Question

Refer to the Focus on Fraud feature "lack of oversight as a control weakness leads to embezzlement" and focus on fraud feature "The city of dixon, illinois, sues its auditor for $50 million related to the rita crundwell embezzlement." the situation described in these features relates to the fraud committed by Rita crundwell in the city of Dixon, illinos. crundwell was sentenced to nearly 20 years in prison after pleading guilty to a wire fraud count. in september 2013, dixon city auditors clifton larson allen and sam card agreed to settle for a total of $40 million a. research this case and describe any recent developments. b. consider the information you learned in chapter 4 regarding ethical decision making. comment on the parties at fault in this case and assess their relative level of fault.

Answer 1

Minneapolis accounting firm CliftonLarsonAllen will pay Illinois city $35M Dixon, Ill., that had sued CliftonLarsonAllen for not discovering a long-running embezzlement scam by the city's former comptroller.
The recent developments related to the case includes the agreement by The Minneapolis accounting firm ‘CliftonLarsonAllen’ to pay Dixon, Ill., $35 million for failing to detect an embezzlement scheme by the city’s former comptroller that lasted two decades and involved $53 million. The terms of a lawsuit settlement were negotiated over the weekend in Chicago by attorneys for the city and ‘CliftonLarsonAllen’ as well as another accounting firm and a bank, and the substantial portion of its settlement payment will be covered by insurance.
Additionally, Vice president of public relations (for Fifth Third Bank) said the institution where the city kept its bank accounts has "agreed to the settlement without any admission of liability."

Both CliftonLarsonAllen and Dixon city administration are at fault in the given case of embezzlement as the Auditors for the firm let millions of dollars leave city coffers without adequate oversight and standard accounting tests. Adding to the unethical approach, Dixon city over the years postponed street repaving, the purchase of new police radios and other projects. Employees at Clifton negligently failed to identify Rita Crundwell's theft for over 20 years. Most importantly, it was a shared responsibility that resulted in Ms. Crundwell's fraud continuing undetected.