Only 4% of fraud is caught by outside auditors. It’s time for accounting to change its approach

From Fortune.com 

For too long, auditors haven’t held themselves as accountable as they should for identifying potential fraud, instead paying out massive settlements for missing the signs and red flags within audits. Looking at the big picture, it’s more than a matter of missing the signs. 

Auditors aren’t necessarily looking for fraud and won’t see what they aren’t looking for. The numbers show the extent of this: Only 4% of occupational fraud is discovered by external auditors. Many auditors have shaken the responsibility in finding fraud, claiming the onus is on others or that finding fraud is too difficult, especially if there is collusion involved.

It’s time to step up and assume responsibility. The public looks to the accounting profession to be a watchdog, adept at recognizing and uncovering occupational fraud and protecting investments. If we continue to fail at upholding our duty to the public and investors, there is nothing stopping Congress from stepping in and taking away the profession’s exclusive right to perform external audits. 

Part of the problem lies in the lack of training necessary to help auditors own the responsibility of fighting fraud. Since it has never been a focus, there are few measures in place to educate auditors on how to actually do it. The framework is there; standard setters have done a good job in setting the expectation that fraud does fall into auditors’ purview. But there’s catch-up that needs to be done to teach auditors the proper steps in identifying potential fraud, including integrating lessons into the education curriculum, inclusion on the CPA exam, and annual requirements for continuing education on finding fraud. Combining education with technology that puts the tools in auditors’ hands is the only effective way to combat financial fraud at a large level. (My firm makes anti-fraud technology, and could financially benefit from more accounting firms using such tools.)

The tone at the top must also set the stage for a drastic industry change. The longer executives balk at the expectation, the harder it will be to implement a new precedent. If this avoidance remains unchecked and firms continue to get banned from performing audits while getting slapped with increasing penalties and fines, they’ll be forced to change. 

It shouldn’t have to come to that. The profession should take proactive steps now to prioritize fraud detection and avoid the mistakes that have led to major scandals, such as what we’ve seen with Wirecard, Luckin Coffee, Parmalat, Satyam, Olympus, Enron, HealthSouth, and Patisserie Valerie. 

The likelihood of a forced reckoning is increasing. Congress has already taken away the profession’s authority to set its own standards for public company audits after continued missteps, putting this duty in the hands of the Public Company Accounting Oversight Board. Loss of the ability to self-regulate was the first step; if firms can’t follow set standards to protect the public, then it’s fair game to open auditing up to anyone who can. 

If the profession continues on this trajectory, then there is no reason Congress won’t intervene further, especially if called for by the investing public. After all, there is precedent—just look at tax preparation. The IRS ruled that tax preparers don’t have to be CPAs, and now the profession has competition with technology providers like TurboTax and non-CPA preparers like H&R Block.

Calls for action aren’t just coming from Congress anymore, either; some countries are calling to break up the big accounting firms. As fraud scandals continue to be revealed, which is likely to happen, investors will have even more reason to hold accounting firms accountable for the supposed audit work being done. After all, investors are the ones that take the biggest hit when a fraud scandal breaks; when billions of dollars are lost, people start to pay attention and demand change.

This is our opportunity to take ownership of our role in identifying potential fraud at the companies we audit. Otherwise the accounting profession is at real risk of losing its exclusive hold on the audit process to potential disrupters. Let’s step up to our responsibility and do the right thing before we no longer have the option.

Brian Fox is founder and president of digital confirmation platform Confirmation.

Michigan Passes Controversial Bill To Microchip Humans Voluntarily "To Protect Their Privacy"

Via GreatGameIndia.com,

The Michigan House of Representatives has passed a controversial bill to microchip humans voluntarily in the state under the guise of protecting their privacy. The Microchip Protection Act would allow Michigan employers to use microchipping of their workers with their consent. However, research has shown that RFID transponders causes cancer.

