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Article updated: 2/4/2013 1:07 PM

Dixon sues audit firm for failing to detect fraud

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Dixon, whose former comptroller embezzled almost $53 million is suing its longtime accounting firm for failing to detect the fraud while auditing the city's books.

Rita Crundwell pleaded guilty and is scheduled to be sentenced next week. Authorities say the scam lasted 20 years and enabled Crundwell to build a world-renowned quarter horse breeding operation.

Crain's Chicago Business reports that Dixon officials are suing the firm of CliftonLarsonAllen, claiming it missed obvious red flags such as bogus invoices. The lawsuit seeks compensation for the entire loss.

The lawsuit says the firm audited Dixon's books and performed other duties such as check processing while its personnel prepared Crundwell's tax returns.

The firm tells Crain's that it wasn't required to do testing that might have uncovered the fraud.

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