17, September 2015
A Case Study: Rita Crundwell
The case of Rita Crundwell revolves around a town, other employees, and an auditor 's blind trust in a women, who clearly did not deserve the trust. Crundwell was the town Comptroller. The fraud resulted in 53 million dollars to be siphoned from the town 's funds in a time frame of 20 years. Crundwell covered her tracks with a fake bank account, fake invoices, and the party line of blaming the state for simply being behind on payments. There were many red flags during the two decades of this scheme, but due to the town 's small size and trusting attitude, they relied heavily on external audits, which were not up to par.
Manager’s Assertions…show more content… The account balances assertion was also misstated on. This is specifically on the PCAOB assertion about right and obligations. The City of Dixon had a bank account in their name called the RSCDA. This was a fraudulent account created by Crundwell to pull off her scheme. However, as this bank account was under the City of Dixon’s name the account should have appeared on the financial statements, with an accurate balance. The city had right to this misused bank account. Finally, the notes and disclosures lacked in presentation and disclosure. Since the financial statements were missing accounts
Audit Failures An “audit failure” is a situation in which a professional auditor fails to detect a material error in the financial statements of the company they are auditing. The audit failure in the situation of Rita Crundwell the failure was exacerbated by the fact that the auditors continually signed off on the misstated statements for years. Crundwell is responsible for many of the deficiencies mentioned, such as the missing funds and the incorrect invoices. However, she is not the sole person responsible for this fraud. The lack of internal control is to blame, and this cannot be placed on a single person. The government should have separated duties and used