Anthony Scilipoti

Accounting is a language.

If I said to you tomorrow you're going to speak Spanish, oh, you know, you could do AI and you figure it out and you're going to learn it.

But the nuances of the language, an individual who did a Ph.D.,

in that language they're going to understand way more about the language than you are the same like reading the financial statements the more you understand of what went into them and how they're prepared the better you're going to interpret them what are the red flags you look for

I like the way you posed the question because it sets up what we've learned over time.

The problem with red flags is it gets to your point that you started at before where you don't want to be crying wolf.

And so I've learned to temper because you could be wrong.

It's not red flags.

We call them flammable items.

So this goes to our process.

It's a three-stage process that we use and we teach because we have Veritas U. And so we teach investors how to make better investment decisions.

And so the first stage is you understand the business and the control environment.

Again, understand and understand the accounting that's being used so that when you study the financial statements, everything else, they all make sense.

And you understand sort of the structure.

How is management compensated?

What stage of their life cycle are they at?

Because those are all sort of constraints and opportunities within the business.

So then you look for a flammable item.

For example, companies generating negative cash flow.

That could be by itself a red flag in the normal way this type of, I would call, forensic analysis is taught.