Netflix recently released a documentary called “All the Queen’s Horses.” It details the story of Rita Crundwell, the perpetrator of the largest case of municipal fraud in American history. As the City Comptroller and Treasurer for Dixon, Illinois, Rita Crundwell embezzled more than $53 million of public funds over a 20-year period.
The stolen funds had a devastating effect on the small City, including staff cuts, budget slashing and failing public infrastructure not being repaired. While the City suffered, Rita Crundwell built one of the nation’s leading quarter horse breeding empires, purchased extravagant vehicles and traveled the world. In 2012, Crundwell’s fraud unraveled after a co-worker uncovered her scheme and alerted the Mayor, who, in turn, brought in the FBI.
The documentary examines multiple aspects of the fraud, including the role of the auditors, personal stories about Crundwell’s co-workers and the accounting procedures used to execute the fraud, as well as the missing accounting practices that allowed the fraud to go undetected for so long. Considering the vast amount of public funds stolen, you would think that the fraud was perpetrated using complex schemes and elaborate cover-ups.
However, as you will find out if you watch the documentary, which we highly recommend, the simplistic accounting actions used by Crundwell emphasizes the importance of ensuring adequate segregation of duties throughout your accounting processes. Even in the smallest of accounting and finance departments, like Dixon’s, there is plenty of staff to design and implement adequate segregation of duties to ensure that no single person can commit a similar fraud scheme.
Up until the Crundwell fraud was uncovered, Dixon, Illinois was most well known as the home of former U.S. President Ronald Reagan. Coincidentally, it was Reagan who coined a phrase that is relevant to this case, is used in the auditing world regularly and will hopefully be a take away for all accounting professionals after viewing this documentary and that is “trust but verify.”
Aaron Funk, CPA