The city
of Dixon, Illinois announced on September 25, 2013 it would receive a $40 million
settlement from CliftonLarsonAllen, Fifth Third Bank, and Janis Card and
Associates for the fraud Rita Crundwell committed and was not detected by the
CPA firms or the bank.
The city
sued the CPA firms and bank after its Comptroller, Rita Crundwell, stole $53
million over 20 years. Bruce Devon of the Chicago firm Powers, Rogers & Smith developed a case that clearly showed
the shortcomings in the audit process that allowed the fraud to go undetected
until Ms. Crundwell took extended leave. At that time, another city employee
discovered the bank account Ms. Crundwell used to steal from the city.
Of the $40
million settlement, $35.15 million was paid by Clifton, $3.85 million by Fifth
Third Bank, and $1 million by Janis Card and Associates. In addition, federal
marshals and the US Attorney's Office recovered about $10 million from the sale
of assets owned by Ms. Crundwell who is serving 19 years, seven months in
prison.
CliftonLarsonAllen LLP is one of the nation’s
top 10 certified public accounting firms. Its CEO Gordon Viere said:
"The allegations of fraud committed by
City of Dixon Comptroller Rita Crundwell, some of which she pled guilty
to, are extremely serious and present an opportunity for all affected parties
to evaluate how they occurred. We believe there was a shared
responsibility that resulted in Ms. Crundwell’s fraud continuing
undetected, and the right thing to do is reduce the harm experienced by
the taxpayers of Dixon and put this matter behind us. Reaching a fair
settlement for taxpayers is important to CliftonLarsonAllen."
First - they are not allegations. They are real. $53 million was
stolen and Ms. Crundwell went to prison. Second, trying to say there was a
shared responsibility that resulted in the fraud going undetected tries to
minimize the CPA firm’s responsibility to detect the fraud that occurred. The
auditing profession has got to get its act together and begin to find the significant
frauds that have brought down major corporations and caused huge losses to
government entities.
This was a simple fraud and could have been detected early on if
the auditors had simply examined the endorsements on cancelled checks or tried
to visit the non-existent capital construction projects that were part of the
fraud.
These are basic audit steps and the audit manager admitted they
were not done.
This is another black eye for the auditing profession. A
profession that is important to the public. It’s time for all auditors to start
studying the past frauds that occurred and find the future frauds that will
happen.
CLA should be shut down since they are fraudulent and incompetent. A very bad combination.
ReplyDeleteA former CLA CPA.