Fight Club by Chuck Palahniuk

Tyler Durden gets me a job as a waiter. He pushed a gun in my mouth. To him, he didn’t fear death and was a legend. We were thinking of blowing up the place as we knew how to make nitroglycerin. We were on top of Parker Morris building. The building started blowing up. The Mischief Committee was at work. In 9 minutes, the building would be blown to shreds. With explosives, it was possible to topple anything. Tyler wanted to destroy the national museum. Tyler and I had a love triangle problem as he liked Marla but Marla liked me. Only 3 minutes left.

Bob held me close. He was a big man. He was clearly upset and started sobbing. I felt terribly lost inside. Bob had huge tits because he had a hormonal imbalance. I didn’t want life to seem like an oblivion. There were others crying too. It was a testicular cancer support group. I was a cancer victim too, just like Bob. It all happened 3 years ago when I was contracted with cancer. Dying was sad. Chloe, a member of the group, liked to watch pornography. I didn’t cry at support group meetings. Bob used to be a bodybuilder and underwent 3 divorces. He had a poor relationship with his 2 kids. Somehow, I found the support group to be useful. Maria was one of the patients at the support group too. I had a poor impression of her as I thought she was a fake.

It’s easy to cry when you realize that everyone you love will reject you or die. On a long enough time line, the survival rate for everyone will drop to zero. – The Narrator

This is how it is with insomnia. Everything is so far away, a copy of a copy of a copy. The insomnia distance of everything, you can’t touch anything and nothing can touch you. – The Narrator

I woke up at Air Harbor International. I wished that I would be dead sometimes. Tyler worked part time as a movie projectionist. The author keeps switching scenes and flashback is performed. Tyler was working on the projector reels. I had bad dreams due to my lack of sleep. Reels had to be changeover in the old projectors and if done properly, no one in the audience will notice. If you miss a changeover, the audience will curse at you. I hated my life. I was travelling for work and had to take notes during work meetings. By accident, Tyler and I met. We met at a nude beach. Tyler showed me how to read the time by the shadow cast by 5 logs at the beach. Later, he gave me his number. Tyler was also a banquet waiter at a hotel.

Life insurance pays off triple if you die on a business trip. I prayed for wind shear effect. I prayed for pelicans sucked into the turbines and loose bolts and ice on the wings. – The Narrator

Maria Singer was at the support group. Everyone always seemed to get better. Chloe said she no longer feared death. ‘Cancer’ was not used. Instead, the term ‘agent’ was used. Later on, I thought out that Chloe died. Maria keep smoking during the session and it was distracting. I respected Chloe for the way she approached life and thought how absurd life was. I hugged Maria during therapy session. Maria knew I was lying too, just like her. Maria went for therapy because she when she saw suffering, it would make her appreciate life more. It made her feel good. I was already at the support group for 2 years. This was how I met Maria.

My suitcase was vibrating and it got picked up by security. I lived in a condominium. My baggage had to be evacuated. I made sure my personal belongings were not left behind. I got home from the airport. There was an accident at my home. My house was blown apart. The police didn’t allow me to return to my own unit. The police didn’t rule out arson. I called Tyler. I agreed to meet Tyler afterwards. Tyler allowed me to move in with him temporarily. We were both drunk and Tyler wanted me to hit him as hard as I could.

If you don’t know what you want, you end up with a lot you don’t. – The Doorman

I had stitches on my face and it was swollen. I was back at work. There was blood covering my face. Fight Club was tomorrow. ‘The first rule about fight club is you don’t talk about fight club.’ I wanted to die with a few scars. Fight Club was a way to give fighters confidence in their real life. In the real world, I worked as a recall campaign co-ordinator. I loved fight club. Self-destruction was the answer. It was held at a basement of a bar. Shoes and shirts were not allowed in fight club. You have a reason to head to the gym and keep your hair short. Some guys go there to de-stress. We don’t talk it outside of work. Tyler and I invented Fight Club. We first fought on a parking lot and it felt strangely therapeutic. ‘If this is your first night at fight club, you have to fight.’ Fighting was a way of overcoming your fear.

Fight club isn’t about winning or losing fights. Fights club isn’t about words. You see a guy come to fight club for the first time, and his ass is a loaf of white bread. You see this same guy here six months later, and he looks carved out of wood. This guy trusts himself to handle anything. – Tyler Durden

Tyler met Maria and they had sex together. I longed to have sex with Marla Singer. Tyler rented a big apartment. There was a used condom in the toilet. I have been living in his house for close to a month already. It was a good place to deal with drugs because it was obscure. Marla stayed at the Regent Hotel. Tyler admitted that he liked Marla. Deep down, I was angry at Tyler’s behavior. I was enraged inside. Marla was wanted and was under threat. Luckily, Marla and Tyler managed to escape from the hotel and took a cab.

Boss sent me home because there was dried blood on my pants. I write haikus for my colleagues. Blood could be seen as a form of enlightenment. Tyler and Marla were having sex frequently. Tyler was doing push-ups. I had a difficult childhood and had issues with my parents. Marla wore a sexy dress and I was impressed. I wanted Marla out of the house now. I liked my boss. Marla was trying to hit bottom. We were boiling milk and later filling them in milk cartons. Tyler didn’t want me mentioning Marla’s name to him again. We were trying to make soap now. Tyler was thinking of making dynamite and blow up bridges.

It’s only after you’ve lost everything that you’re free to do anything. – Tyler

We placed lye and water together and cause objects to burn. He placed it on my hand. He didn’t want to hear me cry and called it guided meditation. Tyler wanted me to learn the value of sacrifice. He wanted me to hit bottom. I had to imagine myself in Ireland, where everyone else was sacrificing as well. He wanted me to imagine that the soap was made of heroes.

Without their death, their pain, without their sacrifice, we would have nothing. – Tyler

Soup was ready, but it contained explosives inside. We needed to act fast, before the soup turned cold. We walked through ballrooms. Tyler also worked as a waiter. Tyler was also full of mischief. Later, he got in trouble and got fired. The hostess was in a real mess and was dead drunk. Tyler liked to spoil people’s experiences. We were always thinking of what we can add to the food.

Getting fired is the best thing that could happen to any of us. That way, we’d quit treading water and do something with our lives. – Tyler

We also played a prank on Marla’s mother. Tyler was making money from selling soap. Tyler called himself the Paper Street Soap Company. Tyler and I bought an Impala. We all hated dance clubs. Marla was upset at what we did to her mother. We had to sleep elsewhere to avoid getting caught. One day, Tyler gave Marla’s mum a box of chocolates. There was once when Marla came to Tyler’s place and wanted to place something in the freezer. She found out that Tyler and I added chemicals to the food. Marla was angry and thought I was the mastermind behind everything. We boiled her mother into soap. Thankfully, Tyler and I managed to escape.

I was back at work. We did a recall campaign. My boss found out about the fight club. I was suffering from a bad bout of insomnia. I was extremely pissed that he managed to find out about it. My boss started reading the fight club rules on a piece of paper which I accidentally left behind. I felt like shooting him I wondered why Tyler wanted 10 copies of the fight club rules? To be honest, I knew about the car defects even before the recall took place but simply kept quiet and did nothing. I met Big Bob later. The fight club group disbanded. However, there was another group that still existed. It was founded by Tyler Durden. I pretended not to know him.

I found Marla at Regent Hotel. She didn’t mention about the collagen trust fund. She seemed really ill. Marla just wanted someone to talk to. There is nothing wrong with dying. The doctor thought I had cancer because I had a birthmark. The wart on my penis would be alright in a matter of time. I want to cheer Marla up.

In the wild you don’t see old animals because as soon as they age, animals die. If they get sick or slow down, something stronger kills them. Animals aren’t meant to get old. – The Narrator

I liked the attention I received in the support groups. You had their full attention. People listened more than usual. We could build trust with one another. Marla found her first lump. It was an accident. Marla didn’t have much of a family. Later, after the lump discovery, she started going for the support group. She took up a job doing prepaid funeral plans for a mortuary. Marla had almost hit rock bottom and was very upset. She had seen the dying. My condo blew up and I didn’t cause it. I couldn’t leave town as I was under investigation.

I’m breaking my attachment to physical power and possessions, because only through destroying myself can I discover the greater power of my spirit. – Tyler

Everything was falling apart. Tyler was not needed at his job. However, he still enjoyed pension. Tyler thought that no one cared about him. Tyler and I were looking increasingly alike. I went to see the manager of Pressman Hotel. I was sounding more and more like Tyler. The union president punched Tyler. Tyler had nothing and didn’t care about his life. Later, I dialed the hotel manager. I got involved in a fight with the manager. There were more and more fight clubs. Tyler wanted to expand his empire. There was money coming in as well. I took the blows in exchange for money.

Project Mayhem was underway and causing havoc for society. You do not ask questions of Project Mayhem. Tyler used the fight club to organize his mayhem activities and to recruit members. Tyler wanted the average Joe to feel powerful. If you’re arrested, you are off the Assault committee. Tyler vets through proposals and discards the ones he thinks are no good. The average Joes would be tasked to execute mayhem. Later, members were ordered to buy a gun. You are not allowed to ask questions. No one was allowed to make excuses. No one was allowed to lie. The ultimate aim of project Mayhem was to teach man that he had the power to control history. Tyler stepped up his game and invented Project Mayhem. What was I really fighting? I wanted to destroy the beautiful things in society. I wanted the world to hit bottom. I hated paying the price for the mistakes of other humans. This was my world and I wanted to dominate it. We wanted to destroy mankind so that the Earth could recover. That was the goal of Project Mayhem. The last rule of Project Mayhem was that you needed to trust Tyler.

