Rob Berry: Hey friends welcome to episode number four.
Today's topic, observation and inquiry in action.
audit bites is the first, the very first live show to talk about audit. The very first one till all your friends. Were on all podcasting platforms, we have videos on YouTube, we are everywhere that you want to be. And you can get CPE just for watching me go to WWW dot audit bytes.com if you want to know more, see more, do more, be more. Today's topic, observation and inquiry. Look, it is essential to what we do as auditors. I don't think anybody will disagree with that. You go out and you observe processes, you ask good questions, so that you can draw some logical conclusions. And so to that extent, my friends, observation and inquiry is our ordering superpower. As a matter of fact, I say it is the ultimate superpower. And if you fail to master this, you can kiss your career goodbye. Your job is estate people think about it. Your job is to ask people good questions. So if that's our job, then why are some of us will? so bad at it. Now, not you, you know not you but other people that work with you. And for you. Those are the people that are bad at it, not you. So we're going to talk about observation and inquiry today. But before we do, let's say hello to my friends coming in the room. Heather is here. As always. Hey, Heather. Lillian is here and Lillian, where have you been my friend? How is that PhD work coming? I haven't seen you in a while. So I'm guessing that you've been studying. Let's catch up. Joe is here. Joe is my favorite ethics person. Hey, Joe. Shouldn't you be on vacation? how his vacation. Mark is here. Good afternoon, Mark. And if you guys want to see mark, he's going to be our special guest Friday on the Friday froster because Joe is on vacation. All right, Laurie is here. Hey, Laurie. And Mark is saying hey to Lillian mark. I didn't know you two knew each other. Okay, cool, small world here. And Clarence is here. My man Clarence Clarence, man, I owe you a big thank you. Something happened today where you referred me to someone
and anytime I can get good referrals, it makes me happy. And they said Clarence said Robert is a good guy. Thanks for you know, thanks for saying that Clarence. I'll send you that bribery check later. And pozo is here as always, from NYC and my buddy keyshawn keyshawn. You know, we hadn't talked in a while, man, but I'd love to catch up with you sometime. So let's make that happen. Now Joe is saying that she leaves for vacation on Friday, just in time for Mark to take her place. Go, Mark. Alright, so again today, observation and inquiry is what we're here to talk about. And I have a special subject for you guys. Today. We're going to talk about Kelly Paxton, his favorite person. Kelly's gonna kill me when she hears this on the replay. But Rita crundwell. And if you guys don't know who she is, we're going to talk about her today in the fantastic failure that resulted from poor observation and inquiry. Mark is saying he might go on vacation with Jo forget about me, Mark. That's probably a wise choice, man. It's probably a very wise choice. Alright, so today, Rita crundwell. observation and inquiry, who is Miss Rita crundwell. So let me fill you in on who she is guys. Rita was the treasurer and comptroller for the town of Dixon, Illinois from 1983 to 2000 and toil, that's a long time. She is also the admitted perpetrator, who is believed to have committed one of the biggest municipal frauds in US history. You see, she was fired April 2012. After it was discovered she embezzled $53 million from the town of Dixon. Now she spent the money you know wisely, she spent it on her quarter world race horse championship.
hobby, getting rid of her hobby if she spent $53 million on it, right. She spent the money breeding horses. She pleaded guilty to her crimes and was sentenced to 19 and a half years of prison. It was so bad that they made a documentary about this. Now, side note, I think they're going to make a documentary about our other friend at theranos. They've already made one but I think we'll see another after her trial. That's my favorite villain. But again, that documentary is called all the Queen's horses. It's actually on YouTube, you guys, I would say, everyone here should watch it, because you see some epic failures. Now what I'm about to do is show some clips from that documentary. And under Section 107 of the Copyright Act. That is how I'm going to show them because that Act says that certain things that are used as criticism, comment, news reporting, teaching, scholarship, and or research is under fair use. And I think this is going to take all of those things into account. We're going to criticize, we're going to comment we're going to teach, we're going to have some news. We're going to do some research. And well, I don't know about the scholarship part. But hey, we've got a whole lot of that covered today. So you guys ready for your first clip, where we explain how she actually committed the crime. If you're ready, typed into the chat, ready for me, I just want to make sure everyone's here and awake for this because, man, this is about to get fun. All right. So let's take a listen. How reader committed this crime.
