Rita Crundwell Case Study

Rita Crundwell was the treasurer and comptroller of Dixon, IL from 1983 to 2012. She worked for the city during high school, and was quickly promoted. Crundwell was also a horse breeder and owner, as she grew up on her family farm. During her time as treasurer, she was the owner of RC Quarter Horses. She had hundreds of horses, and trained dozens of world champions. She was very famous in the horse industry, and “everyone involved in the horse industry knew who Rita was” (Pearce). On December 18, 1990, Rita opened a private bank account titled RSCDA, Reserve Sewer Capital Development Account. It appeared that this account was created for the city of Dixon. Crundwell transferred funds from Dixon’s Money Market account into its Capital

Rita Crundwell was a trustworthy and respectable person in the city of Dixon. She was known for her successful horse business, and her positive and charming attitude. She was the epicenter of accounting for Dixon, IL as she acted as the treasurer and comptroller. During city council meetings, no one validated her work of writing checks or depositing money. Crundwell explained that money was used for projects to better the city, however, no officials bothered to look for physical evidence of the project. Another example of faulty validation is when Crundwell created fake invoices from vendors, and no one contacted a vendor for confirmation of these purchases. More red flags include creating handwritten bills, and not having backup documentations. It is explained that processes are very important to accounting, and if the processes are not being followed correctly, then it is a warning sign of fraud. For a person working for the city, an average salary was $80,000 per year. However, Rita Crundwell’s income reflected $300,000 with no backup documentation to reflect her work. In 2005, the industry standard law changed stating: “if you perform the nonattest services for an industry, then you cannot do the auditing work at the same time”. The city found a mom and pop firm in IL called Clifton Gunderson LLP. Crundwell proposed that she would give all the documents needed to Clifton Gunderson LLP, and all they had to do was sign off on them. The accountant from LLP, Megan Shank, agreed. In regards to the RSCDA account, no officials investigated the bank account. To open a bank account, there needed to be multiple approval signatures, and a reason explaining the need for the account. In the world of banking, it is simple to understand the occurrences and patterns of an account’s withdrawal and deposit activities. It is important to know your client, especially a government client, yet