The idea is to take some Joe on the street who’s never been in a fight and recruit him. Let him experience winning for the first time in his life. Get him to explode. Give him permission to beat the crap out of you. – The Narrator

Recycling and speed limits are bullshit. They’re like someone who quits smoking on his deathbed. – Tyler

I was at my office today. Tyler wanted me to type up and copy some documents. Tyler wanted guys to sleep at the basement of the fight club. The men were required to bring the stuff that Tyler wanted. They had to bring their own burial money as well. We chased away some applicants but some of them were persistent and waited outside the fight club for 3 days. Eventually, we were impressed by their resolve and took them in. There were many teams of Project Mayhem. I had to manage the men. Some of the men were assigned to stupid tasks. Later, I bumped into Marla. The men planned different acts of sabotage. Tyler was never at home. No one has seen Tyler for a long while. Was Tyler building an army? It appears that Tyler dumped us.

Our culture has made us all the same. No one is truly white or black or rich, anymore. We all want the same. Individually, we are nothing. – Space Monkey

My boss went for vacation. Later, Tyler tells me to get to the parking lot. There were mechanics and a Cadillac. What was Tyler planning? Tyler simply wanted us to get God’s attention for being bad as it was better than getting no attention at all. The lower you fall, the higher you’ll fly. Some men were looking for new bars and garages to fight. The fight club would always be free. The mechanic was crazy and simply drove against oncoming traffic. He didn’t care one bit about death. The three space monkeys were in the back seat. Later, we hit and truck and crashed. I wanted to die now. I felt like I was nothing Smoke was emanating from the carpet beneath us.

If you could be either God’s worst enemy or nothing, which would you choose? – The Narrator

I had a near-life experience. The plan of fight club was to enslave people and then show them courage by frightening them. We were a hunting party. We wanted to make soap out of human fat in order to sell them.

I followed the mechanic and bought a gun. I held out my gun and wanted to shoot Raymond Hessel. I placed the gun in his face. He gave me his wallet and I collected his driving license. I kept telling him that he was going to die. Constantly, I intimidated him and threatened him. At all times, the gun was pressed against his face. I was Tyler’s mouth and hands.

Tyler hasn’t been home yet. I collected the 12 human driving licenses. Some of the guys haven’t heard of Tyler. It turns out that I was Tyler. I suffered from bad insomnia and did things which I wasn’t very aware of. Everyone recognized me from my birthmark. Marla admitted that I saved her life as she had previously attempted suicide. Even Marla confirmed that I was Tyler Durden. I didn’t believe myself and knew that I needed more sleep.

This was the problem with insomnia. Project Mayhem was fast expanding to other states. I imagined talking to Tyler now. We both shared the same body. We held down the police commissioner. The whole plan was to stop him from taking down the fight club. Everyone was getting more invested in Fight Club. Basically, when I was awake, I was myself. When I was asleep, Tyler Durden takes over. Tyler said he wouldn’t disappear but I could not offend him as he would screw me over. Tyler was my hallucination.

Everything was falling apart. Marla didn’t know the difference between Tyler and I. A space monkey was learning how to make napalm. I went with Marla for dinner. I wanted Marla to follow me everywhere I went and to record everything I did or said. I clearly the first instance when I met Tyler. It was when I was at a beach, when I was asleep. I insisted that I was not Tyler Durden. The trick, I thought, would be to keep awake. My plan was for Marla to follow me so that she could control the damage that Tyler caused.

Big Bob died while completing a mission. Now, he was just an object. Death was a miracle. He was 48. He was only a part of project Mayhem. People attain the hero status in death. I desperately wanted to tell everyone that the fight club was not worth it. I told people to go home. I’m still standing in the centre of the room. Now, I wanted everyone to leave the fight club. Everyone collapsed in front of me. I was floating and flying. Project Mayhem was my idea. I stood in the middle of the ring and did not move.

I was with Marla in room 8G. We were going to bowling. The plan was to get rid of Tyler. She wanted me to cross-dress etc.

The police were interviewing people near my office. I didn’t get off the bus for work. My boss was dead. The windows were smashed etc. I knew Tyler did it. There was a new version of the lightbulb bomb. I quite liked my boss. The problem was that Tyler didn’t. The police were after me now. There were space monkeys in my bus too. If anyone wanted to shut down the club, the people would grab him by the nuts. The space monkeys were after me. Thankfully, there were cops outside. The police also knew what we were up to. I told them I wasn’t Tyler. They were about to cut off my balls. I tried to escape from the bus. Everyone was tugging at me. They finally removed my trousers. I was in an extremely panicky mood. There was an arm around my chest and then there was simply darkness. I was not allowed to fight back.

My boss was gone and so was my home and job. There was nothing left. Marla was there. I called Marla at the hotel. We decided to return to the first place we ever met. Marla was at the church. Marla hit me and said I killed someone. The police were after me. It was Tyler who killed my boss, it wasn’t me. Tyler shot the mayor’s special envoy. I didn’t have cancer. Tyler was my other half of my split personality. I needed to take care of Tyler Durden.

I started recalling what Tyler knew. I knew why Tyler occurred. A part of me wanted to be with Marla. That’s how Tyler started. Patrick Madden died. As I fought a guy on the ring, I started recalling how he died. I started fighting more guys. I was pounded and hurt. I started crying. Suddenly, I just wanted to continue fighting until I would die.

Everything in my room was gone. Tyler told me to get up even though my life was broken. Death would be an empowering thing. Tyler and I headed to the top of Parker Morris Building and stuck a gun in my mouth. We only had 8 minutes left to live. Marla came running towards us. Marla discouraged me from shooting myself. Marla admitted that she liked me now. She said she liked me, and not Tyler and that she knew the difference. I pulled the trigger.

I died and so did Tyler. The angels in Heaven were good. God spoke me to him. He asked me why I caused so much pain. We just are who we are. Marla was still alive.

Didn’t I realize that each of us is a sacred, unique snowflake of special unique specialness? Can’t I see how we’re all manifestations of love? – The Narrator


Local Government Fraud Prevention by Charles Hall

How to Prevent It, How to Detect It?

This is written for both the layman and the fraud examiner. It will cover various areas of operations. Beware of the opening of secret bank accounts that are not on the books. Beware of only 1 authorised signatory. Look out for fictitious invoices. Catch fraud before it becomes large-scale in nature.

An Overview.  Who steals? Most frauds are committed by middle age males. Those committed by management results in a large loss. The fraudster is usually someone who is good at work and have been with the company for a long period of time and given high responsibility. Opportunity is a key element of fraud. To prove fraud, you must prove intent. Errors are different from fraud. Abuse of company’s assets is possible. There are 3 main fraud categories: asset misappropriation, corruption, financial statement fraud. There is fraud detection and prevention. Prevention is the more effective measure. Theft is the most common type of fraud in the government (cash or non-cash). FS fraud is very rare for public entities as they do not have incentive to cook the books. This book focuses on asset misappropriation and corruption. Frauds usually last for 18 months before detection. Corruption is very serious and leads to large losses. Government is fraud is serious as you are ultimately stealing from the taxpayers. Money is tempting, even to the best of people. The Fraud Triangle (Rationalization, Incentive, Opportunity). There must be all 3 for the audit to occur. SOD is important as it gets rid of the opportunity. People in financial distress have greater incentive to steal. Be wary of round-dollar vendor cheques. It is alarming when records go missing.

Fraud prevention. It is the responsibility of management to develop a good internal control structure. External auditors do not give an opinion on internal controls. Their definition of materiality is different from IA. Audit is not a cure-all as it is more detective in nature. SOD is very effective. 1 person should not be allowed to perform more than 1 function: 1) custody of assets; 2) reconciliation; 3) authorization; 4) book keeping (CRAB). If can’t have SOD, institute a level of review. Write down the names of people performing each of the tasks. Use it for any other transaction cycle. It is possible to use a checklist to assess IC. A sound whistle-blower programme is important. It is more effective than hiring auditors for fraud detection. Use a whistleblowing program that happens all the time. Look out for red flags. Decrease in revenue is a potential red flag. Hire a fraud specialist before fraud occurs. Addressing Fraud is the responsibility of the management. Perform periodic surprise audits on areas with control weaknesses.

Transaction Level Fraud Prevention. Theft can occur in the cash receipting process (Decentralised Cash Collections, Cash Drawers, Elected Officials and Collections, Check-for-cash substitution). Do not have so many cash collection points. It is important to document, immediately, any receipt of cash. A cash drawer should be assigned to a single person. All payments in a day must be reconciled to the receipts issued. All receipts must be accounted for. Understand the normal cash drawer activity. The supervisor must review the entries if one person handles cash and then keys in the transaction. This must happen daily. Cash must be deposited in the bank on a frequent basis. Employees sometimes steal rebates or refund cheques and convert them to cash. It is a must to record on each receipt the amount of cash or check payment received. End of the day – reconcile the daily amount of cash and cheques from the cash drawer to the daily receipts summary for each type of receipt (cash, cheque etc). For disbursement fraud, money is stolen from cheques, electronic payments etc. Bribes are one way. Bribes harm organizations indirectly. The vendor is usually the one who bribes government officials. The aim is to get the purchaser to buy something he doesn’t need and get him hooked. All gifts must be declared. Look at trends of payment to vendors over the years. Beware of fictitious vendors. You need to know how vendors are created and the review process. For example, you can send the cheques to your own home. However, the fraudster must be able to create a signed cheque or wire funds. A forged cheque is also possible. The payment must also be posted and it goes unnoticed. You cannot add vendors and authorize payments. This is a conflict of interest. One should ascertain the new vendor by calling them. If you can edit old vendor’s address, it is possible too. Access rights must be properly assigned. Altering cheque payees is one way of fraud. For cheques that are altered, it usually doesn’t have a corresponding invoice. Invoices should be stamped paid so that there will not be duplicate payments. The accounting clerk can trick the check signer to sign the cheque for a second time. Make sure there is stamped paid. Wire Transfer fraud is also possible. For wire transfer fraud, if you can wire funds yourself and then make entries without review, this is a recipe for fraud. Establish call-back procedure and at least 2 signatories for wire transfers to external parties. Payroll fraud is an area that needs scrutiny too. Look out for the payroll cheque review process. Detect ghost employees. Another way is to inflate pay rates and hours worked. Look at overtime trends etc. Most external auditors perform analytical procedures and not detailed control testing. Jet engine parts can be stolen. Conduct periodic inventories of capital assets. Audit existing, additions and removals of capital assets. Nip it in the bud. Accountability is critical to prevent theft. Assets must be inventorised and there must be a capitalisation threshold. Construction fraud is possible: 1) Kickbacks from the contractor to awarding officials; 2) over-billing; 3) deficient materials and cutting corners. The SO should be hired by the government to act for them and perform quality checks. This SO should be given access to the sites and records. The work should be performed in the government’s interest. The cost of the monitoring agent is a good investment.