Unknown: So let's take a look at how Rita pulled off this scheme. There were six legitimate city of Dixon accounts at Fifth Third Bank. She routinely move funds into the legitimate capital development fund, or read and then set up an additional seventh account no one knew about. To get the process started. She created phony invoices to justify payments for imaginary capital projects, such as fixing sidewalks and street repairs. These phony invoices trigger readers transferring money from the city's legitimate capital development fund into her secret account. And it had a similar name to look like a legitimate city account. From her secret account. She wrote checks for her personal expenses, such as spa visits, jewelry, real estate, a motorcoach. And of course, for the horses. She did this process 179 times.
Rob Berry: All right. So if you guys could actually hear the audio let me know because I want to make sure that everything is working. Now Heather was saying, Let's go, Heather. You just heard it. Now. Tell me what you think now that you've heard it. Joe? Always the ever helpful person says yes, there are two movies on Elizabeth Holmes planned one starring Jennifer Lawrence and one starring Amanda Seyfried Seyfried Wait, Jennifer Lawrence. Oh, wow. Okay. I watch that. No, but thanks, Joe. I actually did not know that. And Claire and said he heard it and good. That means that my audio is working. Okay, so look, realistically, all she did was set up a fake account and deposit funds into that legitimate account. That's really all she did. Heather says that it's worse than she remembered. Heather, it gets even better or worse, depending on how you look at it, it gets even worse. So she called that account that she used the R. S CDA account, which stood for reserves store and capital development account. So that's the account that she found on her fake money through to four fake capital projects. Now, here's what I like to call the RS CDA account. I call it readers secret cash deposit account. The RSCDA account, I'm sorry, you guys know I couldn't get through this without something funny. You have to make light of some of these situations because this is very, very serious. But in this fraud case, there was a lot of scrutiny surrounding the auditors and I don't know if you guys remember that. So let's talk about that. Kelly Richmond Pope, who some of you guys if you've never heard of her, you need to find her and follow her. She's an awesome accounting professor at DePaul. She asked some really great questions about who was responsible for the fraud. So let's take a look at what Kelly had to say about this fraud that occurred. You guys are gonna find it quite interesting.
Unknown: So who really is responsible for finding fraud? Is the auditor's who did the annual audit for the town? Is it the bank Where the city held their bank accounts? Is it the city council who ran the town? Or is it the residents?
Rob Berry: Now, I don't know about you, but I think she asked a really good question. Who is responsible for finding the fraud? So here's what I'm going to ask you guys. Should auditors be responsible for finding fraud? And here's how I want you to answer it. If you think auditor should be responsible, type one in the chat if they should not be responsible, type two. And if you think well, it's complicated type three. So one of Yes, two of No, and three of well, you know, this stuff is complicated, man, I don't really know. So let's go back to our wonderful audience for a minute. He Shawn is laughing at the RS CDA account. And Joe says she likes my name better. I mean, well, you know, and Clarence, you know who Kelly is? Yeah, she I've seen her speak at a couple of conferences. She is great. Alright, so we've got a lot of answers coming in to the question that I asked. And Claire, she said she's done some webinars. Yeah, I've seen on a few webinars, and I've actually seen her in person once. I think maybe twice, but I know once. And Amy Hughes is here, Amy, how's it going? Amy says two auditors should not be responsible for finding fraud. Mark says one, they should be responsible. Heather says three. It's complicated, right? Heather? Heather says it's complicated. Clarence says that it is complicated as well. And Ayesha, forgive me if I said your name wrong. Welcome. She says one and sunny. So I'm messing up your name to please email me on LinkedIn with a voice pronunciation of your name you can lead send me a voice message. Because I think getting people's names right is important. And besides that, you will make a new friend. We'll be friends after that. So you say one auditor should be responsible. Laurie says three. It's complicated. And keyshawn says one auditors should be responsible. Well, I'm not going to tell you my opinion just yet. Because we'll what's the fun in that? It's more fun to make you guys wait. But oh poza was coming
