January 26, 2024

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Auditing

When we talk about auditing around here, it’s usually to highlight all the pitfalls it presents for the firms that practice it. There are lots of rules for auditors to follow, and it’s easy to run afoul of those rules. There’s also the question of what an audit is for. Most regular people don’t really know, but when they hear “audit,” they almost instinctively think that something bad has happened and someone is investigating. Or they think that the purpose of an audit is to find wrongdoing. 

And, look, we don’t have time to get into all the misconceptions around this; it’s a debate that I’m not up to having at this moment, but, suffice to say, auditing isn’t going anywhere. What’s less certain is what auditing will be like in the future because, as of right now, it’s very similar to what it’s been for decades, and it might be time for it to evolve into something new.

But forget all that for a minute, and let’s talk about something far more ridiculous, starting here:

A pastor in Denver who said that God told him to sell cryptocurrency that could not be cashed is facing civil charges, along with his wife, for marketing a digital coin that prosecutors said was “practically worthless” and using the proceeds to support a “lavish lifestyle.”

I’ve read about more crypto scams than I care to think about, but this is the first time I’ve ever read about a crypto scam that began because God told a person to start a cryptocurrency. It’s not that surprising, though; people claim that God tells them to do all kinds of things. 

Anyway, this pastor, Eligio Regalado, along with his wife, Kaitlyn Regalado, have been charged in a civil complaint by the Colorado Attorney General. They created and sold a cryptocurrency called INDXcoin through their Kingdom Wealth Exchange—yes, they had an exchange, too. 

But don’t worry, things do get weirder:

In a video addressing the complaint last week, Mr. Regalado said that he did not want investors to be “mad” at the prosecutors.

“They have to do this,” he said. “I mean, if you think about this: We sold a cryptocurrency with no clear exit. We did. We took God at his word and sold a cryptocurrency with no clear exit.”

Mr. Regalado said that because of problems with the cryptocurrency exchange, investors could not take their money out.

Mr. Regalado also said in the video that he went into the cryptocurrency business because “the Lord” told him to. He said that God had once come to him a dream [sic] and asked him to do so, and he accepted that he and his wife spent the funds in “a home remodel that the Lord told us to do.”

Okay, there’s a lot to unpack here, so let’s take them one at a time:

  1. “Mr. Regalado said that he did not want investors to be ‘mad’ at the prosecutors.” — This is an impressive act of misdirection. The person accused of swindling his investors is asking those investors not to be mad at… the people who told the investors that they were being swindled. Shoot the messenger, etc. CLASSIC. 
  2. “We sold a cryptocurrency with no clear exit.” — At this point in the history of crypto, I’m not sure this really works as an excuse. Sam Bankman-Fried is obviously a very smart guy who also didn’t have a clear exit. He’s in jail now, and there’s a very good chance he will be for the rest of his life. Not a great outcome!
  3. “We took God at his word and sold a cryptocurrency with no clear exit.” — Shifting blame to the Almighty, huh? Bold move.  
  4. “Mr. Regalado said that because of problems with the cryptocurrency exchange, investors could not take their money out.” — Yeah, hi, our technology isn’t working, so, no, you can’t get your money. Just please remember not to be mad at the prosecutors.
  5. “He said that God had once come to him in a dream and asked him to [go into crypto], and he accepted that he and his wife spent the funds in ‘a home remodel that the Lord told us to do.’” — Make sense. After all, the 8th commandment said ‘Thou shalt not steal’; it said nothing about investing the money of others into a new wing of a house without their consent.

Okay, thanks for indulging that. Oh, wait. I’m not quite done. The Denver Post also reported that the Regalados spent the money raised from investors on a “Range Rover, jewelry, luxury handbags, cosmetic dentistry, boat rentals and snowmobile adventures, [the aforementioned] home renovations and an au pair.”

No word on whether He had any input on those items.  

Here’s where the auditing comes in. The complaint from the Securities Commissioner for the State of Colorado states that Regalado told investors that his divinely-inspired crypto project “had been audited by a trusted third party.” 

