LAS VEGAS — The annual independent audit of the Nevada Public Employees Retirement System’s financials will be conducted by a firm that recently agreed to pay a city in Illinois $35 million after it failed to notice that the city’s comptroller had embezzled nearly $54 million from taxpayers over the 20 years during which the firm was conducting independent audits.

In February, Nevada’s Public Employees’ Retirement Board voted unanimously to award a $113,500 contract to CliftonLarsonAllen, LLP, to audit the financials of the state Public Employees’ Retirement System, Legislative Retirement System and Judicial Retirement System for the current fiscal year.

The vote came just months after CliftonLarsonAllen settled a civil lawsuit with the city of Dixon, Illinois. The suit was over the firm’s acknowledged failure to notice that a high-ranking city official had been stealing from city coffers for years, forcing the small municipality to cut public services and lay-off employees.

Though the firm had audited Dixon’s books annually since 1988, it never detected that City Comptroller Rita Crundwell was siphoning off funds from the city to purchase 400 quarter horses, a luxurious ranch, vehicles, a $2 million motor home and more.

Crundwell was sentenced to nearly 20 years in prison after pleading guilty to the theft, while CliftonLarsonAllen settled a civil lawsuit with the city, agreeing to pay $35 million for not detecting the crime.

“We believe there was a shared responsibility that resulted in Ms. Crundwell’s fraud continuing undetected, and the right thing to do is reduce the harm experienced by the taxpayers of Dixon and put this matter behind us,” the firm’s CEO Gordon Viere said in a prepared statement, according to local media.

NVPERS has used CliftonLarsonAllen LLP since 2012, according to Tina Leiss, executive officer for the system. Clifton Gunderson — the same firm that worked for the City of Dixon before it merged in 2012 with LaronAllen to form CliftonLarsonAllen ­— was hired by NVPERS to conduct audits dating back to the 2008-2009 fiscal year. NVPERS also retained Clifton Gunderson in 2006 for an internal controls examination.

Currently, CliftonLarsonAllen is the only independent auditor of NVPERS, which is responsible for nearly $30 billion in pension-fund assets. Although administrators “recently learned of the settlement,” Leiss said there is no reason to be concerned.

“The settlement did not involve any office or personnel with any contact with or responsibility for the Nevada PERS audit relationship,” Leiss wrote in an email. “PERS has tight controls in place to ensure the material accuracy of financial statements and these controls have been in place for a long period of time.”

She said that those controls consist of many checks and balances over the assets held in trust, including regular independent audits of financial statements. As well, NVPERS accounting staff routinely reconciles portfolio values throughout the year and both professional investment staff and outside investment consultants perform ongoing monitoring, Leiss told Nevada Journal

News reports on the Dixon embezzlement paint a close relationship between Crundwell and CliftonLarsonAllen, saying that one of the firm’s employees unsuccessfully asked the comptroller out on a date and that she once played on the firm’s softball team.

Despite the firm’s part in the theft of public dollars and the understandable questions about the firm’s competency and honesty that have surfaced as a result, Leiss said there’s no reason to review past year’s audits conducted by CliftonLarsonAllen.

“PERS has no reason to believe that (there) are any issues with current or prior financial statements, given the tight controls that have been in place for a long period of time,” Leiss said. “The CliftonLarsonAllen personnel assigned to PERS had no involvement with the above settlement and are extremely qualified and experienced in the area of public pension auditing.”

Leiss noted that CliftonLarsonAllen is “extremely large,” with a staff of 3,600 and over 90 offices. According to the company’s website, CliftonLarsonAllen employs over 1,550 Certified Public Accountants.

Chantal Lovell is a reporter with Nevada Journal. For more visit http://nevadajournal.com.