in with one puzzle says three. It's complicated. No absolute assurance. But fraud risk. assessments are broken. More data analytics should be used in audits so much I could say offline and puzzle I'm sure the next time we talk I'm going to hear all about it. So for those of you who don't know pozo in our friends, I love my friend pose Oh to death. And then mark agrees with me. He says names are so important. I'm absolutely right. Yeah, Mark, I, I like getting people's names. Right. And I should say is that I got it correct. Oh, I got it correct. Hey, one for me, tell you guys, here's what I'm going to do. So everybody that played my little game and typed in one, two or three, I'm going to put you in a raffle and what you're going to win, we'll, I'll go ahead and tell you right now what you're gonna win is an I love audit t shirt directly from my audit store. So if I contact you and tell you, you are the winner, just give me your mailing address and your T shirt size and go pick out one we have black, pink, white, all different colors, all different kinds of shirts. So thank you for playing the game with me. Joe is here. And Joe says we have to start asking the right questions to uncover these high risk and unethical well, that leads to fraud at a higher risk. Yeah. Wait, do you hear everything that happened in this case, because like Heather said earlier, it ended up being worse than I remembered to. So in this particular case, it was a small town that did not have good controls in place. So you could say that they should have known better, but I don't know. So with that said, let's talk about all of the responsibilities that reader actually had. Huh? Let's take a look at her responsibilities and duties. You guys are going to be real shocked.
Unknown: They had not only did they not separate individual functions among multiple people. They didn't separate any functions among any people.
Read or picked up the mail, made deposits, updated the journals and Ledger's prepared and signed checks, move investment monies and reconcile the bank accounts. There was very little segregation of duties within the city. Rita literally did it all.
Rob Berry: Alright, so you guys heard that Rita literally Get it all. Now Heather says she's still waiting on her shirt. Heather, let me check on your shirt. And I'll send you an email today, because it should be on its way to you. But if not, we'll handle that Heather actually want a shirt at another giveaway that we had you guys. So he kind of pays to come wherever I am right? Amy says, cool. I love audit t shirts. So let's get back to this. Guys, did you see this? Rita did everything. So as you can see, this setup was ripe for fraud. She did everything without a system of checks and balances in place. And because this was a massive fraud, Attorney, Devin Bruce decided to help the city Sue, Guess who? The auditors. Right? So now the city is about to get sued, and help the city sued the auditors, the auditors are about to get sued. Now I'm going to play you guys another clip and watch this clip. You'll see the headline it says city sues auditors. Could you imagine working for the firm that got sued because of a fraud this big? Could you imagine being one of the field auditors directly on this engagement? Well, that's what you're about to see in just one minute. Take a look at this clip. Why did you decide to represent city?
Unknown: It was clear to me that city of Dixon was a victim and I thought I could make a difference and help the city in the taxpayer. So do you believe that the city had any responsibility in detecting? Do I believe the city of Dixon had any responsibility themselves to identify the fraud that was committed by Ria credit? Well, and I think on equivalently, the answer is no.
Rob Berry: All right, so as you just heard, at least one person believes that the city is not responsible for the fraud that occurred. So take note auditors take note. Attorneys don't believe that the victims of fraud are responsible for detecting that fraud. That was pretty telling. Heather says no clip. Thanks, Heather. There wasn't a clip up there. All you saw was me. But I fixed that. So now you're about to see the clip. And Nico says data analytics driven audit to detect fraud auditor should ask the right questions to detect those kinds of fraud. I 100% agree. But as we see here, at least one person believes that the city is not responsible when there is a fraud that is occur that has occurred. So let's listen further. My friends. Did you meet Rita,
Unknown: I did not meet Rita crundwell when I was prosecuting this case, and nor have I ever met her for purposes of my prosecuting this case to see addiction she was for all intensive purposes irrelevant.