The plan to microchip humans is sponsored by Rep. Bronna Kahle under the guise of protecting the privacy of workers. The stated objective of the bill is that it will protect the privacy rights of Michigan workers and promote further growth for job providers as it relates to microchipping – a cutting-edge technology on the rise that increases workplace efficiency.

“With the way technology has increased over the years and as it continues to grow, it’s important Michigan job providers balance the interests of the company with their employees’ expectations of privacy.”

“Microchipping has been brought up in many conversations as companies across the country are exploring cost-effective ways to increase workplace efficiency. While these miniature devices are on the rise, so are the calls of workers to have their privacy protected.”

- Rep. Bronna Kahle, the Republican who sponsored the bill, said in a press statement.

Radio-frequency identification tags, commonly referred to as microchips, are beginning to seep into the marketplace as new technological devices to help streamline everyday business practices. The chips, roughly the size of a grain of rice, are implanted into the hands of employees and act as a replacement for I.D. badges, timecards, usernames and passwords for security clearance, and even credit cards.

“Despite this type of technology not quite making its way into our state yet, I wouldn’t be surprised if it becomes a standard business practice statewide within the next few years,” Kahle said.

“We should absolutely take every step possible to get ahead of these devices.” 

Under Kahle’s plan, Michigan employers would be able utilize microchipping, but could not mandate employees to have such devices implanted. Kahle said the measure strikes a good balance between protecting workers’ rights and providing businesses with flexibility to increase efficiency and further grow.

However, research has shown that RFID transponders causes cancer. Research has suggested 90 percent of Americans are uncomfortable with microchipping mostly due to studies that suggested a link between RFID transponders and cancer in lab animals.

In May, the plan to chip humans globally through a digital ID was exposed in the Italian Parliament. Sara Cunial, the Member of Parliament for Rome denounced Bill Gates as a “vaccine criminal” and urged the Italian President to hand him over to the International Criminal Court for crimes against humanity. She also exposed Bill Gates’ agenda in India and Africa, along with the plans to chip the human race through the digital identification program ID2020.

The Strategies Of Dementia Politics

Authored by Victor Davis Hanson via National Review,

Stoke chaos, obstruct economic recovery, and hide Biden in the basement till Election Day...

Joe Biden is tragically suffering a mental eclipse and sliding away at a geometric rate. Understandably, his handlers have kept him out of sight. He stays off the campaign trail on the pretext of the virus and his age-related susceptibility to COVID-19 morbidity.

I say “pretext” without apology. Quarantine should not have otherwise stopped Biden over the past three months from doing daily interviews, speeches, and meetings. But each occasion, however scripted, rehearsed, and canned, would only have offered further daily proof that Biden is cognitively unable to be president or indeed to hold any office.

Often Biden cannot finish a sentence. Names are vague eddies in his mind’s river of forgetfulness. He is in a far more dire mental state than a physically failing FDR was in his 1944 campaign for a fourth term.

The earlier career of a healthy Biden illustrates that he was not especially sharp even when in control of most of his faculties. We recall the former sane/nutty Biden of Neal Kinnock plagiarism, his “put y’all in chains” demagoguery, the studied racism of Biden’s riffs about a “clean” and well-spoken Obama, and the sane/insane Corn Pop stories. All are the trademark of a once fool Joe Biden, who was at least alert when compared with his current catalepsy. If Donald Trump can be ungrammatical, Biden is agrammatical — he simply streams together half-thoughts without syntax and then abandons the sentence entirely.

If Trump repeats vocabulary, Biden increasingly searches for words, any noun, whatever its irrelevance to the point he is making. Biden seems to suffer dyscognitive seizures, in which for moments he has no idea what he is doing or saying or where he is — a tragic, nearly epileptic condition. In scary episodes, the pale, scaly, and frozen visage of Biden appears almost reptilian, like a lizard freezing and remaining stationary as it struggles to process signals of perceived danger.

