Integrity, Objectivity, Independence, and O'Doul's

In this inaugural episode of Censored Ethics, Greg Kyte, and Adam Broud explore the intricacies of behavioral ethics. Learn why there is no such thing as perfect objectivity with a splash of independence and integrity.

Meet Your Hosts

Greg Kyte, CPA
Twitter: https://twitter.com/gregkyte
LinkedIn: https://www.linkedin.com/in/gregkyte/

Adam Broud
Twitter: https://twitter.com/adambroud
LinkedIn: https://www.linkedin.com/in/adam-broud-18870a198

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Transcript available upon request (email [e-mail]) 

Creators & Guests

Host

Adam Broud

Host

Greg Kyte, CPA

What is CENSORED Ethics?

Welcome to Ethics that doesn't suck! CPA and comedian Greg Kyte teams up with MBA and comedian Adam Broud to discuss the intricacies of behavioral ethics — sociological nudges that prime people to behave more ethically or less ethically. During their lively conversations, they draw on research from psychology and economics.

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Greg Kyte: [00:00:00] Our whole problem as accountants is to go, okay, we're like, we.

Adam Broud: [00:00:05] Feel like I'm just a hype man right now. I'm just like, Yeah, yeah, get him.

Greg Kyte: [00:00:11] Get him. What? What? So, So, okay, so our fundamental problem and we don't even admit it as accountants, our fundamental problem is we're absolutely not independent because our money, our paycheck comes from the person that they're saying, hey, they're like going, hey, here's a bunch of money. Now, how did these.

Adam Broud: [00:00:31] Oh, good. I was about to take my shot. Anyway, this is.

Greg Kyte: [00:00:39] Thanks for listening to Ethics. If you would like to earn behavioral ethics for listening to this podcast, there is now a premium course available for purchase on the earmark app. Just go to earmark cpe com or download the earmark app from the App Store or from the Google Play store. And now raise your glass to this episode of Ethics. Hello and welcome to Ethics. I'm Greg Kite. I'm a CPA licensed in the great state of Utah.

Adam Broud: [00:01:13] And I'm Adam bRowed. I earned my MBA from BYU, Brigham Young University in 2019.

Greg Kyte: [00:01:19] Awesome. And it's exciting to have someone representing Brigham Young University.

Adam Broud: [00:01:24] Yeah, the school that is. I just looked it up. 22 years we've been at the top of the stone cold sober.

Greg Kyte: [00:01:29] List and here.

Adam Broud: [00:01:30] You are. And here I am today.

Greg Kyte: [00:01:32] We do a whole lot of stuff together. This is this is the first podcast we've done together, but super excited about that. If this is your first time listening, just to get you up to speed, ethics is the only certified course where the presenters, me and Adam get while discussing the intricacies of behavioral ethics.

Adam Broud: [00:01:49] And today's episode is independence, objectivity, integrity and Irish.

Greg Kyte: [00:01:55] And we will both be taking seven. During this one hour course. So let's get into that with the first.

Adam Broud: [00:02:02] Yeah, yeah, yeah. Here we go.

Greg Kyte: [00:02:05] Very good.

Adam Broud: [00:02:07] Uh, smooth.

Greg Kyte: [00:02:08] So smooth.

Adam Broud: [00:02:09] Oh, man. And. And Greg purposefully put my lines right after. Right after? Yeah. Okay, We also have it burns.

Greg Kyte: [00:02:19] But it burns, Daddy.

Adam Broud: [00:02:20] We also have a third person with us today. Uh, we do. The wonderful Crystal Bulova is here as well. When she rings the bell, it's time for us to take another.

Greg Kyte: [00:02:30] Yep. And today we will be, as you might have guessed from the title of the episode, we'll be Hell-cat Maggie, which is an Irish.

Adam Broud: [00:02:39] And this is not a sponsor.

Greg Kyte: [00:02:41] And when we run out of the Irish, we've got a second.

Adam Broud: [00:02:44] Yeah, because.

Greg Kyte: [00:02:45] Clearly that's not.

Adam Broud: [00:02:46] Enough. Yeah, it's not going to be enough. So they're not a sponsor and BYU is not a sponsor. Exactly. This just.

Greg Kyte: [00:02:52] Just to keep everything above board. You need to know who's sponsoring this stuff. And it's not either of those. So we're getting right into it today. Adam Yes. Well, you're not a CPA, but you are an MBA. Yes. Did you take did you take accounting courses?

Adam Broud: [00:03:05] Oh, they are the ones that came closest to failing at Nice.

Greg Kyte: [00:03:09] But you're but you are a businessman.

Adam Broud: [00:03:11] Oh, yeah.

Greg Kyte: [00:03:12] And a stand up comedian.

Adam Broud: [00:03:13] Yes.

Greg Kyte: [00:03:14] And in your I'm sure in your accounting course, they did not get deep into the professional ethical requirements of the accounting profession.

Adam Broud: [00:03:21] They did not. I did HR for a while and we talked about some ethics stuff there, and then I switched to marketing and they were immediately like, Forget all ethics.

Greg Kyte: [00:03:29] There is no ethics in this.

Adam Broud: [00:03:30] No, They're like, if, you know, ethics do the opposite. That's what we do in.

Greg Kyte: [00:03:34] Exactly. That's what I assumed was happening in in all marketing.

Adam Broud: [00:03:37] It's not a secret is Yeah.

Greg Kyte: [00:03:39] Mad Men isn't that the entire the entire show Mad Men was based on that. Yeah. And on. So at least that part of it is part of where you came from.

Adam Broud: [00:03:46] Yeah. Those Mad Men light is what the show is.

Greg Kyte: [00:03:48] Exactly. So, Adam, in, in the accounting profession, there are there are three main pillars of professional ethics for accountants and those would be integrity, independence and objectivity.

Adam Broud: [00:04:02] Just like the beginning of the Constitution.

Greg Kyte: [00:04:05] Yeah.

Adam Broud: [00:04:06] We that.

Greg Kyte: [00:04:06] Yeah, that was the Declaration of Independence.

Adam Broud: [00:04:09] Oh, yeah, that one. Yeah. There's only here we go.

Greg Kyte: [00:04:13] And the other some other aspects of professional ethics for accountants include professional skepticism. When you hear. Do you even know what that is?

Adam Broud: [00:04:23] I mean, it sounds like a way to be like, I'm mean, but for my job is what it kind of sounds like. That's what it.

Greg Kyte: [00:04:28] Is. That's that's how I like to think about it, to where it's like, you're my client and you give me this stuff, but just be aware that I'm going to say, I think this is CENSORED until I prove it Otherwise to myself.

Adam Broud: [00:04:42] Greg feels like you're kind of being an CENSORED. That's why you pay me. And they're like, Oh, this guy and his ethics. What a great guy, right?

Greg Kyte: [00:04:47] Look at. Yeah, you're being. You're being a jerk. Well, it's in it's in the engagement letter that you signed that's on file. So you knew what you were signing up for. Good. Good. Another one is due care. That should make.

Adam Broud: [00:04:58] Sense. Child care. I get it.

Greg Kyte: [00:05:00] Yeah. You have to make sure your children are being properly. No, it's that basically, you're doing your job well. You're doing a thorough job.

Adam Broud: [00:05:07] Cool, cool, cool, cool.

Greg Kyte: [00:05:08] And then. And then competence.

Adam Broud: [00:05:10] Oh, yeah.

Greg Kyte: [00:05:10] So that's why you can't do accounting work. Not. Not just because you're not a licensed CPA.

Adam Broud: [00:05:15] Right. It's my incompetence in accounting.

Greg Kyte: [00:05:18] Not. Not in general.

Adam Broud: [00:05:19] Yeah, yeah, yeah. But in because you keep specifying, it makes me feel better. But. No, no, no.

Greg Kyte: [00:05:24] But you're a smart person. Oh, yeah, sure. Yeah. Me and your mom.

Adam Broud: [00:05:27] Got an accounting.

Greg Kyte: [00:05:28] Think you're a smart person, So. Okay, so. So here's what here's what we got to ask. What does integrity mean to you? Just if you were to define it to like, Man on the Street interview, If I came up and was like, hello, sir, what How would you define integrity?

Adam Broud: [00:05:42] Yeah, it's a conjugation of the word integral.