Rob Berry: Alright, so you heard our attorney here. He said meeting her was irrelevant. But we still need to figure out who was responsible for identifying the fact that she was stealing. Right? So in this case, who were these auditors that we're talking about? And why is everyone trying to blame the auditors. And I love my audience because Mark says, sad when the attorney has to ask the question back delay tactic of line mark is our interview experts. So who Mark should know, Joe says wrong again, management has to take responsibility for risk. Mark says absolutely Joe and Joe says and controls management needs to take responsibility for risk and controls. And Heather says Wow, that is crazy. Heather, you know that when you come somewhere where I am, I give you little bits at a time. So guess what? It gets better or worse, depending on how you want to look at it. So let's listen a little further and talk about who these accountants are that were talking about
Unknown: was who was responsible for identifying the fact that she was stealing the money
developed to cosy have a relationship with so many people that were involved in this thing. She directed the audit. I mean, she was the one that really in my mind, the selected Clifton knew to continue to do the auditing and so forth.
Clifton is a top 10 public accounting firm in the United States. The city of Dixon was a client of Clifton's local office. They were hired. By the city to do the annual audit. And in addition, they were involved in the city's day to day operations.
They made a conscious, intentional decision to get all of the money for every financial aspect of that city.
Rob Berry: Alright guys, so this accounting firm, not only did the annual audit, but they prepare the financial statements as well. So essentially, they were they were auditing themselves. Yeah, so they were auditing themselves. Now, let's take a listen to what happened during some of the depositions because what we have here is actual evidence from when they were deposed in court. So let's just take a listen here. Some of you are already typing it into the chat.
Unknown: They made that decision. They were there, either Clifton was at the City Hall, or the city hall people were dropping financial documents off there at least once a day.
What has come to light in the depositions of one of the partners at Clifton, he testified that they did all the accounts payable, they actually cut checks, they did payroll, they did other consulting services, aside from the fact that they will have to defend against the accusation that they should have discovered this fraud. I think they have a bigger issue to defend. And that is an independence issue.
Rob Berry: All right. So you guys, you guys hit it on the head. Mark says the attorney gets a third of the pot. And then Heather says it is the blame game. But Joe dealing being it is a conflict of interest. Big time. Heather says they should not have done both services. And Clarence rounds out the comments. Every time something goes wrong. It is the auditor's fault. Right, we do get a bullet we do get the blame for a lot of things. Now, at this point, you're probably wondering, what does all of this have to do with observation and inquiry? Robert, you told us all this stuff about Dixon and yes, this is huge, and this is bad. But what does that have to do with observation and inquiry? Well, my friends, there are a lot of things that happened. A lot of observations. They should have sparked more questions from auditors a lot of inquiries. So watch as our attorney Devin explains one of them. One of the things that should have been observed and inquired on as it relates to fake invoices. Yes, you heard me right. vagin voices. So let's take a listen.
Unknown: The city argued that the auditors knew or should have known that the invoices were phoning.
Here's a proper invoice from the Illinois Department of Transportation. This is the way they're supposed to look. And that's the invoice from Rita crundwell. And a nine year old could identify the difference between those. They are the field audit team looked at these false invoices and failed to do anything at all that they were taught in accounting school to follow up, whether it be talk to the city engineer, make a phone call to Springfield go out and look at these clearly fictitious projects, any of which would have resulted in and discovery of the theft.
Rob Berry: Oh, sorry, guys. So misspelled words, missing phone numbers, fake invoices that look nothing like the real invoices. Sorry about that audio issue. We're back now. It's like those email scams, you get where the diction is all off and the grammar is wrong. Right. No one really believes that Jeff Bezos is trying to sell us a bunch of Bitcoin. So let's Talk about the fictitious projects that they mentioned. These invoices were for construction projects. And well, the auditors didn't say anything about the construction projects that were being paid for on invoices with no logos, wrong phone numbers, wrong dates wrong times. So he actually deposed or questioned some of the field auditors. And let's check out what happened in those depositions. And what the field auditors actually had to say.
