A national collegiate fraternity headquartered in Indianapolis is suing its former auditor, charging that the accounting firm failed to notice more than $400,000 in missing funds allegedly embezzled by an ex-employee of the fraternity.

Alpha Tau Omega filed suit against Indianapolis-based K.B. Parrish & Co. LLP on Jan. 18, about the same time the Marion County Prosecutor’s Office announced that it had charged Cheryl Dillon-Britt with 14 counts of theft.

As the director of programs and services for the fraternity’s foundation, Dillon-Britt used her position to issue checks to friends and family members and then deposited the funds into accounts she co-owned with the individuals, according to the charges.

The foundation fired Dillon-Britt on Dec. 15, 2010. About three weeks later, its president and CEO uncovered evidence demonstrating that she misappropriated funds through false scholarships and grant checks, and used the foundation’s checking account and credit cards for unauthorized purposes, the suit said.

Alpha Tau Omega accuses K.B. Parrish of committing professional malpractice or negligence and also of breaching its contract with the foundation.

“Particularly, K.B. Parrish failed to discover and prevent the serious and apparent fraud of Ms. Britt and the other inaccuracies in the foundation’s books and financial statements that should have been obvious to any person with the expertise that K.B. Parrish professed to have in the accounting field,” wrote the foundation’s lawyer, Andrew M. McNeil, in the suit.

K.B. Parrish served as the foundation’s accounting firm and auditor from 2004 through the end of 2011.

The firm’s leadership did not return calls from IBJ seeking comment.

Alpha Tau Omega’s foundation is seeking damages in an amount to be determined by a jury.

The foundation filed its suit against K.B. Parrish in Marion Circuit Court. A 12-count civil suit the foundation filed against Dillon-Britt in February 2011 is pending in the same court.

With 25 certified public accountants, K.B. Parrish is the area's 14th largest accounting firm, according to IBJ research.