Detect Fraud. How do you detect it? There are a large variety of fraud schemes. A leave of absence is good as another employee can perform the work and suspect any wrongdoings. If you have money, hire a fraud specialist. All receivable adjustments must be authorised. Confirm cheques received and keep a log. Search off-the-book theft of receipts. Investigate revenue differences. Do a walkthrough of the documents. There are 6 disbursement fraud tests. 1) Test for duplicate payments; 2) Review the AP Vendor File; 3) Check for fictitious vendors; 4) Compare vendor and payroll addresses; 5) Scan all cheques for proper signatures and payees; 6) Review checks falling just below the approval limit.

Procure Fraud-Related Audit Services. What is an audit about? Is fraud occurring? What is the damage? You can prepare an RFP for fraud-related services. You can pay to get a GAAS audit, forensic audit or internal control review. Some smaller governments are not audited.

Audit and CPA. Audit using the balance sheet approach. Fraud can sting auditors. Balance sheet approach is the examination of period ending balances, just as using confirmations to confirm balances. However, the weakness to this is that the income statement may be mis-classified. Auditors can save time using a risk-based audit approach. You need to explain what a fraud is and that it is not auditor’s responsibility to detect fraud. Any fraud tests must be performed. An IC weakness can be classified as 1) material weakness; 2) significant deficiency; 3) other deficiencies. Be careful of material weaknesses. Auditors can use checklists when performing their audit.


Time Management by Hanif Raah (The 24.5 hour day)

Learn Skills and Tips on How to Increase Productivity, Save Time, Organize Your Life and Reach Your Goals Now

Time is finite. We are always short of time. Learn how to use your time optimally. Learn how to work smart and use the most of your time.

What is Time Management? Get more for the effort you put in. Have mastery over your time. Good time management will aid you in every aspect of your life. Your output will increase with good time management. Your energy levels will be at an optimal level too. You will have more time to do other things. Learn to unclutter your mind. Tips: Do not be a perfectionist; Do things for yourself and not to please others; Learn to say ‘no’; Allow buffer time between appointments; Review your to-do lists every day; Stay on schedule and prioritize the items on your list; Write things down and plan; Fit urgent tasks and do them only if they are in your to-do list; write down your life goals.

Time Management Tools You Need. Use SMART goals. WRITE IT DOWN. Have a well-defined action plan. Stay on the path and work towards it, no matter what happens. Your goal should not just be career-related. Your goal should allow you to grow exponentially, intellectually, financially, and personally. Learn to prepare a to-do list. Plan all your waking hours. Do the most unpleasant tasks first. Allow some time for lunch and relaxation. Use apps to track your progress. Your to-do list is important because it will indicate what is urgent/important.

A conducive environment is definitely important. Create an atmosphere for work. Reduce clutter from your environment. File your documents immediately. Write it down and use a planner. Multitasking is anti-productive. It increases stress levels. It is important that you do not multi-task at all. Focus on one deadline at a time, if possible. Switch off all distractions. Switch off your Wi-Fi on your laptop. Stay away from the net and avoid checking your emails too often. Say ‘no’ to friendly chit chat. Minimize distractions. See whether you can delegate any of the tasks on hand. Reward yourself for a job well done, for example, by having a cup of coffee. Do the most difficult task first. Keep strict deadlines for yourself. Take quick breaks after working for an hour. Here are 7 of the greatest time killers: 1) Checking emails; 2) Watching TV; 3) Commuting; 4) Smart Phones; 5) Friendly Chatting; 6) Surfing the Net; 7) Social Media Networks.

The Parkinson’s law states that work will expand to fill the time you allot for its completion. Using this law, try to allot a little less time to the task than you think you would need; not so less that you get stressed out, but just enough to challenge you to do it quicker. – Hanif Raah

Be more efficient. Think about upward and downward delegation. Give clear instructions. Build the competences for those whom are receiving your delegated work. 80% of the result comes from 20% effort.

You will need to maintain a healthy lifestyle. Improve your eating habits. Have more fruits, vegetables and fish. Drink plenty of water. Exercising is of paramount importance. Try and invest in a health monitor watch if possible. Never sacrifice your sleep. Ensure that you have no distractions at night. Wake up at the same time every day, even on holidays or weekends. Develop a power nap for greater energy in the afternoon. Take some vitamins and minerals as supplements. Make them for fun and leisure activities. Use your weekend to rest and relax.

You need to have your days challenging enough to make each task interesting, yet workable so you keep going. If your day is packed too loosely, you will lose interest in your work; if your schedule is too tight, it will frustrate you into giving up. – Hanif Raah

3d time to management. Concept clock closeup. 3d render

The 100 Simple Secrets of Happy People by David Niven

\What Scientists Have Learned And How You Can Use It

Introduction: All I Can Do Is Point and Hope You Look

In life, most things are not inherently good or bad, success or failure etc. Humans like to focus on short term effects of decision making. Point and hope others will look. The book draws ideas from research on happiness. There are a total of 100 simple secrets of happy people.

  1. Your life has purpose and meaning. We are all connected and you are not just born to fill space. If you consider your life to have a purpose, chances are that you will feel happier.
  2. Use a Strategy for happiness. Let yourself be happy. Do things that make you happy. Define what you want and a plan to get it. Be optimistic and think about happy events in your life.
  3. You don’t have to win every time. Being ultra-competitive may lead you to be being unhappy. Setting too high goals and wanting to win may lead to unhappiness.
  4. Your goals should be aligned with one another. Goals must not be in conflict or life will be haywire. Your goals on education, family, career must be consistent. Do not simply trade one off for another.
  5. Choose your comparisons wisely. If you compare with those ahead of you, you will always feel disappointed. Compare with those that will make you feel grateful for what you have.
  6. Cultivate friendships. Rekindle past relationships. Care about others and hope they will reciprocate.

Close relationships, more than personal satisfaction or one’s view of the world as a whole, are the most meaningful factors in happiness. If you feel close to other people, you are four times as likely to feel good about yourself as compared to if you do not feel close to anyone. – Magen, Birenbaum, Pery 1996

  1. Turn off the TV. It is distracting. It might inhibit your ability to carry a conversation. Only watch it if you have a programme that you really like.
  2. Accept yourself – unconditionally. You are everything that you own and your character etc. Learn to accept yourself. Believe in your values.
  3. Remember where you came from. There is comfort in knowing your heritage. It gives you a sense of place in the world. Learn about your past and the culture of your race etc. It is associated with higher life satisfaction.
  4. Limit yourself to thinking about one subject as you lie down to sleep. Only think of one subject at a time. Thinking about too many times will lead you feel stressed. The better the quality of sleep you have, the happier you will be.
  5. Friendship beats money.

The primary components of happiness are the number of friends, closeness of friends, closeness of family, and relationship with co-workers and neighbors. Together these features explain about 70% of personal happiness. – Murray and Peacock, 1996

  1. Have realistic expectations. Value things that are within your grasp. Make things better. Have realistic and attainable goals. Achieving your goals will make you feel good about yourself.
  2. Be open to new ideas. Never stop learning and adapting. Being open to change will lead to happiness levels remaining constant even when circumstances changed.
  3. Share with others how important they are to you. Relationships are built on mutual appreciation. It is good to be vulnerable and tell others that you care.

Research on unemployed adults has found that the length of unemployment was less important to a person’s self-esteem than the amount of social support received from parents, family members and friends. – Lackovic-Grgin and Dekovic

  1. If you’re not sure, guess positively. Give the other person the benefit of the doubt. Try to see the positive in every situation.
  2. Believe in yourself. Have faith and confidence. You can do it.

Across all ages and all groups, a solid belief in one’s own abilities increase life satisfaction by about 30%, and makes us happier both in our home lives and in our work lives. – Myers and Diener 1995

  1. Don’t believe in yourself too much. Be open to criticism and understand that you may make mistakes once in a while. Do not think too highly of yourself. Disagreements may persist if you are too stubborn.
  2. Don’t face your problems alone. Problems can be unsolvable. Learn to share your problems with others. Ask for help if you must. Sharing your problems can make you feel better about yourself.
  3. Age is not to be feared. Senior people often report that they lead serene lives. Revel in age. Older people tend to have less worries in life. Age is unrelated to levels of personal happiness.
  4. Develop a household routine. Set a schedule for your housework chores and it will seem less painful. An orderly schedule will help you. If you have a regular household routine, your life satisfaction will improve by 5%.
  5. Don’t be overprotective. Let your loved ones lead their own life. Do not keep worrying over them. Everything has a risk associated with it. If you shelter your kids too much, they won’t see the experiences of the world for themselves.
  6. Pay Attention. You may have what you want. The human tendency is to always want more. But it is better to be grateful for what you already have.
  7. Don’t let your religious beliefs fade. Religion teaches us to understand that the world is complex and provides some form of clarity. Research has revealed that religious people can lead more fulfilling lives.
  8. Do what you say you were going to do. If you keep breaking promises, you lose credibility.