Unknown: By the posting number of the individuals that were responsible for the field audit work and the actual generation of the work papers for Clifton, when they did the work for the city of Dixon.
If at any point in time Clifton was doing the audit, and they would have walked down the hallway to ask a simple question of the city engineer. Excuse me, can you tell me about this project? Do you agree the subsequent events would have identified Rita's theft? Yes.
Rob Berry: All right. So this was a reenactment of the actual deposition, where he asked the auditors seeing this invoice, realizing that this is a fake invoice, all of the markers that he pointed out that were indicators that it was fake. If your auditors had said, Let's go down and talk to the engineer to make sure that this project is legitimate because this invoice looks fake. Would that have unraveled the fraud in this field auditor said yes. So now key Shawn is saying read ahead, mom. And manipulated the auditor's Smooth Operator? Yeah. Yeah, Rita manipulated the auditors 100% 100%. Now, Claire, it says the auditor has trusted her. And that's why they got burned. Absolutely. Joe says we clearly need to go back to the basics of fraud training in this one in this one. And in most of the ones that we talked about on Fridays on the Friday for us to Joe, when you say all of this stuff is just back to the basics. So basically, he's saying that observing the invoices and realizing that one may have been false could have prevented and or detected this fraud. But how many times that this happened? Was this like shooting a needle in a haystack? Was there only one fraud incident that occurred or one fraudulent invoice that occurred? Let's see how many fraudulent invoices we had in this particular instance?
Unknown: Do you agree with me had that been done? The fraud would have been identified and Rita would have been arrested? Yes.
There was 179 as we counted of those false invoices, and they fail to react to any one of them. They missed it over and over and over again. They missed it.
Rob Berry: So 179 times, there were false invoices, and no one caught it. So what do we observe so far? First, read ahead, entirely too much control. That is very first thing that we see here. Second, the audit firm had a conflict of interest because well, they prepare the financial statements and essentially they will auditing themselves in third. The field auditors missed fake documents on too many occasions. But before we go any further let's just pause for just one moment. You see you guys are watching audit bytes, episode number four and I am Robert Berry. Our advice is the first and only live show where we tough where we tackle tough auditing topics. Today we're talking about the importance of observation and inquiry. But let me say if you like this, tell all your friends sign up for our newsletter because well if you sign up for that you might win a free CPE and if you need a trainer for your event, yes I conferences wherever you are. Companies call me. This is what you will probably get something that is engaging and educational at the same time. Check me out at www dot dat audit guide calm you will also find past episodes of this podcast as well as the Friday froster which is me, Kelly Paxton and Joe Irvin on Fridays. Again we have CPE is to go along with this. So if you want to get CPE ease for this in previous podcast, check me out that audit guy.com The other thing I want to mention while I am here My best selling book, ask better questions get better answers perform better audit is all about the art of asking questions while auditing. But did you know I also have a boot camp, nine weeks, 18 hours of CPE that is a combination of training and coaching. next iteration starts October 18. Now this is well over a 20 $500 value, but to celebrate the next cohort, if you sign up before Friday, at midnight, you will get 18 hours of CPE for 500 bucks, email me if you want the link to the coupon. So just email me and say boot camp, and I'll get you the
link and if you sign up you will get $500 for 18 hours of CPE. So now my friends back to the story. We are talking about Rita crundwell. And she stole over $50 million. From the town of Dixon, an astute lawyer noticed well possible negligence on the part of the auditors and now he is helping the city sue the auditors. I just showed you some of the fake invoices that his work nine year old could have spotted as being fake. Now, let's listen to him question the existence of auditors all together like why do we exist if we're not here to detect and or prevent fraud? So let's listen to what he has to say about that.
Unknown: If the auditors are not to be held responsible for identifying the theft of millions and millions of dollars every year, why have them in the first place?
Rob Berry: Now I think you guys heard that why have auditors in the first place but he's not done yet? My friends?
Unknown: I think most people are they're under the impression that these audits are going to uncover.
