Final answer:
The auditors missed the fraud in Dixon mainly because Rita Crundwell, who managed the city's finances, used sophisticated methods to conceal her activities, the fraud started small and escalated, and there was significant trust placed in her by the city officials.
Step-by-step explanation:
The auditors for the city of Dixon did not detect the fraud for several reasons. One significant factor was that the primary perpetrator, Rita Crundwell, was in charge of the city's finances and developed a sophisticated scheme to divert funds without drawing attention. She created fake invoices and accounts to mislead anyone who might review the finances. Furthermore, there may have been a level of trust that prevented the auditors from scrutinizing her activities closely.
One reason why the fraud continued for many years was that it started small and grew over time. Rita used her position to illegally transfer city funds to her personal account, and as she became more confident that she wouldn't be caught, the amounts taken grew larger.
The auditors missed several red flags, including bank statements that were mailed to her personal P.O. Box, the creation of a secret bank account, and a significant increase in personal spending that was not in line with her official salary.