Discussion Post: Internal Controls
This exercise will demonstrate how the concepts we learned about internal controls in Chapter 4 play out in real life situations with sometimes devastating consequences.
Read the attached article and view this short news video clip on the $54 million fraud committed by former controller Rita Crunwell against the City of Dixon, IL. She spent the stolen money over 20 years on a lavish lifestyle which included horse farms, luxury homes, a $2.1 million RV, a $250,000 horse trailer, over $300,000 in jewelry, and more than 400 horses:
Unlikely Hero in Dixon IL $54m fraud
Write a paragraph (at least 5 sentences) and respond to two of your classmates' postings with substantive comments. Note that only responding with merely a "yes" or "no" or "I agree/disagree" is insufficient unless you explain thoroughly WHY you feel that way. Your original post should contain original thoughts or address one or more of the following questions:
1) In considering the fraud triangle, what of the three elements were compromised and why?
2) In considering the concept of separation of duties that is covered in your textbook, what process could the city of Dixon implemented that would have prevented the fraud from occurring?
3) Why do you think Rita Crunwell committed this crime? Explain your answer in detail (e.g., don't just say she was greedy and leave it at that. Discuss her possible thought processes or why she was greedy.)
4) How do you see Rita's greed playing out in big or small ways in your world?
5) Just because there were weak controls at the City of Dixon, does that justify Rita's actions? In other words, just because she had the ability to rip off the system, does that mean she had the right to do so? Does power equal right? Why or why not?
6) What actions would you take if due to a flaw in the accounting system you had the ability to steal a significant amount of money and would probably not get caught for a lengthy period of time?
The response must include a reference list. Using Times New Roman 12 pnt font, double-space, one-inch margins, and APA style of writing and citations.