Inserting memorized answers into rehearsed questions, as if the entire con was spontaneous, only reveals how his once episodic dementia has become chronic as he loses his prompt and place. It was understandable that his handlers saw opportunity in secluding Biden during Trump’s tweeting, alongside the contagion, the lockdown, the recession, and the rioting that in voters’ minds had equated fear of chaos with the culpability of the current commander in chief.

But there were always problems with placing Biden in suspended animation in his basement, even as he seemingly surged ahead of Trump in the early-summer polls.

One, seclusion, quiet, and the absence of intellectual stimuli often only enhance dementia, while travel, conversation, and new imagery and experiences tend to unclog for a bit the congested neuron pathways. The more Biden “rests up,” the more he seems to be non compos mentis in his rare staged interviews. His brain is like a flabby muscle, and restful disuse does not make it firmer.

Two, in theory there should be a shelf life to a virtual presidential candidate. True, Biden has climbed in the polls, as the public never sees or hears him — in the manner that an unpopular lame-duck Obama disappeared to the golf courses and retreats in 2016 and yielded the media spotlight to the dog and cat fighting between Trump and Clinton. Obama then discovered that the more he retreated from the public eye, the more the public liked the old idea, rather than the current reality, of him.

So too the ghost model was supposed to work for Biden.

He is a cardboard candidate, but at least he’s not on the front lines of commentary on statue toppling and the contagion, and so he can be blamed for neither.

But by avoiding the campaign trail, Biden is only postponing the inevitable. He is compressing the campaign into an ever-shorter late-summer and autumn cycle. If he really agrees to three debates (he may not agree to any at all), and if he performs as he usually now acts and speaks, then he may end up reminding the American people in the eleventh hour of the campaign that they have a choice between a controversial president and a presidential candidate who simply cannot fulfill the office of presidency. And if Biden is a no-show, Trump will probably debate an empty, Clint Eastwood–prop mute chair.

Why, then, is Biden the nominee at all — other than that he leads in the delegate count and surged after Democrat back-roomers panicked when Bloomberg imploded and Bernie surged? As a result, politicos forced or enticed all the other primary candidates to vacate and unite around someone nominally not a socialist.

Is one consolation that Biden’s dementia offers a credible defense that he has “no recollection” that he was in on Obama’s efforts to surveil an oppositional campaign and abort a presidential transition?

While all Democrats know that the cat must be belled, no one wishes to step forward to do it and remove Biden — and indeed no one knows how to steal a nomination from an enfeebled winner and hand it off to an undeserving but cogent alternative. Take out Biden in August, and who knows what sort of candidate stampede might follow in today’s insane landscape?

So what are these strategies of dementia other than putting Biden on ice while redefining the election as Trump versus the media’s version of the virus, lockdown, and economic stagnation?

Pity is one pretext. The progressive media have put Biden’s blank stares and word searching off limits. We are not supposed to remember that Trump was hounded by progressive M.D.s, to the point that he took — and aced — the Montreal Cognitive Assessment Test, an examination that no one in his right mind would suggest Biden now take, given that the results would be no surprise.

Dementia is also about the only valid reason one can legitimately say “I don’t remember.” So ask Joe Biden about those early January 2017 strategy sessions in which Obama, Biden, and their henchmen plotted the surveillance of the Trump campaign and the destruction of Michael Flynn — and he can honestly say, “What administration?” Ask Biden about his illiberal past statements, his associations with neo-Confederate senators, or his plagiarism, and without guile he can retort, “What? What plagiarism? What senators?” Burisma? Hunter Biden’s Chinese lucre? He will look dumbfounded and turn to an aide to ask, “What is Burisma and who is Hunter?”

Democrats also knew that they would lose with an Elizabeth Warren, Kamala Harris, or Bernie Sanders as their masthead. The primaries, even heavily loaded to the left-wing base, taught them that well enough. The hard-left agenda of winter 2020 went nowhere, and it will go less than nowhere in the fall after months of televised arson, looting, and gratuitous violence.

