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In this case, Clifton did not maintain professional skepticism when performing the audit. It failed to detect the obviously fraudulent invoices that Rita Crundwell fabricated. Although Rita Crundwell made the invoices appear genuine, the invoices did not adhere to the same standards as authentic invoices. They were missing key information, including the state logo and phone number of a contact person. The word “section” was also spelled wrong on some invoices. If the auditor can find that the documents have been modified and investigate them further, such as made a call to verify the information, the fraud would be detected.

In addition, the auditor failed to verify that whether money was going toward city projects. The Fifth Third Bank included the RSCDA account on a bank confirmation, but the auditor neither fully understand the purpose of the account nor did any testing to the expenditures and requested reconciliation. Clearly, the auditor did not maintain professional skepticism when finding that the bank account was unusual.

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Finally, Clifton prepared Rita Crundwell’s personal tax returns but did not notice that a Comptroller spending beyond her means should be investigated or viewed as fraud risk. Obviously, Clifton seemed to be too trust to Rita Crundwell and did not demonstrate sufficient professional skepticism in conducting the audit.

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