Greg Kyte: [00:05:45] Oh, so it has to do with calculus, which also you did a great job doing.

Adam Broud: [00:05:50] Is that not right?

Greg Kyte: [00:05:51] Take the integral of X to the third. Yeah. Minus three x squared minus. I actually have a math degree, so you're right.

Adam Broud: [00:05:58] That's why I'm trying to pull out of this joke immediately. Right.

Greg Kyte: [00:06:01] Which you should.

Adam Broud: [00:06:01] Integrity someone who follows through with what they say that they're going to do. But that doesn't work. Because if you're like, I'm going to murder you and then you murder them, I'm not going to be like, What a man of integrity.

Greg Kyte: [00:06:12] That guy, he really is. He's a man of his word. Yeah, right. No, that's. No, I get.

Adam Broud: [00:06:15] I get what you're saying. Kind of feels that way. Yeah, but a nice things and good things. Yeah.

Greg Kyte: [00:06:19] And and so I think in terms of accounting, like if we're just talking about integrity in general, yeah, I always view that as just sort of the, the super broad we are being, we're doing everything right like, like it's sort of the highest form of moral purity is, is integrity. Okay. And actually in the in the AICPA code of Professional Ethics, there is here's a pull quote that I have for that just in my back pocket because I teach ethics. And it it says that as CPAs, we're required to perform all of our professional duties with the highest sense of integrity, which is weird because often in my live classes, I'll quote that and then I'll ask people, I'll be like, So does that mean that as accountants we are required to be ethically? Are you perfect in what we do?

Adam Broud: [00:07:09] I mean, it sounds like. Yeah, yeah. Based on the definition. Yeah. Whereas all my marketing experience would be like, No one's perfect. Let's keep in mind, these are just loose guidelines. Rules are meant to break, right?

Greg Kyte: [00:07:23] Because in marketing you're like, we're purposely trying to manipulate people to do things they don't want to do. So let's just do that instead of be good people.

Adam Broud: [00:07:34] Yeah, right. Yeah. That's a pull quote from the marketing from the Ethical, Ethical Professional.

Greg Kyte: [00:07:40] Ethical Guide for marketing.

Adam Broud: [00:07:42] Give it a shot is what it kind of just says, you know, give me your best shot.

Greg Kyte: [00:07:45] Yes. Stop. Short of murder, maybe. Yeah. But if it helps push some product.

Adam Broud: [00:07:49] The follow the follow sentences. Just sales, sales, sales written in capital letters is what it is.

Greg Kyte: [00:07:55] Right on. So I would again, back when I do ask that question.

Adam Broud: [00:07:59] Do you have to be perfect?

Greg Kyte: [00:08:01] Right. My answer is yes, we are. We are. We're required to be because oh, here we go. Here we go. Yep. That was a quick seven minutes. We are going to get crazy, crazy fast.

Adam Broud: [00:08:14] The most amount of I've ever taken within an hour is two.

Greg Kyte: [00:08:17] Oh, right on.

Adam Broud: [00:08:18] So this is you're.

Greg Kyte: [00:08:19] There within seven minutes.

Adam Broud: [00:08:20] So don't ask me how much chocolate milk drink at BYU because it was outrageous.

Greg Kyte: [00:08:27] I actually well, we're not going to get into that. I was going to tell a story, but it take us off track. So integrity. So the way I answer that question, yes, yes, we are supposed to be ethically, ethically and morally perfect with what we do as accountants.

Adam Broud: [00:08:40] CENSORED, you're full of yourself there.

Greg Kyte: [00:08:41] There are people who push back, who say who say exactly what you it's like. But we're humans, so no one really expects you to be perfect.

Adam Broud: [00:08:48] And you say human calculators.

Greg Kyte: [00:08:50] Right? We're robots. So, yes, we are actually ethically and morally perfect as long as our programmer was. But but the the point is, is that we don't get redos with accounting. So if you commit in what way? If you commit fraud, you can't be like, Oh, I'm sorry, I'll pay it all back. You can't. I mean, that's not that's not part of if you lie on your report about a financial statement, on your opinion, on a financial statement, there's going to be investors who lose their investment in a company. And you can't just go back and go, You're right, I had a bad day, so sorry.

Adam Broud: [00:09:27] Whereas if you're a marketer, they're just like, Well, can you get away with it? That's what we that's what we ask. You know.

Greg Kyte: [00:09:32] This isn't for marketers.

Adam Broud: [00:09:34] Oh, who is my audience?

Greg Kyte: [00:09:37] It's a it's a count.

Adam Broud: [00:09:38] Oh, that's right.

Greg Kyte: [00:09:39] So but but that's a good point.

Adam Broud: [00:09:41] That's a lot of risk. So I'm assuming hence the point of like, no, like let's give this more than your best shot. And that's.

Greg Kyte: [00:09:47] Why licensed CPAs are required to get in most states for hours of continuing education, specifically on ethics every two years, whereas marketers required to get -four hours of ethics.

Adam Broud: [00:10:01] Training. Yeah, we we're supposed to go to the most morally corrupt places and hang out there for a couple hours. Okay.

Greg Kyte: [00:10:06] So as as CPAs, basically what they're wanting us to use our integrity for, because when you think CPA, do you think taxes or do you think financial statements, where does your mind go? Or is it kind of both?

Adam Broud: [00:10:17] I think I think financial statements mostly, yeah.

Greg Kyte: [00:10:20] Good. Because and that's obviously integrity does need to apply to tax returns. If you're doing tax returns, which I do what you do your own taxes.

Adam Broud: [00:10:28] Yeah. Well, with the assistance of.

Greg Kyte: [00:10:31] Don't say it they're not a sponsor the.

Adam Broud: [00:10:33] Devil.

Greg Kyte: [00:10:36] And so so yeah, so obviously integrity should apply to that too. But where as CPAs what we're licensed to do that other people can't do is do audits of financial statements, audits and reviews and compilations of financial statements. So when it relates to financial statements, what and another you're.

Adam Broud: [00:10:51] All double checking each other's work, though. Yes. So if you all agreed not to be not to have integrity. Right. I'm not going to put that an idea in your head. I'm just saying. Loophole. Right. We can keep going.

Greg Kyte: [00:11:00] Oh, don't don't get me started. There's so many ways that you can conspire with other people to break the rules. But that's what we're saying.

Adam Broud: [00:11:07] But that's why you're having this lesson. You're not supposed to.

Greg Kyte: [00:11:10] Highest level of integrity with all of our professional duties. Cool. So what they're. So when we look at financial statements, what the public is expecting us is expecting from us. And the public trust is also another aspect of our professional ethics is that we're supposed to make sure that we are good to the public because they're trusting us to be good too.

Adam Broud: [00:11:31] I'm only now realizing that accountants really think the world is looking at them as like, man, the backbone of America. I got to tell you, you're one of my closest friends. I still never think about accountants. Yeah, but that's great that you guys are putting so much effort into it. Because it's true. My world would fall apart if you weren't.

Greg Kyte: [00:11:47] But it's. Yeah, because it's a big CENSORED deal. Because.

Adam Broud: [00:11:49] So, I mean, yeah, I like getting paid in an honest way and I want my taxes to be done in an honest way. So it makes sense. It's just something I never think about.

Greg Kyte: [00:11:56] Well, and even even going bigger picture with that. One of the things like trust makes commerce work. If no one trusts anyone, no one will do commerce with anyone else.

Adam Broud: [00:12:07] Oh, that makes sense. So.

Greg Kyte: [00:12:08] So. And we're talking. What we do helps establish that trust on a big level. On, you know, specifically on this. A lot of times we're talking about public markets, but not just that. I have to get at my day job. I got to get I don't work at a CPA firm. I work in-house for a group of medical office buildings. Right, right, right. And we have to get our financial statements reviewed, which isn't it's like there's an audit which is like super intense and then a review which is much less intense where they just don't look quite as thoroughly into everything. Oh yeah. Guess. Yeah. But if someone's.

Adam Broud: [00:12:36] Double checking your work.

Greg Kyte: [00:12:37] Exactly. And, and we're required to do that by our bank. The bank requires of us because the bank has to trust that we're going to repay them for the, you know, 20 plus million dollars of loans that we have with Zions First National Bank, Inc..

