Dixon Sues Accounting Firms For Crundwell Lapses - News and Weather For The Quad Cities -

Dixon Sues Accounting Firms For Crundwell Lapses

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The city of Dixon, Illinois is suing its accountants for negligence, saying they failed to do their jobs  as former comptroller Rita Crundwell stole millions in city funds.  

The city's lawsuit claims one of Dixon's accounting firms, Clifton Larson Allen, allegedly knew about the former comptroller's secret accounts as early as 2010.  

But the accounting firm says they haven't even been responsible for auditing the city since 2006, instead they were only hired to gather financial statements.  

Crundwell of course has admitted to stealing money from the city since 1990.  

It's one of many disagreements between the city and its accountants that will have to play out in court.  

Court documents show the city's accountants were fooled easily; Crundwell made up fake invoices from the state and then wrote checks to pay them off, depositing them into her account.  

Those invoices had the wrong spelling, wrong type set, and no state logos, or contact information to ask about billing.   

All in all the city claims over 179 fake invoices got past accountants.  

One of the city's accounting firms, Clifton Larson Allen, had this to say: "The type of audits our firm performed through 2005 and the compilation services provided since 2006 did not require the sort of detailed testing needed to uncover the fraud." 

The fake invoices were allegedly used to pay for city projects, but those projects weren't even real, and the city says none were investigated by accountants. 

Some of the city's accountants also filed Crundwell's personal tax returns. Court papers say those showed several irregularities like in 2005 when Crundwell spent $304,000 more than she took in that year.  

The city says none of this was ever reported to them, but the accounting firm says that's not true.  

They tell TV6: "We advised various city officials in writing on multiple occasions that a significant deficiency did exist in its internal controls involving lack of segregation of duties." 

The city is also naming Fifth-Third Bank and US Bank in the suit, but is still in the process of gathering evidence against those banks which held Crundwell's secret accounts.  

A hearing for the case is scheduled for March 15th.