In contrast, even a cardboard-cutout version of Biden offers them the veneer of the “moderation.” A Bill Clinton–style Biden phantom, if elected, can allow a passageway for a leftist surrogate into the presidency, the same way that Harry Truman, a centrist, was put on the ticket in 1944 to save the country from Vice President Henry Wallace’s Communism.

Translated, that means the Democratic donor class accepts that they cannot win while siding with the mobs on the street and their appeasers and apologists — and yet the latter leftists are needed to provide the missing 5 to 7 points for victory. With a wink and nod, the vice-presidential candidate will be seen as assuming the presidency and giving to the Left what they could not achieve through a presidential election — while old Joe Biden from Scranton stares at the TV screen a bit longer to prove he’s not a raving socialist.

Also expect the Democrats to push the following strategies harder and harder, as they square the circle of a demented candidate who nonetheless could prove enormously useful — if he can just get elected.

• Expect more calls to cancel the debates as corrupt, fluff, reality-TV pizzazz and utterly unnecessary. Anticipate that the virus lockdown will be prolonged nearly until Election Day and will de facto lead Democrats to call for a Zoom campaign: Biden talking to the camera with a teleprompted script behind the screen.
• Election Day voting, we will be told, is merely an ossified construct. The key to our new electoral process is not Neanderthal driving into a COVID-infested polling booth, but rather voter-harvested mail-in ballots.
• Expect the vote in November to be declared in advance warped, stolen, and invalid — and then declared valid and fair if Biden wins.
• Expect blue states to remain economically mired in quarantines, in hopes of aborting a recovery. Democratic leaders will never really crack down on what heretofore have been blue-state rioting and looting; the chronic chaos and recession will be kept alive and geared to the November election.

Are there problems with such Biden basement strategies? Lots.

A hard-left candidate for vice president will have to do the campaign messaging as a public auxiliary of, and in line with, Joe Biden. She will privately reassure her base that it’s all a moderate con, assuming that leftist voters are sophisticated and cynical enough to be willing to be lied to now for the sake of gaining power shortly.

It will also be problematic to assure the country that Joe Biden is 110 percent fit to be president in November but then to leak to the public by February 2021 that he’s crazy and it’s past time for his radical vice president, regrettably, to move him out.

Using Biden as an empty vessel also assumes that he is at least a vessel. But what if Biden, say, on October 25, 2020, has one of his blank-outs? Or what if he announces once again, but this time at his final rare press conference: “I am going to beat [be] Joe Biden!” What then? Do they call Christopher Steele out of retirement to do a hasty file on Joe Biden, the delusional nut, and use Yahoo or Mother Jones again to leak the dirt in order to switch the order of the Democratic ticket?

Given the current racial hysteria, how do Democratic handlers muzzle the not always latently bigoted Biden? Often dementia is a cruel pathway to the truth, freed from normal self-censorship, politeness, and social awareness. Meaning: What if Biden has more “you ain’t black” moments, or Corn Pop storytelling, or he mimics a black accent to riff about chains, “clean” blacks, and such? And in the present climate, will people be forgiving when he brags that his home state of Delaware was once a “slave state”? One or two such outbursts could shrink his share of the black vote to 80 percent, which would lead to losses in Pennsylvania, Michigan, and Florida.

In the chaos of July, Biden’s handlers have been acclaimed geniuses for anesthetizing him. But in the different season of October, he may finally be forced out from his lockdown, in the wild manner that soon-to-be looters and arsonists at last emerged from quarantine in June — pent-up, angry, incoherent, and self-destructive.

Taibbi: "On America's Birthday, Celebrate The Corporate-Sponsored Revolution"

By Matt Taibbi, via SubStack

It’s the Fourth of July, and revolution is in the air. Only in America would it look like this: an elite-sponsored Maoist revolt, couched as a Black liberation movement whose canonical texts are a corporate consultant’s white guilt self-help manual, and a New York Times series rewriting history to explain an election they called wrong.

