I’ve recently received word that I’ve been accepted as a TEDx speaker! I will be speaking at the TEDx event at Arkansas State University on September 18th.
This is a certified Big Deal, and I’m incredibly honored and humbled by the opportunity. And “humbled” is an understatement. The speaker list for this event will make your head spin. We’ve got Ph.ds galore. We’ve got rescue divers. We’ve got martial arts guys. Best-selling authors. Podcasters. TV and movie producers. AI experts. See this link for the full list.
Kinda makes me wonder if the selection committee got their application papers out of order and mine got accidentally mixed in. I’m not going to ask…
I’ve got 13 minutes on the TEDx stage. My topic is, “The biggest financial scandal you’ve never heard about (and what to do about it).” Spoiler alert – stop reading now if you want to find out for yourself later.
The scandal I’ll be addressing is the myth of auditor independence, and the fundamental, structural flaw in the audit system that is putting our financial system at risk.
Most people who are not in the accounting business don’t know that auditors are hired and paid by the companies they audit. As long as the system stays that way, real auditor independence is a sham.
I’ve seen this first-hand. During my time in two large public accounting and consulting firms, I must have responded to thousands of ‘independence checks.” These checks go into great detail to make sure that the auditors and their families have no financial interest, no matter how tenuous, in any prospective or existing audit client. In some cases, you can be required to sell stocks because you hold a few shares of a new audit client – even if you’re not part of the audit team. I’ve signed dozens of documents confirming that I’m completely independent and attended countless sessions on independence training.
The reality is it’s mostly for show. The real independence test should begin with, “Who is paying for the audit?” If the answer is, “the company we are auditing,” you should stop right there. How in <insert your deity of choices’ name> are you supposed to be independent when the person paying you and the person you’re auditing is the same person?
No independence check form ever asks that question. It’s not asked, because the audit firms already know the answer. And in my opinion, if you fail this one, there’s no need to answer the rest.
Well, yours truly thinks he’s figured out a solution. It’s clean, elegant, and no more expensive than the current method. Once we get close to the 18th, I’ll reveal the answer.
Gotta keep a little suspense going…
Ethical Bankruptcy: Gradually, Then Suddenly 