This trusted third party—not a deity, mind you—was a firm called Hacken that specializes in crypto and blockchain auditing, and they did, in fact, audit Regalado’s project. Unfortunately for  the Regalados, the audit found that their 

  • “security score was zero out of ten,” and 
  • “[w]hen proof-of-stake mining is enabled, value of reward in coinbase is not validated which […] allows to generate an infinite number of new coins,” and
  • “contained transcription errors that lead to ‘numerous critical issues.’” 

Despite these less than ideal findings, a post from the Regalados’ on the Kingdom Wealth Exchange forum proclaimed that it had been “proofed by Hacken” which is a hilariously meaningless statement, and made no mention that “Defendants’ products were catastrophically deficient.”  

On the one hand, this is an (alleged) crypto scam story with garden variety lavish spending and a twist of charlatanry. But on the other, we potentially have a feel-good auditor story. An auditor found fraud! (Pending an investigation and a whole bunch of other law enforcement stuff.)  

This is probably a pipe dream, but isn’t this what we want audits to do? Doesn’t this show auditing’s true potential? Don’t we want a level of assurance ranging from “the financial statements present fairly, in all material respects,” to something like, “this product is catastrophically deficient, your score is a zero out of ten”? 

This feels like where auditing should go. Let’s see if we can make it happen.

RTO: Everyone’s a bunch of rubes

The social fabric of the workplace can be very complex and loaded with pitfalls. One minute, you’re having a nice dinner with colleagues, and the next, you’re getting weird looks because you’re licking your plate. 

Look, I don’t make the rules. I just know that enough people care about how other people behave at work that you can’t walk around asking people who they voted for and expect it to go over well. It’s bad form, that’s all I’m saying.

Anyway, the pandemic basically allowed all of us to forget how to behave in polite company. And now that many more of us are back at the office, people who really care about this stuff have noticed, and they are appalled.  

As companies increasingly recall workers to the office, employees and managers alike are finding that the pandemic made us all a little rusty with in-person conduct. Co-workers are too loud at their desks. People are on their phones during meetings. Shaking hands is no longer a given. Small talk at networking events is … awkward.

Bosses’ solution to this stilted behavior? Charm school.

More than 6 in 10 companies will send their employees to office etiquette classes by 2024, according to a July survey of 1,548 business leaders by ResumeBuilder.com.

Okay, maybe I’m wrong, but there are potentially a few things at play here that make this scramble for manners training much ado about nothing.

First—loud talkers, people zoning out in meetings, shameless germ spreading, and general awkwardness is not new. These behaviors existed before the pandemic, they exist now, they’ll exist in the future. You can shove people into as many Emily Post weekend retreats as you like, and that isn’t going to keep Devon’s shirt on at the company picnic.

Second—and this is related to the first item—you’ll recall that last November, we discussed how deodorant was making a comeback now that more people were working in the office again. But at the time I wrote:

[A study] from 2014 [found] only 87 percent of millennials said deodorant was of “daily importance” and a 2019 survey that showed “37 percent of 25-to-34-year-olds surveyed said they hadn’t purchased deodorant or antiperspirant in the past year” and “48 percent for 18 to 24-year-olds.” 

Given that our collective boorishness existed prior to the plague, I’ll wager that there’s a survey out there from 2019 or before that found a significant number of businesses that wanted to ship their employees off to learn that a fish fork is a thing that exists.

Third—Maybe people are just being obnoxious slobs on purpose so they’ll get asked to go back to working from home?

All of these things should be taken into account before stuffing the charm school budget. Good luck minding your Ps and Qs, everyone.

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Caleb Newquist Caleb is Editor-at-Large at Gusto. In 2009, he became the founding editor of Going Concern, the one-of-a-kind voice on the accounting profession, serving in the role for 9 years. Prior to Going Concern, Caleb worked as a CPA for nearly 6 years in New York and Denver. He lives in Denver with his wife, two daughters, and two cats.

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