Adam Broud: [00:12:51] Exhausting, but necessary. Yeah, right. Yeah. Because yeah, that all makes sense because no one would do commerce. I hate anytime I go on vacation, I have to do bartering with people where they're like, Buy this jacket. I'm like, for how much? And they're like, for how much do you think? And I'm like, 20 bucks. I'm like, Wrong, 200 bucks. I'm like, This isn't going well at all, right?

Greg Kyte: [00:13:10] Right. And a lot of that, again, the bartering comes from because there's no trust.

Adam Broud: [00:13:13] No trust at all with anyone.

Greg Kyte: [00:13:15] Yeah.

Adam Broud: [00:13:15] They think I have $1 billion in my pocket. I think they made that for, like 20 bucks, right?

Greg Kyte: [00:13:20] Yeah, exactly. So and then so the public relies and this is the funny thing, too. The public relies on the auditor's opinion of the financial statements, which I always think is funny, that it's specifically worded as it's our opinion on their financial statements. It's not. We're not and it's our opinion on the honesty or that the financial statements are correct. And so we're not just we don't say, yes, these financial statements are correct. We go our opinion is that there, which is like we're trying to distance ourselves a little bit of it because we could be wrong.

Adam Broud: [00:13:50] This guy.

Greg Kyte: [00:13:51] For me, I mean, there's opinions and there's facts. And my opinion is, yeah, these are great.

Adam Broud: [00:13:56] Well, that's a very that's a that's a very integrous. Is that the word response?

Greg Kyte: [00:14:01] Integrous It is. Now people know what you're saying. Good.

Adam Broud: [00:14:04] That's right. To be like. I mean, my opinion is that it? Yeah, it looks right to me.

Greg Kyte: [00:14:09] Right. And it's like you can't get into every single transaction for a company for entire. And that's why.

Adam Broud: [00:14:13] But it's funnier to think of you just looking at a guy and being like, Look at this guy. I trust him.

Greg Kyte: [00:14:18] My opinion is.

Adam Broud: [00:14:19] My opinion is.

Greg Kyte: [00:14:20] But but I have professional skepticism. So really, I'm supposed to go and go? I don't trust this guy. Prove me wrong.

Adam Broud: [00:14:26] Look at this guy. There we go. Same sentence, different tone.

Greg Kyte: [00:14:28] So my opinion that the public needs me, they they want to make sure that I'm honest, that my opinion is honest, that if I really think it's some financial statements and I go, okay. And I go, these are great financial statements. That's there. Right there. It's the.

Adam Broud: [00:14:44] Most I've ever.

Greg Kyte: [00:14:45] Done. That's it. You're in a new. You're in a new whole new world. Wow. That if I say these are good financial statements, when I truly know that they're crappy financial statements, they want to know that I'm being honest, that they're. So that's a big part of integrity. The other thing is, and this goes back to the due care kind of thing, when I say these are good financial statements, they want to make sure that I've actually done the work to have to actually have an opinion. Sure. That I you know, because you can't just go, well, I haven't looked at anything. Yeah. But, you know, I watch, you know, I do a lot.

Adam Broud: [00:15:17] Of in my opinion, I have a lot of work to do.

Greg Kyte: [00:15:18] I pray I well, I prayed about it. I prayed. And and it says these are good financial.

Adam Broud: [00:15:23] It was revealed unto me that this is fine.

Greg Kyte: [00:15:25] So so that's not really what the, the, the public wants. Yeah. But that's what they do. They don't want, they don't want us praying about it. They want us actually looking at it. That's what I'm saying. Sure. So I do care.

Adam Broud: [00:15:35] Do care. Do care.

Greg Kyte: [00:15:36] Yeah. So next thing.

Adam Broud: [00:15:37] Do you.

Greg Kyte: [00:15:38] See? Let's get it. We're three shots in. Are you feeling it at all?

Adam Broud: [00:15:41] Oh, yeah. Are you? I'm having a great time. Good. I feel warm. I feel nice.

Greg Kyte: [00:15:45] I definitely feel warm. And this is some good, too.

Adam Broud: [00:15:48] I'd probably cuddle with most people. Right? This is how I feel.

Greg Kyte: [00:15:51] And we're apart from the table. So maybe afterwards.

Adam Broud: [00:15:53] Only a table separates us right now.

Greg Kyte: [00:15:56] So objectivity. What do you think objectivity is?

Adam Broud: [00:15:59] That's when, like, babies, See, I love you, man. See a thing, and then you cover it up and they're like, It's still there, right?

Greg Kyte: [00:16:07] Right. Yeah. Object permanence. It's like when. When I close my eyes, the financial statements still exist.

Adam Broud: [00:16:12] Yeah, yeah, yeah. Objectivity. Permanence. Yeah.

Greg Kyte: [00:16:15] Objectivity. No, not close. But I like.

Adam Broud: [00:16:18] That. Thank you.

Greg Kyte: [00:16:19] That's good.

Adam Broud: [00:16:19] That's why you're telling everyone that's close.

Greg Kyte: [00:16:21] That's why you're the jokes guy.

Adam Broud: [00:16:22] Not enough to know when Greg's lying to me. Object.

Greg Kyte: [00:16:26] Object. Objectivity, obviously, is not that objectivity. And here's So I looked up just in case I wouldn't be able to pull it up from my own brain at this point in the podcast, objectivity means dealing with facts and or conditions as perceived without distortion by personal feelings, prejudices or interpretations.

Adam Broud: [00:16:47] So that's you guys think in your robots again what it feels like.

Greg Kyte: [00:16:50] Dude, that's so much of the job is to be human robots. And you're kind of pushing a button because one of the major fears in the accounting profession is that our jobs will be taken over by computers and robots.

Adam Broud: [00:17:01] Oh, sure.

Greg Kyte: [00:17:02] Which, you know, does kind of make sense because even like we were saying, I mentioned you can't you can't analyze every single transaction for an entire year. Well, guess who could?

Adam Broud: [00:17:11] A robot robot.

Greg Kyte: [00:17:12] Could. But again, they have to be programed, right? And we're not there right now. So until robots take over, we still have to be good people. And human robots, I guess. Yeah, but. But objectivity. Well, here's here's the thing. Um, so the question, the next question of the day is this Can you have integrity if you're not objective, do you think?

Adam Broud: [00:17:32] I think, yes, mostly because I don't think you can hit true objectivity because I'm a psychologist. So I have a psychology background. Right.

Greg Kyte: [00:17:42] And tell me about your psychology background.

Adam Broud: [00:17:45] So one of the things I hate most when I was in business school was all these guys who are like, What if you just think about it logically, thinking as if your brain can like, shut off all emotions. Impossible, right? Thoughts are emotion and in fact, prioritizing logic is just prioritizing different emotions over other emotions. So the idea of having pure objectivity get bent suckers. You can't do it. You can't. It's impossible.

Greg Kyte: [00:18:09] Right? That's that's awesome. So basically, you're saying as much as accountants want to be human robots at the core, we're not human robots.

Adam Broud: [00:18:16] No. And you should embrace your humanity.

Greg Kyte: [00:18:18] Should. Are we cuddling yet?

Adam Broud: [00:18:19] I'm trying.

Greg Kyte: [00:18:22] Um, the. Wait. So what was it? Oh, right. So can you. Can you have integrity if you're not objective and you're saying you're saying yes because otherwise integrity be impossible. Because you're saying objectivity. True. True. Like faultless objectivity is impossible.

Adam Broud: [00:18:38] Yes. And it feels like the the catch would be maybe you should acknowledge your biases and like try to correct for them, but acknowledge that they could slip in or possible biases as well. Right. I, I would assume would be part of objectivity where if you're looking at something, you're like, Hey, yeah, this all looks correct to me. That being said, I do agree with this organization or I used to work for this organization, still have ties to it. So therefore that could be a potential bias of mine. But I tried to set it aside for this as best I could.

Greg Kyte: [00:19:08] Right. Gotcha. And so and we're going to get that to that a little bit later actually in the discussion because there are some very specific rules.

Adam Broud: [00:19:14] I think there could be accountant if you plan that later and already found the answer, you're really.