Nothing kills progress or deadens enthusiasm more than someone who talks but never follow through. It is crucial in both your home life and your work life that you stay focused and committed to whatever you say you will do. – David Niven

  1. Don’t be aggressive with your friends and family. There is nothing to be gained from being adversarial.
  2. Root for the Home Team. Support a home team in your community. You will have something in common. You will have something that binds you with the next person.
  3. Don’t confuse stuff with success. What constitutes a happy life? Write it down. Do not simply live day to day.
  4. Every relationship is different. You may not get along well with everyone. Face it.
  5. Don’t think ‘what if’. It is counterproductive as it is reflection on the past and not the future, per se. Don’t wallow in self-pity.
  6. Volunteer. Give time to help others. You will feel that you are helping others. Volunteering helps to generate happiness and create a purpose in life.
  7. If you can’t reach your goals, your goals will hurt you. Let your goals evolve with your life circumstances. Your goals cannot be incongruent with your abilities.
  8. Exercise. People who exercise enjoy life more. It is proven that exercise increases self-confidence. Brisk walking can increase happiness by 12%.
  9. Little Things Have Big Meanings. Tiny things can communicate volumes. We pay attention to facial expressions. Display sensitivity in communication.
  10. It’s not what happened, it’s how you think about what happened. Your life is based on a judgment. The same event can be viewed positively and negatively.
  11. Develop some common interests with loved ones. Common interests are definitely important.

Each common interest between people in a relationship increases the likelihood of a lasting relationship and results in life satisfaction of about 2 percent. – Chand, 1990

  1. Laugh. Just enjoy the laughter. A little laughter makes for a better employee. Learn to laugh sometimes.
  2. Don’t let your entire life hinge on one element. You can experience joy from other aspects of your life. Learn to diversify. Diversify your hopes as well. Through this, you will be better able to cope the difficulties that life throws at you.
  3. Share of yourself. Don’t hold your feelings back. Be more open and start explaining things to others.
  4. Busy is better than bored. Find something to do.

In studies of college students, those with more demanding schedules were 15% more satisfied with life. Despite the more demanding schedules, the individuals studied did not experience any more stress than those with less to do. – David Niven

  1. Satisfaction is relative. It is relative and depends on what you compare it with. What do you feel about your home life is very important. Everyone usually experiences the same stuff in life. You just need to know which you prefer.
  2. Learn to Use a Computer. It can help bring people together. Self-esteem improves as a result of computer usage.
  3. Try to think less about the people and things that bother you. Don’t ignore them but don’t focus on them. Forgive and let go.
  4. Keep your family close. It is easy to neglect your family. However, it is wiser to maintain good relationships with them. Keep in touch. Family is very important.
  5. Eat some fruit every day. Fruit eaters feel better about themselves. Keep it as a snack and eat more of it. There are both emotional and physical benefits associated with it.
  6. Enjoy what you have. Value what you have. Appreciate what you have in life. Do not always focus on the things you do not have.
  7. Think in Concrete Terms. Your progress must be measurable. What do you mean by you want to be a better worker? Make your goals clear and direct. Think about what you can achieve. Set attainable goals.
  8. Be Socially Supportive. Help those who are in need. You will feel good over your efforts.
  9. Don’t blame yourself. Any situation is the result of things that are in your control. Deal with outcomes. Blaming yourself won’t solve the problem. Do not form negative conclusions on yourself.
  10. Be a Peacemaker. Be their voice of reason and reconciliation. Difficulties must be faced in a peaceful manner.
  11. Cherish animals. The closer we get to them, the more love we receive from them. Dogs can offer unconditional love.
  12. Make your work a calling. See work as an expression of yourself, as a part of you. The work you can do your work well, the more people will like you. Life satisfaction increases a lot if you see work as your calling.
  13. Never trade your morals for your goals. Do not compromise what you believe in.

Being happy and being moral buttress each other. People who feel they lack morals report they are half as likely to feel happy compared to those who feel they are moral. – Garrett 1996

  1. Don’t pretend to ignore things your loved ones do that bother you. Raise your disagreement lovingly and constructively. In a relationship, you need to be freely able to communicate your concerns.
  2. Get a good night’s sleep. Don’t sacrifice sleep. It is very important for your functioning. It pays dividends in every aspect of your life.

Quality and quantity of sleep contributes to health, well-being, and a positive outlook. For those who sleep less than 8 hours, every hour of sleep sacrificed results in an 8% less positive feeling about their day. – Pilcher and Ott, 1998

  1. But what you like. Buy things which you need and can appreciate every day. However, do not place too much emphasis on material goods.
  2. Accomplish something every day. Make sure you are working towards your dreams. Keep moving and you will see progress. Move towards achieving your goals.
  3. Be flexible. Think about what others want too. Spend time together. Be accommodating to the activities which your friends want to go for.
  4. Events are temporary. Bad things might happen. Time will heal wounds, but it takes time. Life is not wins and losses, it’s how you live every day.
  5. Be your own fan. Pick yourself up when you’re down. Michael Jordan didn’t give up. Learn to reinforce your own self-confidence.
  6. Join a Group. People in groups feel more comfortable. They are less lonely and feel more comfortable. In group-work, there is unity. People feel connected to one another.
  7. Be Positive. Be the person who exudes optimism. It be reflected back to you. We gravitate to people with approach life with pleasant expectations. It is your beliefs and attitudes towards what you have that depends your happiness.
  8. There will be an end, but you can be prepared. Think of the things which you might regret not doing and start doing them now. Prepare yourself for your mortality.
  9. How we see the world is more important than how the world is. What is the shape of the world? We are actually looking at this through our own lens.
  10. Keep a pen and paper handy. If you write down your thoughts, you will feel more in control. There are too many ideas running across your head and you might forget some of them.
  11. Help the next person who needs some minor assistance. Pay attention to your surroundings and offer help. Being friendly will make you feel good about yourself. Altruistic activities result in a greater happiness.
  12. Take care not to harshly criticize family and friends. Rely on your close ones for support. Love them for who they are. Always be constructive and not just criticize.
  13. Some people like the big picture, and others like the details. Think in terms of the totality you have achieved. Think about the big picture. Even if you look at the details, you can still find satisfaction.
  14. Do things you are good at. Take on responsibilities where you can excel. If you feel competent at what you are doing, chances are that you will feel happy.
  15. Go visit your neighbour. Neighbours can provide a great source of friendship and make you feel better at home. Most of us don’t talk to our neighbours at all. Community interaction can improve happiness.
  16. Smile. Your smile makes others happy, which in turn makes you happy. Humans tend to mimic those around them.
  17. Don’t accept TV’s picture of the world. It often paints negative perceptions of the world.
  18. You always have a choice. Think of the positive reasons why you go to work. Do not always think you are forced to do things. Sometimes, try it as you are doing this because you value it. If you have a sense of autonomy, it feels much better.
  19. Be agreeable. Make it easy for people to deal with you. If you are in the wrong, be quick to apologize.
  20. Don’t ignore one part of your life. You are happier when pieces in your life are in good shape. Take into consideration your needs and priorities when pursuing your goals.
  21. Listen to Music. Music brings you to different levels. Music has positive effects at any age.
  22. Let Your Goals Guide You. Pursue your goals whole-heartedly. In life, you need a plan and you need follow-through.
  23. Use your job positively. Appreciate what your job gives you. Use your job to show what you can do. Work gives you self-respect.
  24. Don’t forget to have fun. Try to enjoy at least a little every day. It should form an essential part of your day.
  25. Believe in ultimate justice. Good will eventually prevail. Believe in karma. Believing that the world is just will make you happier.
  26. Reminisce. Think of the happy times you did together. Look back at your fond memories.
  27. Be conscientious. Care about what you do and do it well. You will feel good if you do a good job. Have the discipline to be dutiful in your work.
  28. Don’t dwell on unwinnable conflicts. Don’t spend time on things you can’t change for sure.
  29. Enjoy the ordinary. Enjoy what you do every day. Even on regular days, there are things to enjoy. Appreciate the smaller things in life.
  30. Focus not on the world’s tragedies, but on the world’s hope. Have hope for the future. Learn to be a friend to everyone.
  31. Get a hobby. It can be consistent and provide an element of fun. For example, reading can be your hobby. It can be really fun. It can increase life satisfaction by at least 6%.
  32. Envying other people’s relationships is pointless. Do not try to replicate what others have. Instead, build your own support system. Do not compare yourself with others.
  33. Give yourself time to adapt to change. Give yourself time to adjust to new circumstances. It is normal to feel nervous about change.
  34. Focus on what really matters to you. Do not join competitions where you do not want the prize. Let the real goals guide you.
  35. Realize that complete satisfaction does not exist. Strive to improve, but not to be perfect. Perfection can be too far out of reach.
  36. Surround yourself with pleasant aromas. Make your home smell nice. Try aroma therapy. Good smells can reawaken your senses.
  37. Don’t let others set your goals. Think about what you really care about. Set meaningful goals.

