Technology for small governments: Ohio's uniform accounting network.

• Author: Petro, Jim
• Position: Brief Article

Responding to financial crises and accounting deficiencies caused by manual bookkeeping procedures in small governments, the Ohio Auditor of State has made automated financial systems an affordable reality for the state's 2,012 village and townships.

Editor's note: GFOA bestows the Louisville Award for Innovation in Government Finance only in recognition of exceptional accomplishments for the introduction of a new concept or technique with enduring value to the profession. This article describes the 2001 winning entry in the Management and Service Delivery category.

In 1996, the Ohio Auditor of State placed the village of West Millgrove under the control of a fiscal commission because of massive fund deficits. The village had received 14 citations in its previous audit, and record keeping was so poor that village officials could not verify their fund balance. Shortly after the appointment of the oversight commission, the village of 170 joined the Uniform Accounting Network. The village received only one citation in its next audit, and the Auditor of State dissolved the commission in 2000, confident that it had returned to fiscal stability.

The majority of Ohio's local governments are townships, villages, and other small entities that generally cannot afford to buy and maintain sophisticated financial systems. The Uniform Accounting Network is a unique state-local program designed to improve financial management through computerized accounting. Since 1990, the UAN has offered customized hardware, software, training, and support to help meet the unique needs of small local governments staffed primarily by parttime finance officers. Nearly two-thirds (1,478) of Ohio's townships, villages, and library systems now are utilizing the program, which has experienced 150 percent growth in the last six years alone.

Although the major features of the UAN are its accounting and payroll applications, the program also includes tax, budget, inventory, cemetery, word processing, spreadsheet, and database applications (Exhibit 1). These standardized applications offer a number of benefits to both the users and the state, the most important of which are improved financial control and more accurate, uniform, and comparable financial reporting. The program also reduces the clerical burden of record keeping, facilitates more efficient and timely audits, improves communication, and provides a mechanism by which the state can accumulate and report statewide financial and demographic data.

Rationale for Change

Financial management in America's townships, villages, and other small governments has come under increasing scrutiny and criticism. In an editorial lamenting poor accountability in some villages, The Cincinnati Enquirer noted that "some (area) small towns could make Third World regimes look good."' At a minimum, bookkeeping problems lead to increased audit costs. At worst, they can lead to fiscal crisis. Some states, most recently Indiana, have gone so far as to abolish or at least streamline the services offered by these small governments.

One of the most significant factors that has contributed to the record keeping difficulties of small governments has been a dependence on cumbersome manual accounting procedures. Finance officers in Ohio's 703 villages and 1,309 townships often spend countless hours manually performing accounting tasks. Needless to say, such methods dramatically increase the potential for human error. The long hours have undoubtedly contributed to the high turnover rates in these elected positions. According to the Ohio Municipal League, almost three-quarters of the village finance officers in Ohio today were not even elected to the office, having been appointed to fill a vacancy. (2) Even when a finance officer from a neighboring entity is willing to temporarily fill in for a sudden vacancy, the lack of uniformity in manual accounting hinders their efforts. Manual accounting also has led to inefficiencies for users of this information, such as state retirement systems that must key in...