Get The Why and How of Auditing on Amazon
Understand auditing like a boss.
Have you seen the movie All the Queens Horses? If not, you should. Today I review the movie created by Kelly Richmond Pope.
It is rare that you see a movie about accounting and auditing. Rarer still, one that is engaging. And why is this documentary captivating? Well, the story for sure, but Kelly did a fine job of putting the pieces together and explaining what was done and how. She includes the key players: the Mayor, the assistant finance director, FBI agents, local citizens, and, of course, Rita Crundwell. (You'll recall from my earlier post that Rita stole $53 million to fund her horsing operations.)
At the time of Rita's arrest, she had four hundred quarter horses, a $2.1 million dollar motor coach, and $300,000 of jewelry. She had ranches and a nice home. So the movie shines the light on Rita's motive: her possessions, specifically, her horses.
Kelly Richmond Pope highlights the key element in the twenty-year fraud: trust. Everyone believed in Rita: the mayor, the council members, department heads, and community leaders. Kelly's interviews with these people provide a nice overview of the trust element and brings to life the individuals that believed in Rita--and the subsequent pain that they suffered.
Interspersed throughout the movie are explanations of what happened. These segments provide easy-to-understand graphics making a complex topic understandable, even to those who have no prior fraud knowledge. The movie gives insight into the opportunity element of fraud, showing that the City of Dixon did not have sufficient segregation of duties.
Additionally, the movie provides interviews with the attorney that sued the city's auditors and bank, resulting in a recovery of $40 million. (I do not agree with the attorney's assertion that the City of Dixon had no responsibility for the detection of the fraud.. Governments are responsible for their internal controls. Those controls should be preventive and detective. Even so, the auditors should design their audits to detect material fraud.)
If you want your audit staff or your clients to understand the gravity of fraud, buy this movie and show it to them.
This movie does a better job of explaining the psychological and financial damage of fraud than any textbook. Showing this movie in college classes would also be a great way to educate young students about this topic.
And the beauty of this movie: it's a story. Human beings are hardwired to learn from stories.
My hat is off to Kelly. She did a fine job of bringing this important story to life for thousands of people. Does the show educate? Yes, but it entertains as well. Well done.
Kelly is an Associate Professor in the School of Accountancy and MIS at DePaul University in Chicago where she teaches forensic accounting, managerial accounting, financial accounting and ethical leadership. For more information about Kelly, click here.
Get my free weekly accounting and auditing digest with the latest content.
Charles Hall is a practicing CPA and Certified Fraud Examiner. For the last thirty years, he has primarily audited governments, nonprofits, and small businesses.He is the author of The Little Book of Local Government Fraud Prevention and Preparation of Financial Statements & Compilation Engagements. He frequently speaks at continuing education events.Charles is the quality control partner for McNair, McLemore, Middlebrooks & Co. where he provides daily audit and accounting assistance to over 65 CPAs. In addition, he consults with other CPA firms, assisting them with auditing and accounting issues.
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.