Greg Kyte: [00:19:18] Like, you know, you're you're you're teeing up all of this stuff here. Here's why here's one of the things why I think integrity. Well and let let's for now let's table the possibility that objectivity is impossible. Okay okay let's let's say that it is possible to be objective.

Adam Broud: [00:19:36] The thought experiment.

Greg Kyte: [00:19:37] Okay. But but if you could be objective. Is can you have integrity with. Well, I am a little bit feeling these right now. Could you have integrity if you're not objective? Here's and here's here's the thought experiment I want to say. Let's say you're let's say you put your child. Asher Yes. In a beauty pageant. Sure. Okay. And he and so he.

Adam Broud: [00:20:01] 22 do what you want, man.

Greg Kyte: [00:20:02] Yeah. And so he so he is he's in a beauty pageant. How old is.

Adam Broud: [00:20:06] Asher? He's turning four next week.

Greg Kyte: [00:20:08] Right on. He's. And he's adorable when I.

Adam Broud: [00:20:10] Went to when I went to haircut but so cute he's.

Greg Kyte: [00:20:12] He's Yeah I didn't I never seen him with glasses till this morning.

Adam Broud: [00:20:16] Oh yeah he's because he's a very irresponsible three year old. Wait, what.

Greg Kyte: [00:20:19] Oh but it's a three year old listening glasses is an adorable, super cute. And today he was showing me his dragon. Yeah, he was showing me a raccoon. I go, Is that your raccoon? And he goes, No, this is someone else's raccoon integrity.

Adam Broud: [00:20:30] It wasn't his raccoon. It was his cousin's raccoon.

Greg Kyte: [00:20:32] He wasn't lying to me. No, but. But if so, if.

Adam Broud: [00:20:36] Asher Beauty pageant.

Greg Kyte: [00:20:37] Isn't a beauty. Thank you. Yeah. Got you. That's where. That's. I don't feel like it's affecting me, but my train of thought is definitely that.

Adam Broud: [00:20:44] Raccoon seemed so important. It was super.

Greg Kyte: [00:20:46] Important. And his glasses, because he's adorable. It's so important.

Adam Broud: [00:20:51] Back on the beauty pageant.

Greg Kyte: [00:20:53] So Asher is in a beauty pageant. And. And this. This would not happen to Asher.

Adam Broud: [00:20:57] But am I judging.

Greg Kyte: [00:20:58] It? No. No, you're not the judge. But but here's the thing. You you have to. So the judges are like, we are sorry, but Asher is the ugliest child.

Adam Broud: [00:21:07] So help.

Greg Kyte: [00:21:08] Me. Seen in our lives. Now you have to give your opinion to the public, to the markets, to the markets of the United States of America on which your 401 (K) relies. You need to give your opinion. That was This is number four.

Adam Broud: [00:21:25] Not good.

Greg Kyte: [00:21:27] You have to give your opinion on whether or not you think on the on the honesty and the accuracy of those judges opinion.

Adam Broud: [00:21:36] I'm auditing them.

Greg Kyte: [00:21:37] You're auditing their opinion of your son.

Adam Broud: [00:21:39] To pay.

Greg Kyte: [00:21:40] Can you can't That's the thing Can you have. Can you have integrity?

Adam Broud: [00:21:44] Could I? Yes. Do I want to? In that moment? Absolutely not.

Greg Kyte: [00:21:47] Okay.

Adam Broud: [00:21:48] My boy is beautiful.

Greg Kyte: [00:21:50] Well, yes. And my children are beautiful as well. And everyone's all God's children are beautiful. Good. Four shots in.

Adam Broud: [00:22:01] Air that's finally found acceptance.

Greg Kyte: [00:22:03] We we did. That's it. And so so really with that, anything that comes back other than your child is a glorious gift from God. Yeah. Would be if they're like anything other than that you would have to give a quality you'd have to give an adverse opinion. Yeah. To that saying.

Adam Broud: [00:22:22] Sure.

Greg Kyte: [00:22:23] So if someone else's ugly child got up and they said, This is the most beautiful child on the world, could you be have integrity with that?

Adam Broud: [00:22:32] I think well, I think in that scenario, I would be I would be fine with that one because someone else's beauty does not reflect on Asher's beauty. So that's fine.

Greg Kyte: [00:22:42] And your objective in that case? Yeah. Yeah, exactly. So and that's and that's what we're getting to, is that, is that with if you're objective, you're if you're not objective, your integrity is going to be called into question.

Adam Broud: [00:22:53] Sure. Understandably so.

Greg Kyte: [00:22:55] Yeah. And which which even comes back to a bigger like.

Adam Broud: [00:22:58] But anyone who saw my child and said he was not beautiful their integrity would also be.

Greg Kyte: [00:23:02] Especially after you give me four shots and say my kid's ugly and maybe you forever.

Adam Broud: [00:23:09] Absolutely.

Greg Kyte: [00:23:10] So this is the this is the only certified behavioral ethics course that's full of swears.

Adam Broud: [00:23:15] Full of swears.

Greg Kyte: [00:23:16] Full of the swears. Okay. So let's get let's get into let's start talking about why objectivity is impossible.

Adam Broud: [00:23:23] Just want to point out your notes here. Say hot or not, says your kid is ugly. And I love that it's specifically hot or not. That's very fun.

Greg Kyte: [00:23:31] Oh, that's what I put in the notes that because that was the thing. That's like a thing.

Adam Broud: [00:23:34] Yeah, it used to be for sure, right? Yeah.

Greg Kyte: [00:23:36] Is it is there something like. Is there something like a hot, hot or not anymore?

Adam Broud: [00:23:40] I hope.

Greg Kyte: [00:23:41] Not. Yeah. Is kind of hot tinder.

Adam Broud: [00:23:43] That's true. We outsourced it, right?

Greg Kyte: [00:23:44] Yeah.

Adam Broud: [00:23:45] Yeah. Okay.

Greg Kyte: [00:23:46] All right. Well, we raised the stakes. We were on Tinder is what it is. Because it's not just random people who are saying you're hot or not. It's people that you were hoping.

Adam Broud: [00:23:54] Who have to have an investment to.

Greg Kyte: [00:23:56] Have. Yeah. To have a relationship. Yeah. It's kind of like the the markets or there's more of a there's more at stake on Tinder than.

Adam Broud: [00:24:03] On hot or that increases or decreases or objectivity. But I don't know that Tinder really cares about that.

Greg Kyte: [00:24:08] Yeah well you know, I did look into the prospectus for a tinder holding and heavy Machinery Inc, and they they do have they do have a commitment to integrity.

Adam Broud: [00:24:23] Oh, good.

Greg Kyte: [00:24:24] So here's some reasons why.

Adam Broud: [00:24:26] No idea what that just meant. Objectivity.

Speaker3: [00:24:30] How many.

Greg Kyte: [00:24:30] Are we? Four. We're 4 in 4.

Adam Broud: [00:24:33] Just over half way.

Greg Kyte: [00:24:34] Okay, so next. Next thing I need to know.

Adam Broud: [00:24:36] Crystal. You're so pretty. I just want you to know that.

Greg Kyte: [00:24:38] She is.

Adam Broud: [00:24:39] So. She's.

Greg Kyte: [00:24:40] She's gorgeous. Oh, I tell you what. If anyone said anything other than that right now. Oh, it's time is over. If that happened over.

Adam Broud: [00:24:52] Grapple, time replaces cuddle time.

Greg Kyte: [00:24:54] Okay, here's I came up with three reasons. You're a psychology major. Yes. Well, you actually undergrad.

Adam Broud: [00:25:00] And one year of a PhD.

Greg Kyte: [00:25:01] There you go. So you are. You're my therapist right now. Sure. There's three things I identified.

Adam Broud: [00:25:06] For what type of psychology. But sure.

Greg Kyte: [00:25:09] Here's here's three, three reasons why I think objectivity is like. Like perfect objectivity. Go on is impossible. One of them is confirmation bias. Tell me what confirmation bias is.

Adam Broud: [00:25:20] Confirmation bias is when a priest in the Catholic Church has confirmed to be a priest and everyone's like, Is this even legit? And they're like, Absolutely. It is. And people are like, That's confirmation bias, right? Secondarily, confirmation bias is when.

Greg Kyte: [00:25:35] You don't know much at all about Catholicism.

