My Life of Inspections, Audits, and Examinations…

I have lived with inspections, audits, and examinations my entire life beginning as a preschooler with my mother inspecting my sister’s and my rooms after we were made to clean them, put things away, etc., before we could go outside and play.

Inspections were common, expected, and sometimes silly in the Corps of Cadets at Texas A&M University yet critically and vitally important in the USMC, especially in the sense of readiness and lethality.

In my banking career, bank examinations were frequent, detailed in scope, disruptive, and necessary.

Sometimes I thought their approach was unfair, misguided, somewhat political, and motivated by their just not liking us personally. However, we got through them and became a better institution because of them despite the fallout of dealing with warranted and unwarranted “matters requiring immediate attention.” We fixed it and we got better.

As a bank, we were also subject to meeting specific internal and external audit standards. The bigger we got, the more onerous and expensive the detail and depth of audit requirement.

Bank external audits rely upon mailing audit confirmations to a sampling of customers as to the accuracy of data and information as to a customer’s account balances.

Oftentimes bank customers receiving a audit confirmation from our external auditors would be very upset with my bank because they incorrectly thought the bank was in trouble of some kind, something was wrong with their accounts, or even upset and angry that an external company had access to their information.

My bank also went through several Texas State Sales Tax audits. While bank services are not typically subject to state sales tax, they do engage and pay a lot of people, companies, and vendors that are required to collect and pay sales tax. Auditing a bank’s accounts payable system revealed possible sales tax violations. We saw this a lot in building new bank buildings and remodeling older buildings.

Sometimes we engaged consultants with specialized expertise to help us identify expensive wasteful processes as well as income enhancing practices.

In all cases, and I emphasize all cases, access to customers’ critical and private information was required and steps were taken to properly safeguard that information.

As a banker, I investigated and uncovered an unfortunately large number of internal bank embezzlements, defalcations, and external frauds and fraud attempts in both the deposit and lending sides of the bank.

As a leadership consultant, I support my clients by encouraging them to know their numbers by creating systems or causing systems to be created that enhance the flow of critical financial information for leadership to profitably run their companies and mitigate financial risks both internal and external. Trust is not an internal control.

?Personally, my wife and I have been audited by the Internal Revenue Service. The last one was quite disconcerting as a five day audit turned into more than five weeks.

?Without going into details, the IRS was concerned that I was hiding income. However, because I keep immaculate records on my income and expenses guided by the professionalism and expertise of my tax return CPAs, I owed nothing after the audit although I did get to pay my accountants a sizable sum of money to deal with the IRS directly.

?So, with all of that, I have zero problems with DOGE doing their thing, firing and replacing inspector generals, hiring special employees, engaging internal and external auditors, bank examiners, or whoever is needed to audit what is going on financially at any level or size of business and government.

?It is easy enough to steal from small for-profit and non-profit organizations. The larger any company, organization, enterprise, or government entity, the easier it is to hide graft, fraud, embezzlement, defalcation, corruption, and everything else bad, including creating non-existent employees on the payroll.

?Inspectors, auditors, examiners, and DOGE folks are not perfect. None of them are perfect. They are, however, necessary, to create an environment of accountability and integrity.

With all of that, here’s what I know:

What is not inspected is not respected.

What is allowed continues.

Silence is always seen as approval.