People do not have to succeed in absolutely everything they do to feel happy. But, people do have to believe they have maintained control over their own life. – Kean, Van Zandt and Miller, 1996

  1. You are a person, not a stereotype. You are happiest when you can express your personality to the fullest. If you need to cry, just do so. Do not be too concerned over what others think of you.
  2. Know what makes you happy and sad. Know what is causing your unhappiness and how the situation can be rectified. All science is about noticing patterns. Scientists like to see connections. When dealing with emotions, we need to be like scientists and notice patterns.
  3. Keep reading. You can both learn and be entertained by it. Regular readers are about 8% more likely to express daily satisfaction

Those who read books benefit from what they learn and the entertainment they receive. But in addition, they get to exercise their brain, and when they do that, we feel satisfied that we are spending our time wisely. – David Niven

  1. We must feel needed. Those who rely on you feel needed. What sends people into retirement is when they feel they are no longer needed on the job. We still need to feel needed.
  2. Say ‘so what’. Your life is not shaped by the acquaintances you meet.

Sometimes we look at what other people have and we want that instead of thinking about what really and truly motivates us, what we really and truly want and need. Don’t take someone else’s accomplishments as evidence that you are doing anything wrong. – David Niven

  1. Have a purpose. You need to have a purpose.
  2. You have not finished the best part of your life. The older people enjoy their older days of their lives. Be happy now. Live in the present.
  3. Money does not buy happiness. Lottery ticket winners are rarely happy. There are a group of people who try to be minimalists.
  4. What does it all mean? The answers are within you.


The Art of Work by Jeff Goins

The Art of Work by Jeff Goins

A Proven Path to Discovering What You Were Meant to do

Finding your calling can be difficult and tiring. It also involves many twists and turns. There is no destination and you will always be on a journey. Everyone is searching for their calling in life. This book also contains messages and examples of people who have made it.

A calling is not some carefully crafted plan. It’s what’s left when the plan goes horribly wrong. – Jeff Goins

There is no guarantee that you will still be alive tomorrow. Therefore, it helps that you can should live life to the fullest. Garrett was a blind cyclist. However, he overcame the odds and became a miracle. Discover what you were born to do. ‘What should you do with your life?’ Learn to find your vocation in life. A vocation is more than a job. You are dealt with a pack of cards and you need to make the most of what you have. It’s what you do with your chances that counts and makes the difference. When you were young, you had big dreams. But somehow along the way, you gave them up. Listen hard to the whisper in your voice. Do not come up with excuses on why you shouldn’t want to do something. Trust your gut but also do things that are uncomfortable and painful. There are 7 themes to someone’s story: 1) Awareness; 2) Apprenticeship; 3) Practice; 4) Discovery; 5) Profession; 6) Mastery; 7) Legacy. Some stages are overlapping in nature. There is a process to finding your life’s work. Do not think of everything that you could have been. Every life is important and significant. Learn to see difficulties as opportunities. Life is full of surprises and you need to react best to them.

Listen to Your Life. Listen to clues and be aware. Larry did a CAT scan and found that he had brain tumour. Larry only lasted 9 months more before he passed on. Always remember to show your appreciation to people you love. Even in your painful moments, life is teaching you a lesson. You must be aware and learn to pay attention. Sometimes, things are not always in your control. Hard work can only get you so far. Some people like to believe that if you must your mind at anything, you can succeed. But getting whatever you want may not make you extremely happy. Life would not be very fun if you were determined in everything you do, but you had no choice over what you could do. How you react to events makes a difference. 87% of the workforce is not engaged in their work. Maybe we should stop looking for happiness. Rather, we should look for meaning or find a reason to be happy. If people have an on-going project, or a job to do, then they have a reason to live another day. See the purpose in your suffering. Do what is required of us. Pain can be a blessing too. Fear can be a motivator. You must know when a good time to listen to it is. Sometimes, if you didn’t do well in a certain aspect, you could strive to help others improve on the situation. Look out for major events or ‘inciting events’ in your life. This big event might just spark you into action. You must believe that you are called to something. You need desire and willingness to begin. Many people know what their dream is, the problem is that they do not dare to admit or say it out. Ask yourself something deeper. There are no guarantees against failure. The key is to keep moving and do not stop. Some of the answers are already inside you. You just need to dig them out. ‘Clarity comes with action’ J. Everyone has a calling, somewhere deep inside them. The unknown is what is keeping us from pursuing action. Listen to your life. Habits of awareness are very important. Learn to listen attentively. Write down the major events of your life on paper. Look out for a recurring theme. Understand that nothing is wasted. Everything that has happened in your past can shape your future. Look below the surface. Learn to watch other people. When in doubt, commit to the path. Do not have a commitment problem. A vocation is something you become. Change takes time. Committing to a wrong thing is better than standing still. This is better as you will still learn from failure. Failure is painful, but it is the best way to learn.

When you are stuck fulfilling an obligation instead of chasing a dream, you aren’t your best self. This is why we find more people moving from one job to the next. They are doing their best to be happy but failing miserably. Most of us have done this at some point, quitting one thing for the promise of something better. And we were disappointed to find that the next job or relationship held the same complications as the one we were escaping. – Jeff Goins

You don’t need some big plan. You just need to be a little dissatisfied. You need to have a vague premonition that the world is not completely right. That’s what awareness is: a sense that something more is possible. – Jeff Goins

If you pay attention to your life and the lessons it can teach you, you won’t feel so lost. Your story will seem less like a series of disjointed events and more like a beautifully complex narrative unfolding before you. – Jeff Goins

Nothing is wasted. No job, no task, no obstacle is useless, if we are willing to see how it can fit into our calling…As you explore your calling, you will be surprised by how your previous experiences are conspiring to lead you in the direction of your life’s work. You just have to listen. – Jeff Goins

You cannot find your calling on your own. It’s a process that involves a team of mentors. And everywhere you look, help is available. – Jeff Goins

Accidental Apprenticeships. You can’t do it alone. An apprentice eventually becomes a professional. Sometimes, apprenticeship takes very long, even up to 10 years. It can take up to 10 years to master a craft. Unfortunately, the apprenticeship model is not popular nowadays. There is no such thing as a self-made man and we are all products of the environment. We need help to grow. Learn to refine and sharpen your skills. Help is instructive, but essential. You cannot master something on your own. Listen to those voices, even if people enter your life willingly. When you give birth, it is important to be able to receive support from your loved ones. A mentor need not stay in your life for long as there would be other mentors that come along the way. It is difficult to find a mentor because most people are self-reliant and think they can do it on their own. A teacher will challenge you to think and act differently. ‘The teacher appears when the student is ready’. You must be willing to look for mentors in unexpected places. How do you find them? Fortune favours the motivated. You just need to keep your eyes open. Interns should be involved in the whole process and they should be able to acknowledge the work that they have done. Pass the skills on to the master and multiply it. In Germany, apprenticeship is very common. The student can work and study at the same time and this helps to add tremendous value. An apprenticeship allows you to obtain guidance from an expert. Opportunities are always available, but you have to look at the right place. Practise the tools available to you. You need to seek out your mentor. Give each other support. You need to be deliberate about the opportunities you seek out. Leap and the net will appear. There is a power in harnessing the community. Your mentor might come from the least likely of places.

Always do more than what is required of you. – George S. Patton

For many of us, there is a fundamental problem with our understanding of our own capabilities. We are often exceeding our own expectations of ourselves. And in spite of the evidence pointing to the contrary, we continue to believe in the myth of talent, that some people are born in the certain way, and we cannot rise above our circumstances and achieve something greater than we’ve ever done before. – Jeff Goins

Painful Practice. Forget about passion. Rather, you should do something you are good at. However, there are singers on American idol which were not very good in the competition but went on to be superstars. Talent is over-rated. Everyone needs intense preparation. The type of practise is very important. Doing your best doesn’t work all the time. Mindset is very important. Do not give up too quickly and still think that you tried your best. Most skills are learned. Deliberate practice is a type of performance that leads to expert performance. The right type of practice is the key. Do not give up when the going gets tough. It is easy to settle for good, but not great. The practice must not be too enjoyable and it has to be difficult. Recognize what you do for fun and what you want to excel at. You must love your work. A spark of inspiration is important. Sometimes, you might be practising even without knowing it. This is known as accidental apprenticeship. Where does motivation come from? It starts with a spark. Inspiration and motivation to practice is important. We all want to make a contribution to the world eventually. William Hung’s video went viral. He even cut an album and achieved fame.

Putting an activity through painful practice is a great way to determine your experience in life. If you can do something when it’s not fun, even when you’re exhausted and bored and want to give up, then it might just be your calling. – Jeff Goins

If you can love what you do, even when it hurts, then you may have more than a hobby. And if you’ve never pushed your talents this far before, if you’ve never tested your skills that much, then you probably haven’t discovered your true vocation. – Jeff Goins

The idea that every person can be whatever he or she wants isn’t always true. Success is more than a matter of hard work; it’s contingent on factors sometimes outside of our control. Where and when you were born can influence what you do. – Jeff Goins

When you see a little hope, doors will open…Never give up, because all you need is a little hope. – Jeff Goins

Building Bridges (The Leap That Wasn’t a Leap). Some people can just relocate to Africa. Sometimes, if you move to a new area, you can make a bigger difference doing what you love. Find what you love and what the world needs. A calling is always messy. There is no guarantee of success, but you just have to take the leap sometimes. Do not trust people when they say they just know when they have found their passion. It is an intentional process. Famous people usually like to admit that they have special powers. Action is more complicated than you think. Listen to the whisper in your heart. Clarity of calling doesn’t come from a moment of epiphany, but rather, a series of deliberate decisions. It is crucial to find a mentor. You have to RESPOND to the call by taking ACTION. Prepare and learn to trust your feelings. Every step will reveal choices you have to make. Learn to take small steps at a time. There is no need to do something audacious. Take small steps. Reality doesn’t conform to what you think life should be. Sometimes, leaping without preparation is not a good idea indeed. It would be good if your project can offer hope to others and change their lives. Before you leap, you need to do your research. Instead of leaping, build a bridge. Not knowing is an excuse. It is normal to feel afraid after leaving your job. If you want a safe journey, continue to do what you do. You MUST KEEP MOVING, even if it is in the wrong direction.