Adam Broud: [00:25:38] Though I have no idea about Catholicism. I've been I I've been to mass so many times, though. That's true. Have you? Oh, so many times. I've been.

Greg Kyte: [00:25:46] Like once to like a Catholic.

Adam Broud: [00:25:47] Mass at least. Well, at least two dozen, which doesn't sound like much, but ask any Catholic. And they're like, that's about as much as I've been as well.

Greg Kyte: [00:25:55] So I thought you were going to say Ask any Mormon. And they haven't been there nearly that many, even less. But yeah.

Adam Broud: [00:26:01] Not their religion. No. Good point. Confirmation bias is also when you find things that just agree with you and you're just like, Oh yeah, see? That's right. Because that was my opinion. And my opinion is is right.

Greg Kyte: [00:26:12] Yeah, right. Yeah, I think so. Like the way I think about it is if you. So let's say we spread out the evidence for or against, let's just say financial statements again because that's what we're talking about. Sure. So let's say we spread out all the evidence on this table about I.

Adam Broud: [00:26:27] Don't have a clue of what it says because like I said, I nearly failed accounting.

Greg Kyte: [00:26:31] It's okay. I'm here.

Adam Broud: [00:26:32] I got you. Oh, thank.

Greg Kyte: [00:26:32] Goodness. So we spread it all out and there's certain things that that might indicate that the financial statements are accurate and certain things that might indicate that the financial statements are not that accurate.

Adam Broud: [00:26:42] Probably the.

Greg Kyte: [00:26:43] Numbers. And if I go in it going going this.

Adam Broud: [00:26:49] That was a pretty funny joke. It was as soon as I said almost interrupted, it was like that. Didn't get any laughs, but pretty funny joke.

Greg Kyte: [00:26:56] That was pretty funny joke. Um, and I and I latch on to something like whatever, whatever. I'm assuming at the beginning that these financial statements are correct or that they're incorrect. Confirmation bias says that once I like it could be like so let's say my, my bias is that they're not correct. Okay? And I go along and I say, so this thing shows that they're correct. This sort of shows they're correct. This this is an indication that. Correct. This is an indication of correct. This is an indication they might be incorrect.

Adam Broud: [00:27:25] Correct.

Greg Kyte: [00:27:26] And then the one that says they're incorrect, I go, see, I told you.

Adam Broud: [00:27:30] They're.

Greg Kyte: [00:27:30] Incorrect because right.

Adam Broud: [00:27:31] There, classic confirmation.

Greg Kyte: [00:27:32] Bias. Confirmation bias. Even though I was like, I kind of poo poo the.

Adam Broud: [00:27:36] Ones I wish I had confirmation bias. But every time I looked into it, it's clearly I just don't you know, all the research indicates I don't have any confirmation and, you know, wish it was different. But it is what it is, right? I'm a perfect person.

Greg Kyte: [00:27:51] That's good. And which is why I had you on the podcast. Yeah. Okay. The next the next psychological bias. Yeah. That I'd like to talk about is the contrast.

Adam Broud: [00:28:02] Of contrast effect.

Greg Kyte: [00:28:03] Do you know the contrast effect? I had to look. It was in my notes.

Adam Broud: [00:28:06] Contrast effect. You wear mostly one color, you do one color that clashes with it, but only to draw attention to the opposite sex. It's similar to peacocking. Let's.

Greg Kyte: [00:28:13] Oh, Oh, I forgot to pour my next one. Hang on. I'm behind.

Adam Broud: [00:28:17] No, hang on.

Greg Kyte: [00:28:18] It's so. So confirmation bias is peacocking.

Adam Broud: [00:28:23] Uh, no, no, no. We're on contrast, contrast, effect.

Greg Kyte: [00:28:27] Contrast, effect. Is is is not that. That's okay. Right? But that is. What it might be in the in the fashion world. Yeah. If this was the.

Adam Broud: [00:28:38] Contrast of.

Greg Kyte: [00:28:38] Ethics for fashion.

Adam Broud: [00:28:41] For fashion we established at the beginning, I like to hit a broader market than you do.

Greg Kyte: [00:28:45] True.

Adam Broud: [00:28:46] But what is it for accountants contrast effect? Well, it's not anything for accountants.

Greg Kyte: [00:28:49] It counts. Don't know what the hell contrast effect is. It's something for psychologists.

Adam Broud: [00:28:52] It's so I've never I don't think I've ever heard of this.

Greg Kyte: [00:28:54] You haven't heard of it? Oh, okay. Well, it's very it's a very simple concept. It's that it's that like, let's say let's talk about like just I mean, again, people being handsome, like the hot or not sort of thing. Sure.

Adam Broud: [00:29:06] Like, let's not talk about kids in this.

Greg Kyte: [00:29:08] No, I'm going to talk about you. Please. So I would say you, Adam Broad and this isn't just because I've had now five of you're a handsome fella.

Adam Broud: [00:29:17] I'm a I'm a handsome fellow at three. You ask me and.

Greg Kyte: [00:29:22] I would say objectively, you're a handsome person.

Adam Broud: [00:29:25] An objective six. Okay.

Greg Kyte: [00:29:27] Back at you to talk about. Talk about me.

Adam Broud: [00:29:29] Now let me go.

Greg Kyte: [00:29:31] This one. What?

Adam Broud: [00:29:32] Oh, you want me to say your objectively handsome?

Greg Kyte: [00:29:35] No. Tell me what you objectively. How do you think I look? Objectively handsome?

Adam Broud: [00:29:39] Yeah. I don't know if people are going to see this, but Greg is, like, super fit.

Greg Kyte: [00:29:43] Oh, well, well, dang. Thanks. So now.

Adam Broud: [00:29:46] He cares about his.

Greg Kyte: [00:29:47] Body. So let's talk about for you. Okay, So let's talk about fit. So, yeah, I work out every day. Every day. Well, five days a week, every weekday, every weekday for about 90 minutes. Lifting some weights. Goodness, I feel pretty good about my.

Adam Broud: [00:29:59] No one can see this, but Crystal is nodding her head so enthusiastically at this. But she's like an I watch on the sidelines.

Greg Kyte: [00:30:05] And and and and crystal like she likes my my my arm muscles, my biceps.

Adam Broud: [00:30:11] My wife's an arm person as well. Yeah. So please only wear long sleeve shirts. That's why.

Greg Kyte: [00:30:15] I do. That's why I cover up when I come to the Browde household.

Adam Broud: [00:30:18] Good. That's, uh. That's integrity.

Greg Kyte: [00:30:20] But put me listen. Put me next to Dwayne the Rock Johnson, and I'm a noodle armed child.

Adam Broud: [00:30:30] That's true.

Greg Kyte: [00:30:31] Compared to him. That's the contrast effect. Yeah, because you could. So you wouldn't. He wouldn't.

Adam Broud: [00:30:35] Even like. I wouldn't even be worthy to be his weights. He could curl me so easy.

Greg Kyte: [00:30:39] Oh, yeah. He like it would be dust on the scales which again is actually it's funny you mentioned that because I bet you I'm probably a good at least 60 pounds heavier than you are.

Adam Broud: [00:30:51] I'm 180.

Greg Kyte: [00:30:53] Okay. Make that.

Adam Broud: [00:30:53] 185.

Greg Kyte: [00:30:54] Yeah. 60. Yeah. I'm 60 pounds heavier than you.

Adam Broud: [00:30:57] Nice all muscle.

Greg Kyte: [00:30:58] Which means. Which means these have a whole lot of me that they got to affect than you. You're at a you're at a disadvantage when it comes to hell-cat.

Adam Broud: [00:31:06] Maggie are surging through the skin and bones so quick.

Greg Kyte: [00:31:10] But it's me who can't keep my mind like going on. So. Okay. Contrast effect. So here's the thing. So if if.

Adam Broud: [00:31:16] My liver is cleaner than yours.

Greg Kyte: [00:31:17] If you look at me, I imagine it is. You look at me compared to Dwayne the Rock Johnson. Sure. I'm a noodle armed child. If you look at me. Compared to that guy from Napoleon Dynamite. Oh, yeah, Yeah, I'm. I'm frigging Mr. Universe. Oh.

Adam Broud: [00:31:32] Because you're comparing and contrasting these two things, and.

