City of Dixon Il-How Taxpayer’s Were Ripped Off

Link to the 3/2011 Financial Statements:

The report contains 2 statements by an external auditor, Samuel S. Card, CPA.  Mr Card was hired by the City, as required by law, to audit the statements.

This massive theft over decades was obviously due to lack of internal controls.  Any person with access to bank accounts must NOT be allowed to approve payments, write checks, and reconcile bank statements and transfer money.  Rita Crundwell apparently opened a bank account for City Development with herself as the signer.  She would transfer money to that account, use some for city activities, and then transfer the rest to herself.

Adequate internal controls could NOT have been in place since this activity was not detected sooner by other employees or the external auditor.  How can this type of theft be prevented?

1) Identify ALL bank accounts held in the city’s name.  Require all statements be PAPER statements-not digital.  Require the person issuing checks or transfers to NOT have access to these statements.

2) Another employee independent of the person writing checks etc must reconcile the bank accounts paying special attention to transfers.  Check dates of transfers and to who.  This insures there are no conflicts or fraud, especially with dates.

Rita Crundwell obviously had too much trust placed in her faithfulness to taxpayers.  The external auditor made numerous statements about looking at internal controls, but not verifying compliance with required standards.

Rita Crundwell was in Federal custody for wire fraud.  Many of her assets have been confiscated.  The taxpayers will probably recover part of what was lost.  It remains to be seen whether trust in government can be restored.

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