If at first you don’t succeed, try, try again. Then quit. There’s no point in being a damn fool about it. –  W.C. Fields

Pivot Points (Why Failure is Your Friend). You might find your passion by experiencing failure. Even when opportunities have dried up, you can pivot. Sometimes, what you do isn’t what you planned from the start. Pivoting is learning how to deal with difficulties and uncertainties. Successful people learn to deal with failure. Sometimes, you will need to try new stuff. Make the most of any situation that you are thrown in. When you are failing, do not give up and despair. Hardship is an opportunity to succeed. Learn to push through your failure. Focus on what you are meant to do. Life is not a dream. You must transform yourself into a dreamer into a doer. Say ‘let’s’ instead of ‘what if’. Keep moving, even if it’s in a different direction. Stop talking and start doing. You must try.

Albert Einstein worked in a patent office; Benjamin Franklin was forced to flee his hometown; Steve Jobs got kicked out of his own company. We all face times of irrelevance; of falling on our own faces and thinking we have no business doing any of this. But pain is a great teacher and failure is a faithful mentor. – Jeff Goins

Dreams are powerful. They are fuel for change. But by themselves, they do no good. Hanging out in coffee shops and talking about one day being a writer or an activist or an entrepreneur is just about the worst thing you can do. – Jeff Goins

The Portfolio Life (A New Kind of Mastery). Places can also have a big impact on you. Later, I decided that I wanted to be a park ranger. Jody changed career from a financial analyst to be a park ranger. Have a portfolio life. Most self-employed people take up portfolio lives and try different types of tasks. Freelancing is the trend. We are hardwired to take up multiple hobbies and combine them to produce our best work. There are 5 different types of work: 1) fee work; 2) salary work; 3) homework; 4) study work; 5) gift work. Careers do not last that long nowadays. Have a portfolio mindset. Invest your life. Have someone to share your vocation with. Play is important too. Play is what you do to make your work interesting. Your work must have an ultimate purpose. Sensible people reinvent themselves every 10 years. You must do your work well. Masters keep pushing and carrying on. Stop focusing on being famous. Money is a by-product. Understand the true meaning of work. What are you working for? We all have a moral responsibility to ask whether the work is good or not. Work is a means of making people better. Increase in income, to a certain extent, does not make people happy. Flow is an important stage to achieve. Use your gifts in a challenging way. A calling may evolve over time as well.

Don’t search for your calling. Explore, try new things, keep your feet moving. Something will grab you. It will call to you. It is no different from falling in love. You can’t sit on the couch and decide that you are going to marry a certain girl. You fall in love after sharing experiences, joy, challenges, maybe even heartbreak. All of which could not have happened without leaving your couch, being involved, and meeting the one girl you can’t stop thinking about. – Jody

A life isn’t significant except for its impact on other lives. – Jackie Robinson

You don’t have to earn a living for 30 years to turn around and spend the next 30 years giving it away. If significance is what matters to you, you can structure your life and work in a way that allows to live your legacy now. In fact, your giving doesn’t have to be a by-product of your success; it can be the very thing that drives it in the first place. – Jeff Goins

Sometimes, all the little things in life aren’t interruptions to our calling. They are the most important part. – Jeff Goins

Your Magnum Opus (What Legacy Looks Like). Poverty is not objective, but it is more subjective. It is more of a mindset. How do you turn your work into something generous? Work should be both the means and the end to a better life. ‘Do what you love and do it for people who you love.’ Success isn’t about you. Work isn’t just a means of getting a paycheck. Do what you are good at and help others. A job is not just about improving yourself. You are still making a difference even if you don’t do things you like. The small things in life count. A calling is a life well lived. Freedom must have boundaries attached to it. Do not spend time pretending to be someone else. You can also prove your talent through great work. If you do meaningful work, you become yourself. Do not ignore your call. Your calling is not just your vocation, it is your entire life. Legacy should be your goal. Be consumed by the calling. Your work is a support system for your life.

It can be dangerous to have a compulsion to work. Lose yourself in the process. However, this could be a problem if you cannot disassociate yourself from it. Use it in your advantage. How do you not let a passion destroy you? You should work hard, but you need to acknowledge the limitations of life. There will always be unfinished work before you die. But you don’t have to kill yourself over it. At that time, you should try to pass it on to the new generation.


Kampong Spirit by Josephine Chia

Life in Potong Pasir from 1955 to 1965

This book features a lot of the main events in Singapore’s history. The author has Peranakan roots. Singapore has since progressed from third to first world. The author has also written ‘Frog Under a Coconut Shell’. This book gives insight into the Kampong life. Singapore attained independence in 1965.

Everyone wants to be happy. Only the degree differs. How avidly one wants to pursue this happiness depends on how much it matters to the individual. This quest starts from satisfying the basic needs of having a home, nourishment, good health and family. Yet somehow it morphs into an obsession to possess more and more things, as if somehow material acquisitions can satisfy the inner longing of the spirit. – Josephine Chia

Everyone needs someone. When the kampong spirit is in evidence, nobody needs to feel alone or abandoned. This warm feeling of being cared for makes life meaningful and brings happiness. And being happy, one possesses a stronger foundation, better able to take the knocks of life more easily. – Josephine Chia

Hard work brought us where we are now. Are there other ways to spend your money. Kampong life appeared to be happy. Kampong spirit was the spirit of helping thy neighbor and living in multi-racial communities. Children could play without fear of discrimination. There was a spirit of sharing in the kampong communities.

Food is major part of a Peranakan. The smell of food can bring back memories. Nasi lemak was one such dish. My mum used to sell nasi lemak to our friends. The Christian cemetery looked very peaceful. Our village consisted mostly of Malays. My mum wore the sarong-kebaya. She was a good seamstress and cook. ‘Whatever your circumstances, always live with joy.’ Mak (Mum). I had a crush on the music director, P. Ramlee. My family turned Catholic. I slept on a mattress. I came from a big family, with many siblings. Hygiene was not very good and there were rats at times. I always looked forward to watching P. Ramlee’s plays. Most of the films were outdoors and I had to brave the elements. At that time, the kachang putih man sold nuts in the streets. Orchard Road was filled with nutmeg trees and palms. My mum picked coconuts from the ground to make nasi lemak. The Kallang River used to cause floods in the 1950s. We obtained water from springs and wells. My mum liked to sew during the New Year. Clothes were purchased from the market and sewed back to a wearable condition. Electricity was powered by a generator. Thankfully, my family had some money from selling food. I was barely literate then. My other sisters passed away due to illness. I wanted to go to school badly and thankfully, my mum was willing to fund it. It was a difficult life, but my mum was inspirational to all the villagers. She believed in the value of hard work. Eventually, I studied literature in University and did an MA in Creative Writing in England. I was grateful for Mum’s encouragement. Kampong Potong Pasir was razed to the ground in early 1970s. HDBs were built to replace them. The kampong was destroyed as a result.

Someone who spouts wise sayings can be philosophical, but wisdom need not always be intellectual and acquired. It can be intuitive. – Josephine Chia

My mum often uttered wise words. Conditions were harsh in the kampong. My mum was very influential on my life. In the 1950s, many people were pushing for self-rule. The British were in power then. The political leaders from the PAP and Labour Front came to campaign. We got water from the wells. David Marshall was our first chief minister. Soon later, the Hock Lee Bus riots took place. It was the communists against the Labour Party. They alluded that the Labour Party was associated with the colonial British. People wanted a party who could give them a better life. Workers went on strike sometimes. The strike turned violet. The communists tried to spread their power in the past. People didn’t like helping the British as they left Singapore to fight the Japanese during the war. We tied coconut leaves to form a broomstick. My mum used to comb my hair. She used coconut milk as a conditioner. Our common language was Malay. We used to play chaptehs (rubber base attached with plumes of feathers). Sometimes, we wore wooden clogs, which were known as char kiaks. They produced a clok clok sound. Later on, rubber flip flops were invented. Parvathi was my best friend and we played masak-masak. We pretended to take care of a real home. Peranakan food was delicious. One day, I found my head was infested with lice. Mum helped to scrub it with carbolic soap. Later, my head was soaked in kerosene and it would help to kill the lice. There were plenty of strikes in 1955 and it was dangerous to walk around the neighbourhood. One day, Mum decided to snip away my long hair. For being rude, Mum would give me chilli padi to eat as a punishment. It was during that time that the new airport in Paya Lebar would be built. My dad could be volatile and hot-tempered at times. Some of my cousins were wealthy and they could afford expensive clothing. At that time, dimples were attractive to have. I was considered ugly as I didn’t have fair skin. I was having my hair permed. Sometimes, I would visit my grandma at her place. My permed hair was awful and I was afraid to face anyone.

