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Another thought: What if all corporate accountants were required to be government employees? We can start with transnational companies first. Then LLCs and I

Another thought: What if all corporate accountants were required to be government employees? We can start with transnational companies first. Then LLCs and Incs. Disincentivize the massive fraud that we see today.

prepend 3y ago
I think this would result in really poor accounting since there’s a big disconnect between a government employer and a company being audited and its books kept. In theory it works because the government auditor would be more interested in justice than corporate interests. In practice, an embedded external employee would not have the relationships to have viable information and would probably end up doing only the most perfunctory level of work to not be fired. My org had this issue where our cyber group embedded an employee in each organization (we basically had a federation of different groups with separate funding streams and incentives) but their career ladders were disconnected from the local org. So the boss in the cyber org never really knew the work and just wanted safety. The org wanted to produce for their mission. So it led to this weird cycle where the embedded cyber person would stop stop every new project. The cyber boss was happy and promoted and gave raises. But it was bad for the org because no new projects.
- nobodyandproud 3y ago
  It depends on whether accountants’ concerns here are about auditing and fining (indirectly) for non-compliance, or if they’re allowed and expected to block projects. For SEC compliance reporting, I’ve seen banks take it both very seriously and provide the absolute minimum to pass muster such that the COs could barely do their jobs. What’s clear is that the “same old” and “reasonable” approaches aren’t working, and a disruption is needed.
TacticalCoder 3y ago
[flagged]
- nobodyandproud 3y ago
  You think Soviet Union. I think Boeing and 737 Max: https://www.washingtonpost.com/investigations/how-the-faa-allows-jetmakers-to-self-certify-that-planes-meet-us-safety-requirements/2019/03/15/96d24d4a-46e6-11e9-90f0-0ccfeec87a61_story.html https://www.washingtonpost.com/investigations/how-the-faa-al...
  - cscurmudgeon 3y ago
    This is safety not financial auditing though. Huge difference. Also see FDA and how it allows companies to submit data and studies.
    - bpm140 3y ago
      I have no strong point of view and am interested in why you think safety is okay and financial auditing is not. Are both not about serving the interests of the public?
      - cscurmudgeon 3y ago
        > I have no strong point of view and am interested in why you think safety is okay and financial auditing is not 1. Real-world data. We all know how it went. Like a scientist, I go by with empirical data when dealing with complex systems that can't impact 100s of millions and not by ideology. The last time a govt audited private financial decisions (and other decisions) was when Soviet Union was alive. Let's do a 5-10 year A/B test and see before making a massive change. (This way we ensure dead sparrows don't cause famines.) 2. Also, why can't the govt clean up its massive fraud and wastage first? Isn't that serving the interests of the public more than political commissars micromanaging every nook and corner of the country? First, the govt should clean up massive fraud wasting tax payer money. Then, lets talk about govt auditing minutiae of businesses. In these kind of threads, there is an assumption that the govt. is 100% efficient. It is not. 2 seconds of digging: https://www.nbcnews.com/politics/justice-department/biggest-fraud-generation-looting-covid-relief-program-known-ppp-n1279664 https://www.nbcnews.com/politics/justice-department/biggest-... https://www.washingtonpost.com/investigations/pentagon-buries-evidence-of-125-billion-in-bureaucratic-waste/2016/12/05/e0668c76-9af6-11e6-a0ed-ab0774c1eaa5_story.html https://www.washingtonpost.com/investigations/pentagon-burie... 3. Just because something is important, doesn't mean a bureaucrat should micromanage that by default.
