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UCD-STAFFORDBEER  October 2008

UCD-STAFFORDBEER October 2008

Subject:

Re: failure notice

From:

allenna leonard <[log in to unmask]>

Reply-To:

[log in to unmask]

Date:

Wed, 15 Oct 2008 10:16:14 -0700

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (225 lines)

Dear Russell,

Thankfully, as of last night, I'm less busy and am looking forward to participating in the discussions.

I agree with you about the elitism.  It matches with a form of groupthink that has recently been being discussed in the context of the upcoming US elections.  The findings are that communications within homogenous groups tends to reinforce and further polarize their views. A sense of entitlement among people who live among the privileged and seldom have contact with anyone outside that group would be difficult to avoid. 

This was one of the points in Stafford's 'World in Torment' paper. Even when the elite were not acting with ill will toward middle and lower class people, they were so poorly informed as to design bad and ineffectual programmes.  Witness the planning before Katrina when officials simply ignored and cut out of discussions people who pointed out that evacuation plans that required a car and a credit card would be of no use to people who had neither.

Interestingly, Stafford's brother Ian Beer told me that when he was headmaster of Harrow that one of the things they did was have exchanges so that boys from the school would have experiences for a short time in environments of modest means while boys from those environments visited Harrow.  

Yes, I did a bunch of audit related work.  One is on my website <www.allennaleonard.com>. Others were 'Improving Audit Enquiry' and 'Assessing Management Control: a systems approach' about the VSM.  I also was a background contributor to 'Learning About Risk' that the website paper addresses. That one was authored by Bill Bradshaw (now unfortunately deceased) and Alan Willis who is still active - especially with regard to environmental audit.

One interesting piece is that in 1961 Mautz and Scharf wrote "Theory of Audit Evidence'.  It referred to W. Edwards Deming, Russell Ackoff and Ludwig Wittgenstein as thinkers whose work would have a beneficial effect on the conduct of more complex audits to match a more complex economic picture. Unfortunately the trend went the other way - for audit to become more of a business and less of a profession (especially in the USA)and to expand the rules based/tick and check aspect of audit when they should have moved more into a principles based approach that would have left most of the ticking and checking to computers and used auditors for their judgement - especially examining areas like 'the completeness assumption' and the 'assumption of management good faith'. There were other promising initiatives, like the use of Bayesian statistics in the audit that were abandoned from lack of enthusiasm and a desire to create simple and profitable audit packages.  

In the Audit Enquiry study we recommended 360 degree reliability where we looked at the reliability of everything from the design and team planning of the audit, through the reliability of interviewer and interviewee to the reliability of the synthesis and integration of the report.

We moved away from a concentration on fraud as too limiting and as less likely to make a material difference than mismanagement and avoiding creating the conditions that would make fraud and other lapses in accountability less likely to occur.

Best,
Allenna



--- On Wed, 10/15/08, R Clemens <[log in to unmask]> wrote:

> From: R Clemens <[log in to unmask]>
> Subject: Re: failure notice
> To: [log in to unmask]
> Date: Wednesday, October 15, 2008, 12:02 PM
> Allenna
> 
> Thank you for taking the time in your busy schedule to
> write these comments below. They are very much appreciated.
> I can agree 100% with the views you have indicated SB had on
> this subject. And I now feel much closer through them to the
> man whom I did not know personally.  
> 
> Yes, the topic focus for me was very much in the 'old
> boy' network thing -- not the petty actions of misguided
> youth or needful people. How do they rationalise this?
> 
> I think it starts from a form of elitism -- presumed to
> exist by birth rights or by virtue of membership of a club
> or tribe etc. Some form of identity -- real or assumed. 
> 
> In respect to your audit work: I was not aware of this,
> although I do have a vague memory of you mentioning it once.
> In an earlier post I included a link to a short appendix in
> which I had summarised some forensic audit  information.
> (here again if you missed it.
> http://cybernetics-society.wikispaces.com/Forensic+Audit) 
> 
> Question: did you have any experiences or knowledge of this
> management fraud risk assessment area? The point of interest
> for me is in the hidden variable -- the capacity to
> rationalise as one of the three variables considered in that
> framework. 
> 
> regards
> Russell
> 
> --- On Thu, 16/10/08, allenna leonard
> <[log in to unmask]> wrote:
> From: allenna leonard <[log in to unmask]>
> Subject: Fw: failure notice
> To: [log in to unmask]
> Received: Thursday, 16 October, 2008, 1:26 AM
> 
> Oops - typo
> 
> 
> 
> > Dear All,
> > 
> > I've been overcommitted in other areas and so have
> > barely been able to read, never mind participate in
> the
> > recent discussions. This response will be partial but
> can
> > perhaps add somewhat to Stafford's ideas about
> > criminality.
> > 
> > The first point is that he didn't regard criminals
> as
> > very different from the people in the plutocracy that
> always
> > (and often perfectly legally) arranged matters so that
> they
> > got the benefit and others absorbed the costs. The
> outright
> > criminals probably did less damage because they were
> out in the open and
> > somewhat contained by the law than the old boy
> networks at
> > the top who feathered their own nests at the expense
> of
> > their communities or their countries.  And, he
> remarked more
> > than once, at least they weren't hypocrites to
> boot.  
> > 
> > He told a story about an Indian colleague who lamented
> his
> > country's level of thievery demonstrated by the
> fact
> > that a trainload of grain would arrive at its remote
> > destination barely half full.  Stafford replied (the
> purpose
> > of a system being what it does) that they seemed to
> have
> > developed a very efficient distribution system for the
> > grain.  
> > 
> > Stafford agreed with Deming that the failure is in the
> > systems rather than in the individuals 9 times out of
> 10. 
> > My colleague Bill Bradshaw with whom I worked on the
> audit
> > projects for the Canadian Institute of Chartered
> Accountants
> > held similar views.  If the safeguards aren't
> built in
> > to the system, the temptation will prove to be too
> much -
> > either to someone who is greedy and unscrupulous or to
> > someone who simply has a compelling need for more
> money and
> > no legitimate way to get it. A strong system of
> management
> > control like the VSM makes it very difficult to cheat
> at a
> > material level.  
> > 
> > In the analogy to cancer - many cancers seem to arise
> > because the body depletes its toxin removing
> capacities or
> > because its immune systems become weak.  Indeed cancer
> > prevention measures include limiting exposure to
> toxins and
> > eating lots of berries to help get rid of them. 
> Governance
> > measures can also be designed to improve the immune
> systems
> > of organizations not just to discourage criminality,
> > political gamesmanship and internal competition but to
> > reward innovation, improve transparency and foster
> attitudes
> > of attentiveness and adaptation.
> > 
> > Phillip Gueddemi made a presentation at the ASC
> Conference
> > last spring that talked about the design of black
> 'black
> > boxes' so that both financial products (like
> packaged
> > loans) and tangible products like processed meat and
> goods
> > shipped in containers had such low variety filtration
> on the
> > front end that pretty much anything could be in them. 
> Like
> > with Schrodinger's Cat, you didn't know until
> you
> > opened the box and/or ate the meat.
> > 
> > Stafford certainly did approve of the function of the
> > police although he was suspicious of the forces'
> > tendencies to attract people with right wing values or
> who
> > enjoyed power for its own sake.  He was also quite
> worried
> > about the power of technology to invade privacy and
> target
> > people who might disagree with the powers that be.
> > 
> > Best,
> > Allenna
> 
> 
>       
> 
> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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