 7 year period.

Table 1 also provides what became of the matters that were referred to the Legislative Joint Auditing Committee. For example, 286 of them were filed in courts for prosecution (column 3). Of particular interest is the 189 of the 286 cases that resulted in convictions. This number helps us calculate the amount of public resources that were misappropriated by public officials in the state between 2010 and 2017.  

How much in public resources did Arkansans end up losing as a result of these 189 conviction cases? Table 2 provides a summary of the total amount of resources that were abused in each of these years, as well as the total amount of tax dollars lost over this 10 year period.

The $12.6 million total is tax dollars that were abused at all levels of government. Of the $12.6 million, roughly $2.8 million was misappropriated by county governments. Table 3 shows the amounts that were misappropriated at county governments in Arkansas in each of the years between 2010 and 2017.

These $2.8 million are tax dollars that county governments could have used to provide better services for their constituents. Identifying misappropriation of public funds should not be the responsibility of Legislative Audit alone. Taxpayers have a role to play as well by requiring that their elected officials are transparent in the way they use resources.  The hope is that the information contained in this article and in the Arkansas Center for Research in Economics Policy Brief titled “Let the Sun Shine in: Improving Access to Arkansas Counties’ Financial information” would inspire constituents to demand more transparency and encourage them to hold public officials accountable. $2.4 million of $2.8 million misappropriated at county level occurred in counties that publish no fiscal information according the transparency report produced by the Arkansas Center for Research in Economics. Fiscal transparency can deter public officials from engaging in corrupt practices as it adds another layer of scrutiny on the use of public funds.  Preventing corruption through transparency is better than curing it through criminal convictions.