cscurmudgeon 3y ago
Doesn’t the govt lose large amounts of money to various fraud schemes? https://www.nbcnews.com/news/amp/ncna1279664 https://www.nbcnews.com/news/amp/ncna1279664 May be the govt should have private sector auditors to help with that?
- nobodyandproud 3y ago
  Yes, by underfunding auditers and accountability. Or throwing out money without any sense of accounting. Yes, fraudsters will take full advantage of it. Your example shows why we need more auditers and more frequent auditing, not less.
  - cscurmudgeon 3y ago
    > Your example shows why we need more auditers and more frequent auditing, not less. Yes more auditors for govt. Not more govt. auditors for business. More auditing != govt auditing of private business There is a jump of logic there to go from left to right of the equation.
    - nobodyandproud 3y ago
      > Yes more auditors for govt. Not more govt. auditors for business. It was your example. Explain then the point of your example, beyond “see, government must be incompetent.” Because I see a leap of logic in saying “government (org) +government (audit)” incompetence implies “private (org) + goverment (audit)” incompetence. Nevermind that all nuance was stripped away in making a one-liner.
JacobAldridge 3y ago
> What if all corporate accountants were required to be government employees? So then what if a company is seeking to expand internationally, and looking at options for various reasons (including costs, which includes the tax burden). Isn’t it a conflict of interest to have a US government employee weighing in on how to improve a company at the loss of IRS revenue? And that’s an extreme example. Any company accountant or CFO is going to be involved in regular decisions where “paying less tax” is an important outcome to consider.
- nobodyandproud 3y ago
  Isn’t that the task of tax attorneys? Different line of work, though same domain of concern.
  - JacobAldridge 3y ago
    Depending on the size of the company, you’d probably need a team; but there aren’t too many companies with a tax attorney on the staff so the accounting team would be doing the heavy lifting.
    - nobodyandproud 3y ago
      Large and multinational companies (your extreme example) don’t suffer from this problem; nor do medium sized ones. Many of the smaller businesses rely on dodge—by-cash or function just fine. In fact, the audit problems caused by tiny, front/fake LLCs and paper companies lead to a real, criminal-level audit trail problem.
gorwell 3y ago
"In November 2022, DOD failed its fifth consecutive audit, unable to account for sixty-one percent of its $3.5 trillion in assets."
- nobodyandproud 3y ago
  “The sheer size and scope of the department — which makes up for more than half of the U.S. discretionary spending and has assets that range from personnel and supplies to bases and weapons — makes it difficult to audit. “ “The agency had never expected to pass, however, due to accounting issues officials said could take years to fix. Because accounting records needed to complete the assessment were not available, all five audits received a “disclaimer of opinion,” though there have been improvements each time. ” https://thehill.com/policy/defense/3740921-defense-department-fails-another-audit-but-makes-progress/ https://thehill.com/policy/defense/3740921-defense-departmen... The objection you’ve raised, if anything, highlights the need for a neutral outside party to annually audit and create thorough paper trails for very large organizations. Do you want to pursue this line of argument further?