In the day, noises from hens and ducks were common. In the evening, there were sounds from hurricane lamps or carbide lamps. The Tik Tok man indicated that food was here. He sold street food. Noodles cost about 10 cents back then. He was located near Hill Street. We all loved the sight of him as it meant great food was coming. High Street for the place for rich merchants. Robinson’s was a luxury department store which was opened in 1958. My parent’s first home was at Kampong Potong Pasir. My mum was optimistic that conditions would change. I loved to visit Town. My mum was always good at embroidery. Sometimes, we would wear the kebayas. I received heirlooms from my mum. I wasn’t known to be pretty in the past. The CNY clothing really hurt. David Marshall sounded like a clarion call of hope for the people in Singapore. Ah Gu was planning to attend David Marshall’s rally. Kallang Airport was the main airport at that time. However, it was soon replaced by the Paya Lebar airport. Mum and I also wanted to visit Tekka market and Rochor Canal. Any building built from concrete seemed modern and high-class. There were people selling ang ku kuih, which was from glutinous flour stuffed with softened yellow mung beans. It was sweet and red colour represented prosperity. Dhoby was the Hindi word for laundryman, who were mainly Indians at that time. The Cathay building was the tallest in Singapore at that time. Cactus plants were planted at our homes to ward away Pontianaks (Malay female vampires). High Street looked brilliant and rich. We were very impressed by what was sold in Robinsons and longed to own something from the store. Sua Ku meant Mountain Turtle. I was not allowed to remove my shoes in public, despite it being uncomfortable. Tan Kim Seng was a philanthropist. The best heirlooms were memories with my family. My dad was knowledgeable about the history of Singapore. Later, we visited Satay Club at Beach Road. My dad treated us well at times. My mum woke me up the next day and made me mee sua. The sugar was to bring me good fortune and the egg was a symbol of fertility. The Merdeka rally led to chaos and many people were injured from the stamped. The stage collapsed and people were squashed like sardines. 50 people were seriously injured in the end. Later, Lim Yew Hock succeeded David Marshall.

Lallangs in the grass were sharp and we had to be careful not to get cut. We often pretended to be cowboys etc. Some of the children also caught fish and eels. My mum was an excellent cook. She would often make nasi lemak. The lallang grassland has a thriving population of wild rodents, salamanders, frogs and snakes. Some of the locals knew how to source food and medicine from nature. Most of your medicine came from nature. We were all afraid of the python. It was rumoured to be 10 feet long. The villagers warned people not to enter the grassland as the python was not caught yet. The python killed by constriction. My mum made delicious tapioca. The python uses unique infra-red sense and can navigate in the dark. Our family were planning to visit our grandparents in Bandar, KL. Mum loved the mountains in Malaysia. We would go by kereta-api (vehicle-fire). It would be a long train journey. Abu had a good command of English. We all wanted freedom from the White Rule. Merdeka would be achieved in Malaya first. The Chief Minister in Singapore was Lim Yew Hock. Tekka was a popular wet market in the country. It was a fascinating and exotic place. One villager suggested using goat’s milk as a bait for the python. The goat would be used to lure the python out. The other villagers all waited with parangs and hid in expectation that the snake might emerge. Although the goat was sacrificed, the python was caught and killed. Everyone celebrated that evening and started dancing. The Federated States of Malaya would gain independence from the British on August 31. We would be free now.

When we lose touch with nature, our chi shrivels within us. It’s important to breathe amongst trees and flowers; feel the wind in your hair, the sun on your skin, the sand under your toes, or smell the salt in the air. You should never be too busy to connect with nature. – Mum

We would often be awaken by roosters. My mum had given birth to close to 16 children. However, only 8 of us survived. Mum often did all the housework by herself. Banana money was useless back then. My eldest brother was also caring and he took care of us. Back then, girls did not have to attend schools. I was afraid I would be given away as my family was poor. Life in the kampong was really challenging. However, the good news was that my parents wanted me to head to school. I was 7 years old at that time. At that time, Tan Howe Liang was supported as he was Singapore’s hope for a medal. I was going for gold and hoped to enter school soon. Eventually, I studied at Cedar Primary. St Joseph Institution was very grand at that time. Some of the walkways to major buildings were also sheltered. It was a joy to buy books and I was fascinated by the process. Unlike my mum, I was soon to be educated. On a national level, Singapore would run its internal affairs while the British would run external affairs. It was one step closer to self-government. Tan Howe Liang returned from the British Empire Games with a Gold medal in 1960.

Money is a currency that allows you to buy things. Having it does not always make you happy. True wealth is when you have equanimity and joy of spirit. – Mum

The kampong spirit and sense of togetherness was strong. Gotong Royong means ‘mutual assistance’. Doors were kept open and people trusted one another. My mum performed her work with dignity. She was also talented at picking up musical instruments. Nature had its symphony in the village. In the past, the bucket men was used to clean up after people’s faeces. I had to sell food to pay for my school fees. Survival was paramount in the kampong. Karim had a great voice and could sing well. We all formed a band and sang P Ramlee’s songs. Music had this unique way of forging people together and form solidarity. Karim wanted to perform in public so that he had a better chance to play in a band. There would be an election in May that year. Lee Kuan Yew gave speeches for rallies and represented the PAP. He promised to improve our lives if we voted his party in. We could tell he was warm and sincere in his speech and he carried a great presence. He often took time to walk the ground. In 1959, his party formed the new government. We were on the brink of nationhood. We could finally call ourselves the citizens of Singapore. Alcohol doesn’t make you more creative but destroys your essence. The National Anthem was composed at that time too. Karim achieved success and managed to play in a band. English, Chinese, Chinese and Tamil were introduced as the 4 national languages. Our national flag was also designed in 1959. It was an enormous sense of pride for everyone.

Malay was our common language. I loved the English accent in general. I was attracted by the lovely spread of food on offer. The English parties always had great food. Parvathi read the book to me. Many people had to work part time to support the family, including myself. I was known as ‘Orang Cina Bukan Cina’, or ‘Chinese person, not Chinese’. I felt like I was in no man’s land and unwanted. Malays loved to admire birds. We bought birds and played with them. My father wanted to be to be married off young so that I would not burden the family. Our country was pessimistic as a whole. We were wrestling with the sense of identity. The first of June would be our first national day. However, it rained really heavily. Later, we folded sampan boats and raced against one another. Flooding occurred at parts of Singapore and there were crocodile sightings. The national day celebrations were cancelled. Women were starting to get more recognized in the society. Mrs Hedwig Anuar as a director of the library. I was in love with books and wanted to visit the library someday. The PAP was adamant that they would repair Jalan Potong Pasir and that was what they did. Everyone helped up with the laying of roads. We helped to scoop sand in the process. All of the potholes in the road were removed. We all worked towards a common goal and this created a sense of community. Women didn’t have to feel shackled anymore. Education was the hope to change my family’s circumstances. Tan Howe Liang also won the silver medal in the Olympics.

I read romantic books when I was 10. Very often, I read to Parvathi. Amongst Indians, arranged marriages were common. Karim was a full-fledged musician. There was a cable radio installed near our home. We could listen to Western singers from that era too. The Tunku urged Singapore to merge with Malaya. My dad thought that we were close to one another and didn’t see why splitting was necessary. The merger was a hot topic. Should we merge with Malaya? The weather was getting dry. The village bomoh danced, but there was no rain. Singapore was suffering from drought. We were afraid that a spark might cause our house to catch fire instantly. The biggest problem was that the well was drying up. Finally the water truck came and we had to scoop our share of the rationed water. Our government started negotiating a water deal with Malaya. Perhaps merger would be a good solution indeed. During festive occasions like Hari Raya, people in the village could contribute food for everyone to share and eat. The food was delicious indeed. There was a fire at Bukit Ho Swee. A rubber factory burnt down. In the end, 4 people died while 16,000 were made homeless. It was horrific indeed. It was one of the worst Kampong fires in history. The Women’s Charter kicked in and it was illegal to send girls under 16 to be married off. There were more women in power now.

Our first University was born. My eldest brother was a teacher. He thought me how to play chess. I loved the game and found it to be exciting indeed. I became a long life fan of chess since then. Pavarthi’s future wasn’t bright as her family didn’t have money to send her for education. The richer people had better advantages as they could send their children for education. The government agreed to provide a generator for us so that we could have electricity in the evening. Our kampong started working together as a community. The government is fulfilling our wishes for a better life. In 1963, Singapore merged with Malaya. Everyone had to vote on 3 options in a referendum on the terms of entry into Malaya. Option A was for Singapore to retain control over internal affairs and it was the best option. Tan Howe Liang won a gold in the Commonwealth Games. We were all euphoric in nature.

Tunku and LKY had a goal for a unified States. The Barisan Socialis disapproved of the merger. Sukarno, President of Indonesia, disapproved of the merger and reacted with Konfrontasi. Indonesia wanted Malaya and Borneo to be part of them. I dreamt of being a writer. We as Peranakans, celebrated Chinese New Year. It was the time of the year where we could eat great food. I felt in love in with the sea and felt indebted to PAP. Joo Chiat was the area where I enjoyed a lot. The kebaya was made up of fine embroidery. Mum gave me a pair of gold earrings. We also fired crackers during CNY. TV also made its debut soon after. Later, we all sang the National Anthem. Most of us were glued to the TV and intrigued by the programmes on offer. My dad gave me a blue stamp as a present. It was lovely indeed. Despite the merger, racial tensions built up and people were no longer united as one community as compared to the Kampong days. People of different races saw each other as being different. Anti-Malaysia rioters burned down the British embassy. US President John F. Kennedy was assassinated on Nov 22. There were random bomb blasts in Singapore at that time. This was the dark side to the merger.