Much of America has watched in quizzical silence in recent weeks as crowds declared war on an increasingly incoherent succession of historical symbols. Maybe you nodded as Confederate general Albert Pike was toppled or even when Christopher Columbus was beheaded, but it got a little weird when George Washington was emblazoned with “Fuck Cops” and set on fire, or when they went after Ulysses S. Grant, abolitionist Colonel Hans Christian Heg, “Forward,” (a seven-foot-tall female figure meant to symbolize progress), the Portland, Oregon “Elk statue,” or my personal favorite, the former slave Miguel de Cervantes, whose cheerful creations Don Quixote and Sancho Panza were apparently mistaken for reals and had their eyes lashed red in San Francisco.

Was a What the Fuck? too much to ask? It was! In the space of a few weeks the level of discourse in the news media dropped so low, the fear of being shamed as a deviationist so high, that most of the weirder incidents went uncovered. Leading press organs engaged in real-time Soviet-style airbrushing. Here’s how the Washington Post described a movement that targeted Spanish missionary Junipero Serra, Abraham Lincoln (a “single-handed symbol of white supremacy,” according to UW-Madison students), an apple cider press sculpture, abolitionist Mathias Baldwin, and the first all-Black volunteer regiment in the Civil War, among others:

Across the country, protesters have toppled statues of figures from America’s sordid past — including Confederate generals — as part of demonstrations against racism and police violence.

The New York Times, once the dictionary definition of “unprovocative,” suddenly reads like Pol Pot’s Sayings of Angkar. Heading into the Fourth of July weekend, the morning read for upscale white Manhattanites was denouncing Mount Rushmore, urging Black America to arm itself, and re-positioning America alongside more deserving historical parallels in a feature about caste systems:

Throughout human history, three caste systems have stood out. The lingering, millenniums-long caste system of India. The tragically accelerated, chilling and officially vanquished caste system of Nazi Germany. And the shape-shifting, unspoken, race-based caste pyramid in the United States.

It’s tragic that this even needs saying, but the sudden reinvention in the press of modern America as a Nazi apartheid state is as phony as the thousands of patriotic campaigns that occupied the news media previously. We’re witnessing an obscene malfunction of the elite messaging system.

The people who run this country have run out of workable myths with which to distract the public, and in a moment of extreme crisis have chosen to stoke civil war and defame the rest of us – black and white – rather than admit to a generation of corruption, betrayal, and mismanagement.

I saw the first hints of this crackup in the panicked conversations of campaign reporters four summers ago. Colleagues in news media had always reveled in the power to police the boundaries of national politics. Former ABC reporter Mark Halperin* (henceforth canceled people will be marked here with asterisks, for shorthand purposes) used to cheerfully refer to a handful of pollsters, pundits, and pols he called the “Gang of 500. who “set the political agenda for the country.”

People like Halperin wrote glowing self-referential “exposes” every four years about the power of their bullshit. If they told Americans a presidential race would be decided by angsty “soccer moms” (because Bill Clinton was talking up “zero tolerance” for school truancy and a return to school uniforms), then it was so. If eight years later the deciders were “security moms,” because what mattered then was not schools or prescription drugs but “what are you doing to protect my kids from terrorists?”, then that was so.

If they said voters cared most of all to know which multimillionaire candidate was a better potential beer-drinking companion – because “a person is smart, people are dumb,” as one pundit put it – then that was to be taken seriously also.

Unfortunately, voters had other problems. By 2016 Americans had lived for a generation under an economic model dominated by huge transnational companies that sold weapons into holocausts of urban violence, rejoiced in addiction to opiates or carcinogens as a revenue model, bled virtually all the savings of the American middle class (targeting minorities especially) through a succession of speculative bubble schemes, and relentlessly lobbied to be exempted from taxes, environmental laws, criminal penalties, and even their own business errors, through bailouts approved by the “politicians” they sponsored in both parties.