prepend 3y ago

I think this would result in really poor accounting since there’s a big disconnect between a government employer and a company being audited and its books kept. In theory it works because the government auditor would be more interested in justice than corporate interests. In practice, an embedded external employee would not have the relationships to have viable information and would probably end up doing only the most perfunctory level of work to not be fired. My org had this issue where our cyber group embedded an employee in each organization (we basically had a federation of different groups with separate funding streams and incentives) but their career ladders were disconnected from the local org. So the boss in the cyber org never really knew the work and just wanted safety. The org wanted to produce for their mission. So it led to this weird cycle where the embedded cyber person would stop stop every new project. The cyber boss was happy and promoted and gave raises. But it was bad for the org because no new projects.

nobodyandproud 3y ago
It depends on whether accountants’ concerns here are about auditing and fining (indirectly) for non-compliance, or if they’re allowed and expected to block projects. For SEC compliance reporting, I’ve seen banks take it both very seriously and provide the absolute minimum to pass muster such that the COs could barely do their jobs. What’s clear is that the “same old” and “reasonable” approaches aren’t working, and a disruption is needed.

TacticalCoder 3y ago

[flagged]

nobodyandproud 3y ago
You think Soviet Union. I think Boeing and 737 Max: https://www.washingtonpost.com/investigations/how-the-faa-allows-jetmakers-to-self-certify-that-planes-meet-us-safety-requirements/2019/03/15/96d24d4a-46e6-11e9-90f0-0ccfeec87a61_story.html https://www.washingtonpost.com/investigations/how-the-faa-al...
- cscurmudgeon 3y ago
  This is safety not financial auditing though. Huge difference. Also see FDA and how it allows companies to submit data and studies.
  - bpm140 3y ago
    I have no strong point of view and am interested in why you think safety is okay and financial auditing is not. Are both not about serving the interests of the public?
    - cscurmudgeon 3y ago
      > I have no strong point of view and am interested in why you think safety is okay and financial auditing is not 1. Real-world data. We all know how it went. Like a scientist, I go by with empirical data when dealing with complex systems that can't impact 100s of millions and not by ideology. The last time a govt audited private financial decisions (and other decisions) was when Soviet Union was alive. Let's do a 5-10 year A/B test and see before making a massive change. (This way we ensure dead sparrows don't cause famines.) 2. Also, why can't the govt clean up its massive fraud and wastage first? Isn't that serving the interests of the public more than political commissars micromanaging every nook and corner of the country? First, the govt should clean up massive fraud wasting tax payer money. Then, lets talk about govt auditing minutiae of businesses. In these kind of threads, there is an assumption that the govt. is 100% efficient. It is not. 2 seconds of digging: https://www.nbcnews.com/politics/justice-department/biggest-fraud-generation-looting-covid-relief-program-known-ppp-n1279664 https://www.nbcnews.com/politics/justice-department/biggest-... https://www.washingtonpost.com/investigations/pentagon-buries-evidence-of-125-billion-in-bureaucratic-waste/2016/12/05/e0668c76-9af6-11e6-a0ed-ab0774c1eaa5_story.html https://www.washingtonpost.com/investigations/pentagon-burie... 3. Just because something is important, doesn't mean a bureaucrat should micromanage that by default.

cscurmudgeon 3y ago

Doesn’t the govt lose large amounts of money to various fraud schemes? https://www.nbcnews.com/news/amp/ncna1279664 https://www.nbcnews.com/news/amp/ncna1279664 May be the govt should have private sector auditors to help with that?

nobodyandproud 3y ago
Yes, by underfunding auditers and accountability. Or throwing out money without any sense of accounting. Yes, fraudsters will take full advantage of it. Your example shows why we need more auditers and more frequent auditing, not less.
- cscurmudgeon 3y ago
  > Your example shows why we need more auditers and more frequent auditing, not less. Yes more auditors for govt. Not more govt. auditors for business. More auditing != govt auditing of private business There is a jump of logic there to go from left to right of the equation.
  - nobodyandproud 3y ago
    > Yes more auditors for govt. Not more govt. auditors for business. It was your example. Explain then the point of your example, beyond “see, government must be incompetent.” Because I see a leap of logic in saying “government (org) +government (audit)” incompetence implies “private (org) + goverment (audit)” incompetence. Nevermind that all nuance was stripped away in making a one-liner.

JacobAldridge 3y ago

> What if all corporate accountants were required to be government employees? So then what if a company is seeking to expand internationally, and looking at options for various reasons (including costs, which includes the tax burden). Isn’t it a conflict of interest to have a US government employee weighing in on how to improve a company at the loss of IRS revenue? And that’s an extreme example. Any company accountant or CFO is going to be involved in regular decisions where “paying less tax” is an important outcome to consider.

nobodyandproud 3y ago
Isn’t that the task of tax attorneys? Different line of work, though same domain of concern.
- JacobAldridge 3y ago
  Depending on the size of the company, you’d probably need a team; but there aren’t too many companies with a tax attorney on the staff so the accounting team would be doing the heavy lifting.
  - nobodyandproud 3y ago
    Large and multinational companies (your extreme example) don’t suffer from this problem; nor do medium sized ones. Many of the smaller businesses rely on dodge—by-cash or function just fine. In fact, the audit problems caused by tiny, front/fake LLCs and paper companies lead to a real, criminal-level audit trail problem.

gorwell 3y ago

"In November 2022, DOD failed its fifth consecutive audit, unable to account for sixty-one percent of its $3.5 trillion in assets."

nobodyandproud 3y ago
“The sheer size and scope of the department — which makes up for more than half of the U.S. discretionary spending and has assets that range from personnel and supplies to bases and weapons — makes it difficult to audit. “ “The agency had never expected to pass, however, due to accounting issues officials said could take years to fix. Because accounting records needed to complete the assessment were not available, all five audits received a “disclaimer of opinion,” though there have been improvements each time. ” https://thehill.com/policy/defense/3740921-defense-department-fails-another-audit-but-makes-progress/ https://thehill.com/policy/defense/3740921-defense-departmen... The objection you’ve raised, if anything, highlights the need for a neutral outside party to annually audit and create thorough paper trails for very large organizations. Do you want to pursue this line of argument further?