Greg Kyte: [00:31:35] That's the contrast effect. Sure. So even so, and that affects objectivity is that if you're looking at I'm for sure.

Adam Broud: [00:31:42] Because I can't see the connection. Keep going.

Greg Kyte: [00:31:43] Well, here's the thing. So let's say the last engagement I was on, okay, those those people's books were just horrible. Like there was so much there was just so much wrong.

Adam Broud: [00:31:54] On round two.

Greg Kyte: [00:31:55] It was Enron times two, round two. That's how bad those guys, those guys books were. And now I come to another company. And their books are bad. Okay, but. But. But I just came off of the world's worst engagement with the worst books. So you're like, Can I objectively, can I objectively give an opinion about this next set? You better. You're an accountant, right? And I'm a human robot. And like you said, that's possible.

Adam Broud: [00:32:20] These are the. Did I?

Greg Kyte: [00:32:23] But ultimately, if the last engagement I had was super bad. No.

Adam Broud: [00:32:29] Was amazing. Oh, was amazing.

Greg Kyte: [00:32:30] Everything was absolutely perfect. Like, I had no golden I had no notes. I had no, uh, no adjusting journal entries that I request that they record in the financial statements. I don't have.

Adam Broud: [00:32:41] Any reverse Enron examples to give.

Greg Kyte: [00:32:43] If this was.

Adam Broud: [00:32:44] The cleanest accounting doesn't show up in the news as frequently, right?

Greg Kyte: [00:32:47] Not. Not nearly as much. I don't. I actually don't either. I was like, you know.

Adam Broud: [00:32:50] What? I do have, I don't.

Greg Kyte: [00:32:51] Know, Utah Valley Medical offices. Oh, that's my company. Nice. So let's say you just came off of when the when the when the auditors come off of my review, the next people, they get thrown in the toilet because compared to my books, their books are crap. Yeah. Pure CENSORED. And then and again. So either way, that's so confirmation or not confirmation. Contrast effect. Yeah. Is a way that you can't that's going to impair your objectivity.

Adam Broud: [00:33:20] I feel like contrast I feel like we've been talking about this for ten minutes like time has extended and I. Yeah.

Greg Kyte: [00:33:28] And the listener feels the same the next the next psychological bias. Bias, Blind spot. Blind spot. Do you know bias Blind spot I love I.

Adam Broud: [00:33:36] Know what a literal blind spot is. What's a literal blind? There's a point in your eye that no, that for your optical nerve connects to your eyeball in the back. Yeah. And so when the light hits it, it is a spot in which your eye cannot see. So your mind just fills in the gaps instead. Yeah, yeah. That is your blind spot, which you can test. And it's super fun. It is super.

Greg Kyte: [00:33:55] Fun. I did that like in ninth grade. It was. It was. It was like trippy.

Adam Broud: [00:33:58] Oh, I love.

Greg Kyte: [00:33:58] I cover this eye and then look at this dot and the other dot goes away.

Adam Broud: [00:34:01] And when I taught, I taught psychology at the University of South Florida. And it was my favorite thing to teach because I could skip to biases so easily, I'd be like, okay, so if you cannot trust even your senses, such as your eyeballs in certain situations, how could you completely trust your outlook on life? Right, Right.

Greg Kyte: [00:34:19] Well, okay, it's. Which is exactly kind.

Adam Broud: [00:34:22] Of why turning my head feels so good right now. But. But how many.

Greg Kyte: [00:34:26] Are we in so far? We're still.

Adam Broud: [00:34:28] Five. I believe we have two.

Greg Kyte: [00:34:29] More than two more. Two more.

Adam Broud: [00:34:31] I have never been this in my life.

Greg Kyte: [00:34:32] Really? Oh, we're going to have to make sure you're hydrated just because I care about you. Thank you. So you've got water? I've got some. I got some Gatorade. But we got. But we got here. Listen. So blind spot. Yeah. Bias blind spot is is is kind of what. Tell me if this is what you're saying because I don't know if I totally understand things right now, but Bias blind spot is where it's the idea that you listen to things like you said it before contrast or the confirmation bias and you're like, confirmation bias doesn't work for me.

Adam Broud: [00:35:02] Yeah, I don't have it right.

Greg Kyte: [00:35:03] But that's that's bias blind spot where you read about all these things, you go, I'm smarter than that. Yeah. It's so which really. Okay, we were five and now we're six in cheers.

Speaker4: [00:35:13] Mhm.

Greg Kyte: [00:35:14] So bias blind spot. And I think marketers must love this because I, I think about the bias blind spot with marketing a ton where it's like it's like if you do these things, it's going to nudge people to buy your product. And I read about that and I go, That doesn't work for me. I only buy the stuff that I want. That's bias blind spot. Or it's like confirmation bias. You only the stuff that that reflects what you want it to say. That's the stuff you're really going to pick up on. You go, Yeah, I get it that that's the case. But I'm smarter than that. Yeah, and that's. But you're not. I'm not. And the research says that I'm not, but I. But I truly. It's so dumb because even with bias blind spot I go that that's. That doesn't. That's not you.

Adam Broud: [00:35:55] You have to be a perfect accountant Greg nice try. Right.

Greg Kyte: [00:35:59] So we have all those things.

Adam Broud: [00:36:01] All of them.

Greg Kyte: [00:36:01] And all of those impair our objectivity.

Adam Broud: [00:36:05] Your humanity is working against you. It is.

Greg Kyte: [00:36:07] My. What?

Adam Broud: [00:36:08] Your humanity is working against you.

Greg Kyte: [00:36:10] It is? Absolutely.

Adam Broud: [00:36:12] You managed whiggish.

Greg Kyte: [00:36:14] You. So. So here's. So again, let's go back to the humanity.

Adam Broud: [00:36:18] Let's bring in.

Greg Kyte: [00:36:21] Going back to the beginning.

Adam Broud: [00:36:22] Yeah.

Greg Kyte: [00:36:23] There's three main pillars of ethics for the accounting profession. There's integrity, huh? There's objectivity. There's integrity, which. Well, actually, let's, let's, let's review this. Integrity. Integrity, which is like being morally and ethically perfect. And we were like, that's not. That's aspirational. Yeah.

Adam Broud: [00:36:41] Good luck, dude.

Greg Kyte: [00:36:42] There's objectivity.

Adam Broud: [00:36:44] Object, permanence.

Greg Kyte: [00:36:45] Which objectivity is also not like. Not like perfect objectivity. Not possible. We're all affected by bias.

Adam Broud: [00:36:52] Possible. None of this is possible. The world's lost.

Greg Kyte: [00:36:55] And the third one? No, it's not lost.

Adam Broud: [00:36:57] It was the third one. Stark depression.

Greg Kyte: [00:36:59] Okay, I know you're being funny.

Adam Broud: [00:37:00] I'm not.

Greg Kyte: [00:37:01] But do you think the world's lost because we can't have objectivity?

Adam Broud: [00:37:04] No, it's integrity. Humanity is a beautiful thing, and it's underappreciated even by those who experience an everyday life.

Greg Kyte: [00:37:10] So the third thing I have to really lock down now, because you're gonzo.

Adam Broud: [00:37:14] I'm not.

Greg Kyte: [00:37:15] Yeah. So the third one is independence. Listen to me.

Adam Broud: [00:37:18] The third one is independence. Third one's the Declaration of Independence.

Greg Kyte: [00:37:21] It is. And what right. It's. I had a joke about that, but I can't remember it now.

Adam Broud: [00:37:26] Um. Thomas Jefferson. Not integrity. No integrity.

Greg Kyte: [00:37:30] Well, wait. What was it? We didn't. Uh. Oh, Here's. Here's here's the joke. Um, so. So the question is this. Can you have integrity? Sorry. Can you have.

Adam Broud: [00:37:40] Focusing now.

Greg Kyte: [00:37:41] Greg, Can you have independence without objectivity?

Adam Broud: [00:37:45] Can you have independence?

Greg Kyte: [00:37:46] Can you be independent if you're not objective?

Adam Broud: [00:37:49] I don't know. In my brain, those words work so independently that they're not even connected. So. So, uh, this is tough.

Greg Kyte: [00:37:56] Here's why you can't. Because guess what? We did not guess what? America didn't send King George. We didn't send him a declaration of objectivity. That's a that's a good joke.

