So, you have to feed it some updated assumptions, because ChatGPT relies on an OMB estimate that improper payments are only $200B per year, and that SARBOX controls would only eliminate 20% of those improper payments. Even at those unrealistically conservative estimates, ChatGPT recommends implementing SARBOX for the federal government (FEDBOX).

I fed it some more reasonable assumptions:
1) Federal fraud is about 20% of the total budget. I think that this is a conservative estimate. I think that arguing against that at this point would be difficult
2) SARBOX for the federal government would cut that fraud by 80%. This assumption is a little more aggressive, but, with AI, I think it would be reasonable. The trick is to use Musk's playbook of bottoms-up, going with the payments first, and working back. All other attempts at fraud have been top-down, going with allocations first.

From ChatGPT, I was able to:
1) estimate the net savings of FEDBOX after implementation costs.
2) suggest a timeline for a phased in implementation, what those phases should be, an how long each phase may take, the challenges of implementation, and how to overcome them.
3) A detailed cost benefit analysis of each phase
4) The break even point of implementation (year 1 or 2)
5) Policy recommendations for implementation for Congress and the White House
6) The policy makers and federal agencies that might lead the charge
7) Draft legislative proposal to get things rolling

The resulting research is fascinating for two reasons:
1) It gives an easy to understand answer for a very complex issue. It would have taken me at least two weeks tp put this together, maybe a month. My ChatGPT session was about 5 minutes.
2) It uses second level reasoning. This isn't just data, it is applying data to a problem, and providing a good answer.
3) ChatGPT is very weak compared to the best engines out there. Pro is way better.

This is a lot of reading, but hopefully this is enlightening. And, if you are in the knowledge business, this is also likely terrifying.

Here are the link to the chat:
https://chatgpt.com/share/67b49d4d-03f4-8003-a26b-d75653ee59a9
Here is the draft legislation:
https://chatgpt.com/canvas/shared/67b4a1f07c34819197bf481c31f71dbc

The one thing that ChatGPT didn't do well was to create an executive summary of this research for a blog post. It took me 10x longer to write this post than it did all of the research above.

BTW, my plan is to refine this proposal, making sure there are no factual inaccuracies, and email it to every senator or congressman that I think might find it interesting.

BusterAg said:

---

So, you have to feed it some updated assumptions, because ChatGPT relies on an OMB estimate that improper payments are only $200B per year, and that SARBOX controls would only eliminate 20% of those improper payments. Even at those unrealistically conservative estimates, ChatGPT recommends implementing SARBOX for the federal government (FEDBOX).

I fed it some more reasonable assumptions:
1) Federal fraud is about 20% of the total budget. I think that this is a conservative estimate. I think that arguing against that at this point would be difficult
2) SARBOX for the federal government would cut that fraud by 80%. This assumption is a little more aggressive, but, with AI, I think it would be reasonable. The trick is to use Musk's playbook of bottoms-up, going with the payments first, and working back. All other attempts at fraud have been top-down, going with allocations first.

From ChatGPT, I was able to:
1) estimate the net savings of FEDBOX after implementation costs.
2) suggest a timeline for a phased in implementation, what those phases should be, an how long each phase may take, the challenges of implementation, and how to overcome them.
3) A detailed cost benefit analysis of each phase
4) The break even point of implementation (year 1 or 2)
5) Policy recommendations for implementation for Congress and the White House
6) The policy makers and federal agencies that might lead the charge
7) Draft legislative proposal to get things rolling

The resulting research is fascinating for two reasons:
1) It gives an easy to understand answer for a very complex issue. It would have taken me at least two weeks tp put this together, maybe a month. My ChatGPT session was about 5 minutes.
2) It uses second level reasoning. This isn't just data, it is applying data to a problem, and providing a good answer.
3) ChatGPT is very weak compared to the best engines out there. Pro is way better.

This is a lot of reading, but hopefully this is enlightening. And, if you are in the knowledge business, this is also likely terrifying.