The concessions to civilization employers had once under great pressure agreed to provide – pensions, medical insurance, sick leave, the forty-hour work week – vanished as the manufacturing economy was exported in a snap to unfree labor zones like China and Indonesia. Both parties supported the deals American business made with monster states. Just this week U.S. customs seized 13 tons of human hair farmed from the heads of Uighur political prisoners in Chinese labor camps: we gave that country Most Favored Nation Trading status eons ago.

I watched for election cycle after election cycle as politicians and press lackeys alike promised lives would improve with middle-class tax cuts, “service for college” grants, federal retraining programs and an endless succession of proposals to “cut red tape” and “run America like a business.”

Through the election of Barack Obama maybe there was patience for this, but within a few years after the crash of 2008 people stopped believing. When protest movements popped up on both the left and right – ordinary people mad about everything from crushing consumer and student debt to unpunished financial fraud to pointless war to surveillance to bailouts to stolen pensions to, yes, police brutality – the first reaction of donor-fattened pols was to blow off the warning signs. They controlled both parties, what was the worst that could happen?

When the election of Trump made a solid first attempt at answering that question, establishment figures howled in self-pity and outrage. Who but deplorable racists could hate us this much? Those were the first gusts hinting at the current hurricane of stupidity.

About those “deplorables”: the populist fury that drove the Trump campaign was obviously not rooted in concern over police brutality, and just as obviously Trump was using gross racial rhetoric to drum up support. I wrote about this repeatedly covering him in 2015-2016.

But he did stress other themes. In hunger to suck up discontent of every stripe, candidate Trump complained about everything from the anti-trust exemption for insurance companies (“the lines” around states prevented competition, he said half-coherently) to the “obsolete” mission of NATO, to “nation building” abroad (he pledged instead to “build the roads, highways, bridges, tunnels, airports, and the railways of tomorrow” at home), to NAFTA to the Fed to, yes, Most Favored Nation trading status for China.

In Trump crowds one frequently heard people talking about being willing to “try anything” as long as it didn’t come from a “politician,” a term which by 2016 had become synonymous with “paid liar.” Of course Trump was a liar, too, but at least he was his own liar, which in a testament to the level of pessimism gripping the country by 2016 was an important distinction to some.

Trump proved almost completely insincere with respect to all of these policy complaints. But it was amazing to watch the speed with which it became consensus that Trump’s entire platform had been only a promise to restore the power of white identity. It became taboo even to say something as tame as, “Trump sold fake solutions to real problems.” Even that was too near the truth.

Papers like the New York Times did post-mortems citing research that concluded things like “how trade affected personal finances had little bearing on political preferences,” while “unemployment or the density of manufacturing jobs in one’s area” were similarly irrelevant. The same pundits who chanted “It’s the economy, stupid,” throughout the nineties reversed tune.

* * *

The best explanation for these sudden reversals in rhetoric is that Trump broke the brains of America’s educated classes. Like Russian aristocrats who spent the last days of the Tsarist empire flocking to fortune-tellers and mystics, upscale blue-staters have lost themselves lately in quasi-religious tracts like White Fragility, and are lining up to flog themselves for personal and historical sins.

In desperation to help the country atone for their idea of why Trump happened, they’ve engaged in a sort of moon landing of anti-intellectual endeavors, committing a generation of minds to finding a solution to the one thing no thinking person ever considered a problem, i.e. the Enlightenment ideas that led to the American Revolution.

The same pols and pundits who not long ago were waving the flag for wars and insisting that American-style democracy was so perfectly realized that it made sense to bring it to all the peoples of the world, by force if needed (think Friedman’s hypothesis of a borderless utopia of forced wealth creation called the Golden Straitjacket), have now reversed course to tell us our entire history needs to be wiped clean.

Everything is a lie now. CNN even put “Independence” in quotes when describing the holiday today (i.e. “Reexamining ‘Independence’ Day”). This will end with Wolf Blitzer, dressed in a daskiki, pulling the switch to dynamite the Statue of Liberty.

Continue reading at Taibbi's substack