Adam Broud: [00:38:06] It feels like a pretty good pull. Pull quote. That's a pretty good job. Pretty good.

Greg Kyte: [00:38:09] Yeah. So you reminded me of that.

Adam Broud: [00:38:11] So can't wait to listen to that on the back end of this and be like that makes no CENSORED sense. Greg.

Greg Kyte: [00:38:17] I think this will make more sense than it feels like it's making right now. Good. So, but maybe that's just an inflated sense of self. One more that we got one more. Great. And we've got ten more minutes to talk about independence.

Adam Broud: [00:38:28] Yeah, Yeah. Intel Teach me. Teach me.

Greg Kyte: [00:38:30] So independence is it's funny because we through the law of syllogism.

Adam Broud: [00:38:37] The what? The law.

Greg Kyte: [00:38:38] Of syllogism.

Adam Broud: [00:38:39] So he's slurring or is this an actual word?

Greg Kyte: [00:38:42] You can't have integrity without objectivity. You can't have objectivity without independence.

Adam Broud: [00:38:46] You can't have syllogism without the dictionary. What does it.

Greg Kyte: [00:38:48] Mean? Syllogism? It's just that it's that it's that if if A requires B and B requires C, then really you need to look at C because A can't happen without C, So, okay, we're talking two human robots. They get it. You 100% don't you.

Adam Broud: [00:39:02] Can't have an A without B, then you can't be without C.

Greg Kyte: [00:39:05] So if you can't So listen, let's see if you can follow this. If you can't have integrity without objectivity, then you need to have you better make CENSORED sure you're objective. Yeah. Yeah.

Adam Broud: [00:39:14] Or or.

Greg Kyte: [00:39:15] Or if you can't have integrity.

Adam Broud: [00:39:17] And then if you can't have.

Greg Kyte: [00:39:18] Objectivity without independence, you better make CENSORED sure you're independent. Yeah, Yeah. Or else everything falls apart. Yeah. And that's. And that's so much the emphasis makes accounting profession for ethics. I sound so smart right now.

Adam Broud: [00:39:30] Six in literally right now. Syllogism You're a genius to me. I'm like, Whoa, Greg, you're killing this. You're so good at your job. Did you come up with this? No, it's on a paper in front of me.

Greg Kyte: [00:39:43] The independence is where we focus so much of our attention when it comes to professional ethics in the accounting profession.

Adam Broud: [00:39:49] Really?

Greg Kyte: [00:39:50] Because, like I said.

Adam Broud: [00:39:51] Because everything else depends.

Greg Kyte: [00:39:52] On it, it would all crumble. And not only that.

Adam Broud: [00:39:54] In what way?

Greg Kyte: [00:39:55] Well, in.

Adam Broud: [00:39:56] I was so focused on telling jokes through most of this podcast, but you just reeled me in. I'm fascinated in two ways.

Greg Kyte: [00:40:03] So the one way is in in reality, without independence, you can't be objective and therefore you can't be you can't have integrity. The other thing is, if you're not independent. So let's say again, let's go back to the trust thing.

Adam Broud: [00:40:16] Please do. Is that.

Greg Kyte: [00:40:17] Are people going to trust you if you're like you're you're expressing your opinion about your kid? Are you independent from your kid? No. No. Were you independent from the other kid that was said that he was? Yes. Yeah. So that was independent? I don't know. So. So if everyone else was trying to trust your opinion about the the results of this beauty pageant, they would trust them with the kid. That wasn't your kid.

Adam Broud: [00:40:42] They would not my.

Greg Kyte: [00:40:43] Own kid With your own kid. Exactly. And that's the same thing here. The public needs to trust accountants opinions about financial statements. They're not going to trust your opinion if you if you're getting a kickback from the company that you're doing the audit from.

Adam Broud: [00:40:56] So who pays me to do the audit that?

Greg Kyte: [00:40:58] See, that's the thing. And that makes it the independence is also impossible because you're getting paid by the company. You're getting paid by the company that's having you give your opinion about their financial statements. Yes. So you're not so you're like absolutely not independent.

Adam Broud: [00:41:17] The world's a cruel place.

Greg Kyte: [00:41:18] Because of that. But that but that's the big problem that accountants have. You're so smart, though, because even in you found, like the crux of the problem dudes.

Adam Broud: [00:41:29] I'm 16, but it's still working capital in a capitalistic society. That's right. I know how it works.

Greg Kyte: [00:41:34] So so our whole problem as accountants is to go, okay, we're like.

Adam Broud: [00:41:40] We feel like I'm just a hype man right now. I'm just like, Yeah, yeah, get him. Get him. What? What?

Greg Kyte: [00:41:48] So, so.

Adam Broud: [00:41:50] Okay.

Greg Kyte: [00:41:51] So our fundamental problem and we don't even admit it as accountants, our fundamental problem is we're absolutely not independent because our money, our paycheck comes from the person that they're saying, hey, they're like going, hey, here's a bunch of money. Now, how did these.

Adam Broud: [00:42:07] Oh, good. I was about to take my shot. Anyway, this is. I was like, Let's just do this now.

Greg Kyte: [00:42:14] I forgot to pour mine.

Speaker3: [00:42:17] Uh.

Adam Broud: [00:42:18] Let's get this over with. Let's get going. Oh. I have never been this.

Greg Kyte: [00:42:23] We're 100% of our shots in through this through this podcast.

Adam Broud: [00:42:27] So am I coherent? Yes. Can you understand me at least? Oh, thank goodness. Yeah. Was that coherent? Oh, thank goodness. So I feel like I. Okay, sure. Keep going.

Greg Kyte: [00:42:39] So the fundamental problem that we have is that we're not independent because the company that we're giving our opinion on their financial statements, they pay us for that opinion.

Adam Broud: [00:42:48] Yeah, that's not cool. Not cool. I mean, that's fine. You're getting paid. That's good. But that doesn't help your objectivity and independence and all that stuff.

Greg Kyte: [00:42:55] And as accountants, we don't even we want to be independent so bad that we don't even acknowledge that that money impairs our independence. You don't acknowledge it? No. Well, Well, we're acknowledging. I'm acknowledging I will because that's my job. And I want to tell everybody right now, your independence is effing impaired because you're getting money from the client who's.

Adam Broud: [00:43:16] Saying, I'm going to listen to this podcast, this podcast, this podcast and agree with you? Or are they?

Greg Kyte: [00:43:22] Oh, they absolutely. They're like, Yeah, we don't really want to acknowledge that because that's because that fundamentally impairs your independence. But what we look at is other things that impair one's independence. Like for instance, here's some things that we say impair our independence if passed.

Adam Broud: [00:43:36] So funny.

Greg Kyte: [00:43:38] So so if I'm if I'm auditing Disney Corporation. Okay. And I own and they have like hundreds of thousands of shares of their company that are out in the markets. Yeah. If I own one share of of the millions of shares that are out there, you're I'm am I independent or am I not independent?

Adam Broud: [00:43:57] You're dependent upon that one share. Exactly.

Greg Kyte: [00:44:00] So my independence is impaired because I own one share of Disney stocks, which might give me a.

Adam Broud: [00:44:06] Bit as I am, but you're impaired.

Greg Kyte: [00:44:08] The other thing. Okay, if I. Let's say if. Let's say if I did the books for Disney. Yeah. And then I audited the books for Disney. Yeah. Would I be independent.

Adam Broud: [00:44:18] If you did them and then audited yourself? Right? No. Greg thinks Greg does the best work, right?

Greg Kyte: [00:44:23] I would think I did the best work.

Adam Broud: [00:44:25] If Adam gave Adam and great Adam gets an A plus.

Greg Kyte: [00:44:27] Exactly. So my independence is impaired if I audit my own work. Yeah. Yeah, exactly. Yeah. Easy. You know this stuff. Okay, now, here's the other thing. If let's say. Let's say I work for Disney, okay? Like, let's say I'm not even an accountant. Let's say I'm an a marketer for Disney.

Adam Broud: [00:44:44] Let's not let's say that you're even like, let's say you play one of your Winnie the Pooh in the park.

Greg Kyte: [00:44:49] Okay, I'm Winnie the Pooh. I'm the mascot. Winnie the Pooh.