Here are the link to the chat:
https://chatgpt.com/share/67b49d4d-03f4-8003-a26b-d75653ee59a9
Here is the draft legislation:
https://chatgpt.com/canvas/shared/67b4a1f07c34819197bf481c31f71dbc

The one thing that ChatGPT didn't do well was to create an executive summary of this research for a blog post. It took me 10x longer to write this post than it did all of the research above.

BTW, my plan is to refine this proposal, making sure there are no factual inaccuracies, and email it to every senator or congressman that I think might find it interesting.

---

Unless it includes kickbacks for them or a quid pro quo for some pet project that they think will help them get re-elected then probably 98% will file your proposal in file 13.

Cool though what we can do with AI.

i ran your exact same prompts into Grok 2 and it gave vastly different totals. Would be interested to see if Grok 3 ran yet more numbers.

If you want to buy a boat, you better hurry.

After reading that ChatGPT thread all the big 4 accounting firm partners realized you are giving them billions of dollars worth of work.

rgag12 said:

---

If you want to buy a boat, you better hurry.

After reading that ChatGPT thread all the big 4 accounting firm partners realized you are giving them billions of dollars worth of work.

---

They're about to charge billions and then remind everyone that their work is not designed to detect fraud, just material misstatements in the financials.

Pinochet said:

---

rgag12 said:

---

If you want to buy a boat, you better hurry.

After reading that ChatGPT thread all the big 4 accounting firm partners realized you are giving them billions of dollars worth of work.

---

They're about to charge billions and then remind everyone that their work is not designed to detect fraud, just material misstatements in the financials, and the quality of their accounting systems to detect fraud.

---

FIFY

An external auditor has to sign off that the company's internal controls meet the standards set by the Public Company Accounting Oversight Board.

Spotted Ag said:

---

Unless it includes kickbacks for them or a quid pro quo for some pet project that they think will help them get re-elected then probably 98% will file your proposal in file 13.

Cool though what we can do with AI.

---

The key here is to get the people that want to push fraud detection to the heads of the party. That alone is worth championing this thing.

We have good congressmen in place to bang that hammer, and a POTUS that gives zero F's about congressional complaints of more executive branch oversight.

The wildcard is that if senior leadership is determined to commit fraud, unless they are stupid, there are many ways to get away with it even if audited. So this still comes down to who we are putting in positions of power in govt

DannyDuberstein said:

---

The wildcard is that if senior leadership is determined to commit fraud, unless they are stupid, there are many ways to get away with it even if audited. So this still comes down to who we are putting in positions of power in govt

---

The reason why SOX works is because the government can fine you, charge you criminally, and as a result have your stock price plummet to the basement.

Would we really have the government be in charge of holding the government accountable? How well has that been working out currently with all the inspector generals?

There is going to have to be a cultural revolution within g the government. Honestly I don't think it's feasible without a major revolution forcing the entire system to change. The temptation for graft is too strong and the people who run DC don't know any other way to operate.

rgag12 said:

---

DannyDuberstein said:

---

The wildcard is that if senior leadership is determined to commit fraud, unless they are stupid, there are many ways to get away with it even if audited. So this still comes down to who we are putting in positions of power in govt

---

The reason why SOX works is because the government can fine you, charge you criminally, and as a result have your stock price plummet to the basement.

Would we really have the government be in charge of holding the government accountable? How well has that been working out currently with all the inspector generals?

There is going to have to be a cultural revolution within g the government. Honestly I don't think it's feasible without a major revolution forcing the entire system to change. The temptation for graft is too strong and the people who run DC don't know any other way to operate.

---

No, the people holding the government accountable would be:

1) External auditors, who are going to make $billions each year for the work, and can be imprisoned for fraud.
2) The next administration, who, when discovering the types of internal control busts that Muskermensch is finding, will put their predecessors in jail.

BusterAg said:

---

Pinochet said:

---

rgag12 said:

---

If you want to buy a boat, you better hurry.

After reading that ChatGPT thread all the big 4 accounting firm partners realized you are giving them billions of dollars worth of work.

---

They're about to charge billions and then remind everyone that their work is not designed to detect fraud, just material misstatements in the financials, and the quality of their accounting systems to detect fraud.

---

FIFY

An external auditor has to sign off that the company's internal controls meet the standards set by the Public Company Accounting Oversight Board.

