The Devil SHOULD Go To Georgia

In the song, the Devil went down to Georgia because he was way behind on souls. With The Donald, Fani Willis, Nathan Wade, and the rest in various courtrooms it seems like another opportune time for the Devil to return to Georgia.

Sidebar: Grammar is not, as readers know, our strong point. Our question is: if the Devil is properly capitalized, and we think it is, what about the pronoun? Should we go Him or him? End Sidebar.

We want to limit our comments to this passage from John Hinderaker at PowerLine:

[Nathan’s] testimony was incredible. He and [Fani] had both hoped to avoid taking the stand, but [Nathan] was required to testify and counsel asked him about the trips he took with [Fani]. These trips, to Napa Valley, the Caribbean and other locations, were put on [Nathan’s] credit card, which supports the idea that Fani was benefiting financially from her exorbitant payments to [Nathan]. [Nathan] tried to avoid this conclusion by claiming that [Fani] paid him back, but there is no record of this because she paid him in cash. [Emphasis added]

You should read all John has to say but you might find the state of public service too depressing. Our comment is about the part in bold. The issue is not one of whether you put $10 or $20 in the collection plate each week. A small amount like that would be untraceable. These payments, however, would be a single transaction of at least four figures. It is highly unlikely that both Fani and Nathan keep large sums of currency on their person or in their residence. If a quick audit of their bank accounts found neither withdrawals or deposits that would likely move the probability of lying under oath to beyond a reasonable doubt. Even we rarely have a grand or more in ready currency. Most younger folks have little or none. If Fani isn’t making any big currency withdrawals and Nathan isn’t making any big currency deposits during the appropriate periods then we would say they need to prove why they haven’t lied under oath.

Fani and Nathan aren’t the only souls for the Devil to steal in the current legal dust-ups in Georgia but they are a ripe opportunity for him or Him.

F For Accountants At SVB

In our last post we focused on Silicon Valley Bank (SVB) we focused on the bank, the depositors, and the federal government’s response to the bank’s failure from a finance perspective. They all deserved an F. We left out the external accountants. As we noted yesterday, SVB was heavily invested in long-term Treasury Bond and had not hedged the risk.

One part of an evaluation, we use that term to include the bank examiners and the external auditors, will be looking at a variety of ratios and sources of risk. As we quoted yesterday, SVB had an unusually large amount of its funds in Treasury Bonds. It also seemed to have a number of depositors with unusually large balances. It wasn’t the bank run from a It’s A Wonderful Life with many people seeking small balances. It was relatively small number of people and organizations seeking very large balances, in part because they thought the FDIC might enforce the $250,000 insurance limit. The US Bank Examiners, the California Bank Examiners (we think), and the external auditors, KPMG, should have all figured out the risk exposure. Perhaps there are internal auditors that missed it too.

So to be extra explicit, the accountants evaluating SVB should have seen both elements of risk. The first is SVB was over invested in long-term Treasury Bonds. That ratio should be the first red flag. The second is that they have huge depositors. The combination of the two (yes, we are referencing this) screams risk. Everyone should have heard it. KPMG will be punished by lawsuits from the stockholders and the resulting loss of reputation. What if anything will happen the bank examiners?

Auditing Opportunity

Kevin Williamson shows that not every forensic scientist is Abby Scuito.  His article provides a great opportunity for audit firms.  Folks often think that auditing only applies to financial records but as Dictionary.com recognizes, financial records are just the most common example:

an official examination and verification of accounts and records, especially of financial accounts.

Comparing compliance with expected standards and giving an opinion is what auditing firms do.  They commonly do it for financial statements and internal control.  Compliance with standards of criminal investigation would only be a small step for them.  It makes sense that if we need external audits of financial statements then external audits of matters of life and death are a reasonable step.  The audit firms understand risk assessment, e.g., let’s audit all the murder cases and fewer less serious charges, internal control, and sampling that would lead to an effective audit of criminal investigation processes.

Audited financial statements provide reliable information for investors.  Audited criminal investigation processes would provide reliable information for jurors and help ferret out the problems that Kevin reports quickly.  There are details to be worked out on the extent of the engagement but experience will provide the solutions.  Why not try it now?