Rob Berry: You just heard from one of the town's citizens he's an average Joe. I think that the average Joe kind of thinks that auditors are there to prevent and or detect fraud. But while we're going down this trail, let's go back to the deposition with Clifton, the accounting firm, and let's see what they had to say as it relates to auditors and their role in preventing and or detecting fraud. So let's have a listen.
Unknown: No auditors are not responsible for finding fraud, nor should they be they became reporting and disclosing police making sure that the corporation's public corporations in particular, were following the appropriate regulations. Am I defending these particular orders? No.
I just did not see, in light of the overwhelming negligence of cliftonlarsonallen employees which came out in these depositions on cross examination I just did not see how they could win the case of federally kountry.
Rob Berry: Alright, so you see the accounting firm is saying auditor should not be responsible. And then the other representative here from PricewaterhouseCoopers said that he doesn't believe auditors should be responsible for detecting fraud but our lawyer that we see pictured here, he's having trouble with that. But as I said earlier, observation and inquiry should have at least been used here and it could have helped to detect this fraud but my friends, it gets even better or worse, as it were you guys know me.
Unknown: I deposed both of the current as well as the former head of the Clifton office index. And both of those individuals were also the key people involved every year and performing the work for Rita credit wells, personal income tax returns.
Is it unusual that somebody would have over $300,000 cash flow out without being explained by their tax returns? Well, it wouldn't be unusual.
In 2005, there's over $300,000 that Clifton in preparing Rita crundwell. his tax returns, identifies as money coming into Rita crundwell, for which there's no documentation, all his city employee who makes 80 some $1,000 a year.
Other than just writing it down and claiming it that's the most that she had in terms of documentation. Correct.
Correct.
You never asked her for anything further. True. True.
Rob Berry: Now, I don't know if you guys missed that. But did you hear the accounting firm also did read us personal income taxes. And they saw that she had $300,000 in revenue coming in as income. And they didn't ask her where it came from. But they knew that she only made well, she made less than $100,000 a year in her job. So this accounting firm, prepared the financial statements, audited financial statements, and they also did her personal income taxes, where there were red flags waving all over the place, because she had $300,000 in revenue that came in that was unaccounted for. And as you heard them ask, did you ask her about that? $300,000? And he said, No. So let's go back to the audience. Mark says going after the auditors is fine, but Well, after the barn door was wide open, ripped off the hinges and the cows were in another state. Wait, I mean, horses, who when Mark, and Joe says agreed, she agrees with you. Heather says, Good one. See you next time. We ain't done yet, Heather. But I'll see you later. My friend. Joe says so many red, I mean, pink flags. keyshawn says gross negligence. And Mark says they saw both sides of the story. Oh, my, on the red flags. And he says, Mark says again, they were just sucking money in. They were just sucking in the money on both sides. Absolutely. They were sucking in the money on both sides. But you guys are probably wondering what in the world does that have to do with observation and inquiry? Well, look, there were a few observations here and a little bit of inquiry that would have gone a long way. So how do we get comfortable with observation and inquiry as auditors? I'm going to give you three ways to make the most of observation and inquiry, three ways to make the most of observation and inquiry. You guys ready? You ready for three ways to make the most of observation and inquiry? Because in this one, again, the invoices were fake, they could have asked a simple question, who the accounting firm did
her personal income taxes? They could have asked the question based on their observations. So let's just take it back.