---

Simmer down, Turbo. I know exactly what an external auditor has to do. I'm allowed to make jokes about my own profession.

But if you want to get into it, the controls covered by a 404 report are only required to cover financial reporting. A financial statement audit or a sox report (no one in the industry uses the term "sarbox" except maybe academics who have never been outside a textbook) covers ICFR. The Enron and Worldcom problems were adherence to GAAP issues. They were caused by fraudulent entries, but were at their core GAAP problems that should have been found with a better planned and executed audit. Since you want to have a controls report, you should define the controls you expect to see. Careful, I consult with big companies and newly public entities all the time on their new controls and they all seem to misunderstand what constitutes a control activity and what makes it effective vs ineffective.

Excellent post.

I did SOX 404 work in 2004 for long enough to know that I never wanted to do SOX work ever again. SARBOX is easier to get answers than SOX when thrown into Google. 404 has different meanings, like, uh, your page doesn't exist. You are not my audience.

You are right that the internal controls would be different for government entities. But, do you really think that a public company that had a payment system that allowed the reason for a major disbursement blank would pass a 404 audit?

BusterAg said:

---

rgag12 said:

---

DannyDuberstein said:

---

The wildcard is that if senior leadership is determined to commit fraud, unless they are stupid, there are many ways to get away with it even if audited. So this still comes down to who we are putting in positions of power in govt

---

The reason why SOX works is because the government can fine you, charge you criminally, and as a result have your stock price plummet to the basement.

Would we really have the government be in charge of holding the government accountable? How well has that been working out currently with all the inspector generals?

There is going to have to be a cultural revolution within g the government. Honestly I don't think it's feasible without a major revolution forcing the entire system to change. The temptation for graft is too strong and the people who run DC don't know any other way to operate.

---

No, the people holding the government accountable would be:

1) External auditors, who are going to make $billions each year for the work, and can be imprisoned for fraud.
2) The next administration, who, when discovering the types of internal control busts that Muskermensch is finding, will put their predecessors in jail.

---

The external auditor can find material fraud. Can't do anything to enforce it. You'd have to hope and pray that the government would want to tar and feather one its own. If you've been paying attention, that happens almost never even when caught red-handed.

This administration will fire those people, a handful may even be criminally tried.

However, unless something drastically changes the government will sink back to what it has always done before. Protect its own.

rgag12 said:

---

The external auditor can find material fraud. Can't do anything to enforce it. You'd have to hope and pray that the government would want to tar and feather one its own. If you've been paying attention, that happens almost never even when caught red-handed.

This administration will fire those people, a handful may even be criminally tried.

However, unless something drastically changes the government will sink back to what it has always done before. Protect its own.

---

I agree.

To me, the change to the norm will be driven by two things:
1) Cultural change. The chickens have come home to roost in the terms of inflation. The voting public will not tolerate 25% inflation every four years into eternity. It is going to be THE political hot potato for the next decade.
2) Technological change. With AI, Muskermensch has discovered a tactic to cut through the red tape used to hide fraud like a hot meat cleaver through tepid butter.

The keys to the government through the voters is going to be the driver behind holding people accountable. The voters will not continue to tolerate this inflation. The inflation will continue as long as the fraud continues. There are just too many things lining up that point to inevitable change. I'm hoping it can be done with at least some accountability.

If that doesn't work, it will be pitchforks and moltov cocktails that drive change during my kids lifetime.

BusterAg said:

---

Excellent post.

I did SOX 404 work in 2004 for long enough to know that I never wanted to do SOX work ever again. SARBOX is easier to get answers than SOX when thrown into Google. 404 has different meanings, like, uh, your page doesn't exist. You are not my audience.

You are right that the internal controls would be different for government entities. But, do you really think that a public company that had a payment system that allowed the reason for a major disbursement blank would pass a 404 audit?

---

I did SOX compliance while in IT for a bg Telco and you're spot on. Was also a Chief Compliance Officer for a brief time for a tiny company..

No, that would pass muster.

BusterAg said:

---

Excellent post.