Adam Broud: [00:44:53] Super buff, Winnie the Pooh in the park.

Greg Kyte: [00:44:55] You can't see because those costumes.

Adam Broud: [00:44:57] Greg is so jagged. Have you seen want every listener to know that he is? And this isn't. This isn't a joke. I can't tell jokes at this part at this point. Greg's like, super freaking ripped. This is true. So imagine Winnie the Pooh with he mentioned he mentioned Dwayne the Rock Johnson. He's not far from that.

Greg Kyte: [00:45:15] I'm far from that.

Adam Broud: [00:45:16] I don't know about that. I've been watching all the Fast and Furious movies, and if you went in there, you are a mix between Vin Diesel and I want to say Greg the Rock Johnson and let's just call you that.

Greg Kyte: [00:45:26] Awesome. Okay. So if I worked for the company even as Winnie the Pooh and then I and then I audited.

Speaker5: [00:45:33] Smackerel of and then I.

Greg Kyte: [00:45:35] But no, no, like, for real, actually, let's say that's the truth. Let's say if I. That was really funny too. And I'm trying to keep us on topic. You keep throwing me off. I know.

Adam Broud: [00:45:45] You are. And it is my goal to keep you off topic right now.

Greg Kyte: [00:45:49] So let's say I'm a CPA like I am right now, but right now, like my moonlighting that I do is stand up comedy that I do with.

Adam Broud: [00:45:56] You and Winnie the Pooh.

Greg Kyte: [00:45:57] But let's say it was Winnie the Pooh, okay? And that my moonlighting job was being Winnie the Pooh at Disneyland Parks and that. But my day job is being an accountant. What? But then my day job. I have to. I have to audit the books of Disneyland. But I'm Winnie the Pooh for Disneyland. And if it came out to the public that I'm Winnie the Pooh for Disneyland and I audit their books and my independent or I my not independent, you're dependent.

Adam Broud: [00:46:22] You're getting paid through Disney.

Greg Kyte: [00:46:25] Exactly. Because I don't want the.

Adam Broud: [00:46:27] Amount of effort it took for me to remember what company we were talking about. And it's one of the most commonly discussed companies in the world.

Greg Kyte: [00:46:33] But that but you're exactly right, because I don't want I don't want to keep my paycheck coming in as as Winnie the Pooh.

Adam Broud: [00:46:40] Yeah. So you're tempted to be like, oh, Disney looks great, but don't even pay attention to this.

Greg Kyte: [00:46:45] Especially if they're going down the toilet. I'm like, I don't want these guys to go out of business because I need my Winnie the Pooh side hustle to pay for my Subaru crosstrek that I got out there. So I need that too. So I'd be like, no, even if they're if they look horrible, I go, No, these are great because I still need that sweet, sweet Winnie the Pooh money to pay for my Subaru.

Adam Broud: [00:47:03] Don't look at this money. Look at Splash Mountain. Come ride, Come take a ride down.

Speaker3: [00:47:08] Okay.

Greg Kyte: [00:47:09] We're pretty close to being done. Good. And there's not a lot I can do. I'm going to read my paper to see if there's more important things that we need to say before we're done with today's podcast.

Speaker5: [00:47:20] Winnie the Pooh doesn't Know what to do.

Greg Kyte: [00:47:24] Independence. I love you, man. Independence is a state of mind. Oh, this is a.

Adam Broud: [00:47:31] State of mind.

Greg Kyte: [00:47:32] Oh, no. The next one's I copied these. I copied and pasted these out of the Aicpa's. What was it? It was plain English. Plain? They call it this. They call it the plain English definition of or like it was a whole publication they had called the plain English. Here's what independence means, you dumb mother.

Adam Broud: [00:47:52] I think title, but I respect it.

Greg Kyte: [00:47:56] Independence. Here's what it says. These are quotes. These are quotes, But they're not like quotes. Quotes. Because, like, I took. Like, they were really long and I was able to make them shorter. Okay.

Adam Broud: [00:48:08] Because because towns mostly deal with numbers. So when you give an give them an opportunity to talk, they're going to go for a while, I assume, Right.

Greg Kyte: [00:48:16] And I don't want that. I want it shorter. So here's what it says.

Adam Broud: [00:48:19] What does it say? Hit me with that.

Greg Kyte: [00:48:20] Independence is a state of mind that permits a member to be unaffected by the influences that compromise, integrity, objectivity and professional skepticism.

Adam Broud: [00:48:32] Can't hear the word member without thinking, but I appreciate that. Gotcha.

Greg Kyte: [00:48:36] You're super. I couldn't think of. They talk a member. That's like another word for CPA. So independence is a state of mind that permits a CPA.

Adam Broud: [00:48:46] Well, if we go back to A is B and B is C, so if members CPA, the CPA mean.

Greg Kyte: [00:48:52] No.

Adam Broud: [00:48:53] Certified accountant. What's this podcast rated?

Greg Kyte: [00:48:59] It's now it's rated X. The definite Oh. So it says it says it's a state of mind. Okay. So the so first they say it's the state of mind that helps, that makes it so that you can be have integrity and be objective. Okay. And then they specifically have this caveat that says this definition should not be interpreted as an absolute, is intended to convey that one must be free of all influences that might conflict, that might compromise objective professional judgment. Instead, it should determine whether the influences that do exist create a threat that is above an acceptable level. But but what is saying is it's like you're going to have these biases that we talked about.

Adam Broud: [00:49:42] So they acknowledge it.

Greg Kyte: [00:49:43] They say, Yeah, you can't be perfect, but they're saying you got to make sure that these biases aren't above whatever certain level they need to be to make it so that you are impaired with your independence, not so much with your blood content.

Adam Broud: [00:49:56] Your eyes are so blue.

Greg Kyte: [00:50:00] I think so.

Adam Broud: [00:50:01] Oh, Crystal.

Greg Kyte: [00:50:02] Oh.

Adam Broud: [00:50:03] They're beautiful crystal sets.

Greg Kyte: [00:50:05] So that. I don't know if I. If we really put a bow on the topic, but that's all the words that are on my paper. That was my notes.

Adam Broud: [00:50:15] I feel like my integrity has improved.

Greg Kyte: [00:50:17] Has it improved?

Adam Broud: [00:50:18] Oh, yeah.

Greg Kyte: [00:50:19] Good. Awesome.

Adam Broud: [00:50:20] And when I do marketing from here on out, I'm going to be like, I'm not independent, independent. I'm not independent or my impudent no. From this client, I'm trying to sell something. And you know what? When it comes down to it, I might myself be engaging in some biases. I might have a bias blind spot, in fact, in this situation. But then I'm going to look at that and I'm going to be like and now I'm going to extort it and I'm going to sell things, but I'm going to be aware. I'm going to be aware, thanks to this podcast. Thank you so much.

Greg Kyte: [00:50:52] Craig No, Adam, seriously, you're one of my favorite.

Speaker5: [00:50:56] My hand.

Adam Broud: [00:50:57] Oh, it feels so good.

Greg Kyte: [00:50:59] One of my favorite people in the world. It's so fun to work with you. This for the listener just so that they know the ethics. This is this is this is one of a four part podcast series. Please listen.

Adam Broud: [00:51:12] About this.

Greg Kyte: [00:51:13] Oh. Or do that would be awesome.

Adam Broud: [00:51:16] You won't get.

Greg Kyte: [00:51:17] Any you can get continuing education credit by listening to this podcast. If you go to earmark and take a brief quiz where somebody somewhere is going to find five things to ask you about what you listen to, you probably.

Adam Broud: [00:51:31] Sound so dumb to the listener right now, but you sound so amazing to me the way that you're able to even finish a single sentence right now. I'm blown away, but so impressed.

Greg Kyte: [00:51:42] But thank you guys so much for listening guys. I'm Greg Kite.

Adam Broud: [00:51:45] I'm I'm.

Greg Kyte: [00:51:48] And hopefully you'll come back to listen to another ethics.

Speaker5: [00:51:55] Ethics.

Greg Kyte: [00:51:57] Do you want to.

Adam Broud: [00:51:58] Do it again? And here's a podcast. Okay. What what Well let's say you start here's here's come back. Come back.

Greg Kyte: [00:52:09] To another.

Speaker5: [00:52:10] Episode of Ethics.