Have you guys seen a kid? Or have you ever been around kids? or Do you have kids? They question everything right. That's what you need to do. As an auditor. First thing you need to do is look at it like a child and appear it says why they hate your auto reports, please ignore that this should be three keys to observation and inquiry, my dad, but the first thing you want to do is look at it like a child. You know nothing. And you are here to learn? Because after all, what is the child's favorite question? type into the chat what you guys believe to be a child's favorite question. So imagine if the auditors had asked about the invoices, or the construction projects, or the conflicts of interest, or the 400,000 extra dollar or 300,000 extra dollars that she obtained in one year? So somebody tell me, what is a child's favorite question? All right, give it away a prize this time. I just want to see if everybody knows it. No, I'm just kidding. I may actually give away a prize. The first person to answer was pozo. And she said, Why Amy said why I got a LinkedIn. Oh, this is Cindy gene. Cindy. Gene, you just showing up for me is LinkedIn user, because I'm actually cheating. I can see you on my cell phone. Thank you for being here. Cindy Jean, I don't think you've ever been on one of these before. And Joe says why that's right. A child's favorite question is why? So as auditors, we need to think about things like a child act as if we don't know anything, because that's when true observation and inquiry happens as they say that is where the magic happens. Okay, Shawn said a child's favorite question is, what's your name? You know that? That is true. That is another one. Hey, what's your name? Mr. Yeah, that's another one. Good one. The key Shawn it had to be. It had to be keyshawn it had to be keyshawn. All right. So what can you do to make observation and inquiry better First, look at it like a child. What's the child's face? question why. Your second thing
that you can do is well, ask questions. Don't question people. You see, your goal is to find out the truth and you need to put your bias aside and collect the facts. The other thing you need to do is stop power ticking. You're testing attributes. What is that you ask? Well, back in the day, we used to call it power taking when auditors would just go through and they had testing attributes, and they would just check, check, check, check, check, and it's done. So if you're just checking done on your field work and on your work papers without truly considering the objective, you are just power taking it. Stop power taking it stop power ticking, you're testing attributes. Okay, now I see everybody else wants to be funny. Now, Asha wants to say why, but then how? Yeah, no, you're right, though. Kids favorite questions? They say why? Then they say how? At least you weren't like keyshawn? What's your name? keyshot. How many kids are asking you? What's your name? That's what I want to know. But no, you guys are here on audit bikes with me and some ways that you can improve your observation and inquiry number one, look at it like a child. Number two, ask questions. Don't question people. And as we are coming towards the end, the third thing that I want you to do is push for logical answers. Why is that because logic deletes most lies. When people are lying, and you get logical with them. They're going to start to get upset, you're going to start to find the truth, they're going to start stuttering and stammering and then that's when you call Marc Andreessen, because he's going to help you learn how to do better interviews when it comes to talking to people. So you guys, thank you for joining me here on audit bites. Today we were talking about observation and inquiry and action. And what I've shown you was the case of Rita crundwell, who was the Comptroller and Treasurer in Dixon, Illinois, where she stole over $50 million. Now she was able to steal it because
there was no segregation of duties. This woman was responsible for everything, but also the accounting firm that prepared the books for the town was the same accounting firm that did the financial statement audit. So there was a conflict of interest there. She also submitted fake invoices that they did not pick up on and they didn't do any observation and inquiry and simply asked the engineering department down the hall if those projects were legitimate.
So your three things to do in order to have good observation and inquiry. as Joe said, We are going back to the basics. One, look at it like a child to ask questions, don't question people. And three, you are going to push for logical answers. I am Robert Berry, and this is episode number four of audit bites, go to audit bites.com. To see past replays, tell all your friends about this, give us good ratings on those podcasting platforms, and really get CPE just for watching a podcast. This episode is not up there yet, but previous episodes are in previous episodes of the Friday froster. You can get CPE for as little as $7 for one hour. You heard me right. So why don't you just go and get your CPE today, and before we go, we're gonna go back to the audience because I have the best audience in the world. You guys are so helpful. And I'm gracious to have you on my team. keyshawn says Thank you, Robert. Great story. And excellent tip. three tips were awesome keyshawn. If you know any otters tell all of them to go look at the replay and go purchase the CPE for 799. Mark says thank you. Great prep work on this segment. Awesome. Thank you, Mark. I'll be sending you the episodes for this Friday froster because you guys mark is going to be our guest hosts on the Friday fraudster this week. So again, if you like this, go to audit bytes.com pick up your CPE pick up some of your merge, and we'll see you next time.
Thank you for joining us on this episode of audit bytes. If you want to do more, see more, be more, check out our website that are calm where you will find quality training, audit merge. Yes, we have had shirts and other apparel as well as pairs copies of this podcast and the Friday frausto podcast www.att.com Thanks for joining us.