I did SOX 404 work in 2004 for long enough to know that I never wanted to do SOX work ever again. SARBOX is easier to get answers than SOX when thrown into Google. 404 has different meanings, like, uh, your page doesn't exist. You are not my audience.

You are right that the internal controls would be different for government entities. But, do you really think that a public company that had a payment system that allowed the reason for a major disbursement blank would pass a 404 audit?

---

Only if that was a key control and there was no compensating control. It's hard to imagine a situation where that's not a key control though. We don't have enough detail to know exactly what the process and the related control activities are, but I get your point.

BusterAg said:

---

rgag12 said:

---

DannyDuberstein said:

---

The wildcard is that if senior leadership is determined to commit fraud, unless they are stupid, there are many ways to get away with it even if audited. So this still comes down to who we are putting in positions of power in govt

---

The reason why SOX works is because the government can fine you, charge you criminally, and as a result have your stock price plummet to the basement.

Would we really have the government be in charge of holding the government accountable? How well has that been working out currently with all the inspector generals?

There is going to have to be a cultural revolution within g the government. Honestly I don't think it's feasible without a major revolution forcing the entire system to change. The temptation for graft is too strong and the people who run DC don't know any other way to operate.

---

No, the people holding the government accountable would be:

1) External auditors, who are going to make $billions each year for the work, and can be imprisoned for fraud.
2) The next administration, who, when discovering the types of internal control busts that Muskermensch is finding, will put their predecessors in jail.

---

The bolded will kill it because no one will take that audit job if they can go to prison because someone hides something well enough. If you can fit the process into an already existing framework created by an industry group, you can get people to do the job correctly because their license and way of making money is on the line.

I'm not too familiar with GAGAS, and fund accounting is not my bag. I suspect there is a very small number of people who are experts at that. You can't have the idiots who audited your local credit union or local water utility doing this work. There are so many issues with their ability to scale and their ability to follow the rules that you are just asking for issues.

Just to be clear, I'm fine with more accountability on gov agencies, but I also want the gov agencies to shrink drastically. This ****show is actually going to make it easier to get rid of some of this stuff because they can't depend on it having all the proper approvals. A control that maps an expenditure to an appropriation is great but that doesn't solve the inflated appropriation.

I posted this in another thread, but executive branch agencies follow Sarbanes Oxley type practices under OMB Circular A-123. There is also the Federal Managers Financial Integrity Act of 1982. There are requirements to have systems of internal controls, test them, report deficiencies, etc. There are also mechanisms in place to detect and report fraud (which is probably why all those Inspector Generals were fired).

That being said, you don't fix problems with systems...you need good people and accountability.

I'll also offer that improper payments does not always mean the money is gone and was not recovered. A duplicate payment on a subcontract is "improper" but that doesn't mean the money was not credited back.

Its ridiculous that Government is in charge of SOX enforcement and yet ignores similar common sense accountability steps.

I would recommend a couple of changes:

• Implementation in more than 18 months. Stretching this out across adminstrations means it never happens. That is the nature of bureaucracy. Jam it down their throats as quickly as possible. Name and Shame non compliance and foot dragging.
• Have the President or VP do a quarterly all-media live report on implementation...call out the waste and fraud exposed. Name prosecutions and enforcement actions resulting.
• SOX attestations has to go below agency chiefs. Drive it down in the organization. I required each of my Segment BU owners to attest and I reviewed their reports. A Segment owner that couldn't control his business couldn't lead a business.

japantiger said:

---

Its ridiculous that Government is in charge of SOX enforcement and yet ignores similar common sense accountability steps.

I would recommend a couple of changes:

• Implementation in more than 18 months. Stretching this out across adminstrations means it never happens. That is the nature of bureaucracy. Jam it down their throats as quickly as possible. Name and Shame non compliance and foot dragging.
• Have the President or VP do a quarterly all-media live report on implementation...call out the waste and fraud exposed. Name prosecutions and enforcement actions resulting.
• SOX attestations has to go below agency chiefs. Drive it down in the organization. I required each of my Segment BU owners to attest and I reviewed their reports. A Segment owner that couldn't control his business couldn't lead a business.

---

Don't you mean Salbanes-Oxrey, JAPANtiger?

Pinochet said:

---

BusterAg said:

---

Excellent post.

I did SOX 404 work in 2004 for long enough to know that I never wanted to do SOX work ever again. SARBOX is easier to get answers than SOX when thrown into Google. 404 has different meanings, like, uh, your page doesn't exist. You are not my audience.

You are right that the internal controls would be different for government entities. But, do you really think that a public company that had a payment system that allowed the reason for a major disbursement blank would pass a 404 audit?

---

Only if that was a key control and there was no compensating control. It's hard to imagine a situation where that's not a key control though. We don't have enough detail to know exactly what the process and the related control activities are, but I get your point.

---

If you are a government agency, being able to tie a disbursement to the federal budget is probably the most obvious key control. That is the primary reason for the existence of agencies, to use government money efficiently.

BusterAg said:

---

Pinochet said:

---

BusterAg said:

---

Excellent post.

I did SOX 404 work in 2004 for long enough to know that I never wanted to do SOX work ever again. SARBOX is easier to get answers than SOX when thrown into Google. 404 has different meanings, like, uh, your page doesn't exist. You are not my audience.

You are right that the internal controls would be different for government entities. But, do you really think that a public company that had a payment system that allowed the reason for a major disbursement blank would pass a 404 audit?

---

Only if that was a key control and there was no compensating control. It's hard to imagine a situation where that's not a key control though. We don't have enough detail to know exactly what the process and the related control activities are, but I get your point.

---

If you are a government agency, being able to tie a disbursement to the federal budget is probably the most obvious key control. That is the primary reason for the existence of agencies, to use government money efficiently.

---

I think you're saying the same thing I am, but key control has a definition under the SOX reporting regime. It has to be defined and the auditor is not able to define which are key and which aren't (the issuer defines their own controls). They have to assess the issuer's conclusions. Legislating things in a way that is incredibly prescriptive has its own problems.

Use Grok instead of chatGPT. Grok 3 was released today.

BigRobSA said:

---

japantiger said:

---

Its ridiculous that Government is in charge of SOX enforcement and yet ignores similar common sense accountability steps.

I would recommend a couple of changes:

• Implementation in more than 18 months. Stretching this out across adminstrations means it never happens. That is the nature of bureaucracy. Jam it down their throats as quickly as possible. Name and Shame non compliance and foot dragging.
• Have the President or VP do a quarterly all-media live report on implementation...call out the waste and fraud exposed. Name prosecutions and enforcement actions resulting.
• SOX attestations has to go below agency chiefs. Drive it down in the organization. I required each of my Segment BU owners to attest and I reviewed their reports. A Segment owner that couldn't control his business couldn't lead a business.

---

Don't you mean Salbanes-Oxrey, JAPANtiger?

---

hai

Logos Stick said:

---

Use Grok instead of chatGPT. Grok 3 was released today.

---

What CPT came out with was very good.

I might try Grok 3 to compare.

It's just that I know my way around GPT since I use it a bit. I haven't dusted off Grok yet.

There are plenty of people out there stress testing things to see what is better than what else.

But, just for the sake of avoiding stupid conflict arguments "Of course X's AI is going to support what he is doing", I thought it would be interesting to see what Google's AI said about what Musk is doing.

Pinochet said:

---

I think you're saying the same thing I am, but key control has a definition under the SOX reporting regime. It has to be defined and the auditor is not able to define which are key and which aren't (the issuer defines their own controls). They have to assess the issuer's conclusions. Legislating things in a way that is incredibly prescriptive has its own problems.

---

Okay, pretend that you are the head of the Dept of Treasury. Would you adopt the ability to tie a disbursement to an appropriation as a key control?

Sounds like that is pretty much codified in the Constitution. Congress makes the appropriations, Executive spends the money appropriated by Congress.

If not there, where would you start?

Quote:

---

BTW, my plan is to refine this proposal, making sure there are no factual inaccuracies, and email it to every senator or congressman that I think might find it interesting.

---

Great effort man.
Senators and Congmen are worthless POSs.

Send it to Trump and Musk.