Parvathi was 17 and all her parents wanted was to get rid of her. His parents also didn’t want to pay a hefty dowry for her. Her dad was not a nice man and was often drunk. The man that Parvathi was supposed to marry was a widower and was ugly. She wanted me to live my life freely and happily. Karim appeared on TV in a live performance. However, Karim (who used to shovel faeces) lost his job as an entertainer when Great World shut. STB tried to promote Singapore as having a unique culture and heritage. Konfrontasi started and bombs went off. Tension continued to mount and the communists were not making things easy. There was chaos and carnage. A curfew was imposed and everyone had to stay indoors from 9pm to 6am. In the end, 23 people were killed in Konfrontasi. Karim was injured badly and couldn’t sing anymore. Violence continued to ensue once in a while. On 3rd of September, 13 people were killed. I gave Parvathi my earrings as she was in a dire situation. My mum understood my behavior. The next day, Parvathi committed suicide by swallowing all the pills that were used to sedate her brother. I could not bear to watch her get cremated and I was extremely upset by the whole event.

Singapore was beset by troubles and the bomb at MacDonald’s House went off. They were planted by Indonesia saboteurs. No one felt safe at all. Schools were affected as well. Karim was crestfallen after his injuries. The merger was not going well. The racial imbalance was a big issue. We agreed that we should fight together as one. Finally, the Tunku admitted that the relationship with Singapore was over. The separation would be on Aug 9, 1965. LKY admitted that the separation from Malaya was a moment of anguish. We had to survive on our own as an independent nation. It was important to dream and to live in hope. LKY was optimistic that Singapore would survive. Our family finally owned a television. We did well in the SEA Peninsular Games. Everyone had to work hard to get Singapore out of the Third World Status. The lion must roar again.


Asian Financial Statement Analysis by ChinHwee Tan and Thomas R. Robinson

Detecting Financial Irregularities

This is important for forensic accounting and detecting accounting anomalies. Learn to detect tricks played by other companies. Due Diligence is important for non-arm length transactions. Some of the fraud cases include Satyam, Sino-Forest, Olympus etc. I approached Tom Robinson to collaborate on the manuscript.

Satyam was founded in 1987 and was an IT consultancy firm in India. 90% of their profits were cooked and the chairman stepped down in Jan 2008. Later on, it was acquired by Tech Mahindra Limited. Benjamin Graham was known as the father of investing. Satyam was overpriced by the market because of inflated earnings etc. Fictitious transactions and bogus customer receipts were used. How does one detect such fraudulent practices? Parmalat in Europe was another example of a horrible accounting scandal as well. Corporate governance has been a big issue recently. Many businesses are controlled by the founder or his family. There is a need to weed out corrupt practices and improve the situation. This book starts off with a framework for analysing financial statements. It will teach you how to identify red flags (like overstated earnings, overstated financial position, multiyear earnings manipulation, overstated operating cash flows, related party transactions and poor corporate governance). Later on, case studies will be presented as well.

A Framework for Evaluating Financial Irregularities. The P/L is linked to the balance sheet and overstating one will affect the other. Inflating operating cash flow will result in a decrease of investing and financing cash flow. Look for unusual increases in assets or intangibles in the balance sheet that are not explained in the footnotes to the FS. A = L + OE must always balance. Revenues should always be presented on a gross basis. Revenues must be classified into operating and non-operating appropriately. Note that the financial statements are all closely tied with each other and it is important to understand this. If you want to overstate revenue, you need to adjust your balance sheet as well. That is through overstating assets or understating liability. Usually, companies will overstate accounts receivable. Elevated AR might be a sign of inflated revenues. Sino-Forest used other companies to engage in fraudulent purchase and sales of timbre with it. This resulted in the AR and AP increasing. Learn to understand the accrual basis of accounting and the matching principle of recognizing expenses with revenue. If a company collects cash first before service is provided, then a liability called unearned revenue must be provided. Learn to understand accrued expenses as well. Sometimes, the cash flow can occur later or before the earnings. You need to read the whole financial statements as a whole to evaluate and not just evaluate the income statement on its own. For overstatement of revenue, the most likely overstatement will be AR. Sometimes, revenue can be reported even before it is earned. Be alarmed if revenue is growing too quickly. 90% of their cash and bank deposits did not exist. Companies can understate expenses by failing to recognize the COGS or defer recognition of expenses by creating deferred assets. An example of an asset which should be expensed is deferred acquisition costs. One way to remove liabilities is to reduce assets as well and transfer everything to an SPE to avoid consolidation. Olympus once kept liabilities off its books in this way. They later purchased the SPEs and overpaid for them, resulting in excess goodwill in their books when consolidation was required. One way to smooth earnings is to overstate bad debt expenses. Sometimes, companies can classify operating expenditure as a capital expenditure. This will lead to an overstatement in operating cash flow and an understated investing cash flow

Those companies that want to artificially make themselves look better cannot manipulate one financial statement without impacting either another financial statement or an offsetting item on the same financial statement. – ChinHwee Tan & Thomas R. Robinson

There are two kinds, both premature revenue recognition and reporting non-existent revenues. There are motivations to make the earnings better than what they currently are. Fraudulent reporting of revenue is quite common. Sometimes, their revenue recognition principle might still be acceptable by the accounting standards. Revenue and gains might be distinguished properly. It might not be correct to record revenue at the point of contract signing, for instance. Look at the days sales in receivables ratios etc. Overstatement of cash is more difficult as auditors might be able to detect it. Satyam used ‘Investment in Bank Deposits’ which was fictitious and non-existent. The conclusion to make is that overstatement in revenue should result in an overstatement of assets (cash, inventory, investments etc). Longtop set up a new company, but did not consolidate it. Some of the expenses were parked in the new company. One simply way is to avoid recording liabilities on the company’s books. Gains can be shifted to revenue. Look out for share ownership and any related transfers. Look out for increasing share buyback programmes. Look at profitability margins as compared with their peers. Be wary of ‘extreme’ outsourcing as that could be a significant red flag. Sometimes, do not rely on management’s earnings forecasts. Be careful of non-arms length transactions. If a company fails to name their major suppliers or customers, it could be a potential red flags. ‘Authorized Intermediaries’. Listing through reverse takeovers often avoids the typical IPO due diligence. Limited management ownership and capital raisings without returns to shareholders can be alarming. Strategic investors should have a board seat in the governance of the company. Look out for alignment between management and their shareholders.

Detecting Overstated Financial Position. There are incentives for management to present a strong balance sheet. Investors often look at the balance sheet of the company. One way to accomplish this is to use off-balance sheet financing. Exclusion of A and L is possible through unconsolidated entities/joint ventures. For instance, via operating leases. Understating assets improves the ROA. Companies are not required to recognize an asset/liability on BS if an operating lease is used. Leasing means borrowing the asset. Please consider the impact of leasing and get the PV of future lease payments. Adjust earnings by adding back after tax lease payments and subtract estimate after-tax interest and depreciation expenses. One way of off-balance sheet financing is the selling of receivables, but still bearing some credit risk of collections. An analyst needs to read news in order to detect off-balance sheet activities. Look out for key words like ‘SPEs’, ‘joint ventures’, ‘associated companies’, ‘non-consolidated entities’, ‘guarantees’, ‘commitments’. For example, a company can guarantee a debt of others but fail to recognize the liability on its balance sheet. Overstatement of assets is actually quite popular. Sometimes, over-statement of valuation of assets on the balance sheet is possible. Fair value measurement is possible. PPE is measured at cost model or revaluation model. The book showcases the different types of recognition criteria. Financial assets should be measured at fair value or at amortized cost (depending on classification). Sometimes gains through revaluation can only be measured in other comprehensive income and not in the income statement. Biological assets valuation can be subjective as it involves a measure of the stage of growth and a value for that stage of growth. It can be difficult when there is no intermediate market. Compare it to other assets in similar assets. Off-balance items like underground reserves of oil can be overstated. Independent estimates for proved reserves need to be obtained. How are the companies accounting for their affiliates? Using the equity method of accounting?

Detecting Earnings Management. Some companies use cookie jar accounting. Management might be incentivised if they generate year-on-year profit. Management can change estimates or even use their judgement. Bad debts must be accrued as an allowance of bad debts. Examine the bad debt presented on the balance sheet and also use professional scepticism when auditing that number. For companies who collect in advance, use the deferred revenue account. See whether accrued or prepaid expenses are sensible even a company’s business model. Look out for DTA and DTLs on the balance sheet and know how to account for them. A company can also set up a cookie jar reserve. Will the deferred tax be used in future years?

Detecting Over-stated Operating Cash Flows. Cash flow can be used as a gauge for the quality of earnings. In addition, the discounted cash flow model is used by analysts. A strong earnings figure, coupled with negative cash flows, is concerning. One way is to misclassify cash flow. An analyst needs to understand the relationship between the cash flow statement and the income statement. The cash flow statement is divided into operating, investing and financing sections. Debt and equity transactions form the firm’s financing activities. You must be clear how a firm generates its cash. GAAP and IFRS are vary slightly on where to place interest/dividends on the cash flow statement. Investing usually consists of PPE or intangible assets. The financing section shows the long term inflow or outflow of capital to the firm in the form of cash from investors. In a healthy company, the operating income should be able to support the company on its own. The company’s operations must be healthy. Understand what are the main items that should enter the 3 categories. Most firms use the indirect method of presentation. The net income can be reconciled to the cash flow statement. You can use ‘cash flow from operating activities/sales revenue’. ‘Cash flow from operating activities/net income’. The free cash flow to the firm can be computed as Cash Flow from operating activities – capital expenditures. Purchase of PPE on credit must be declared. Worldcom misclassified normal operating expenses as capital expenditures.

This is accomplished by removing the effects of items that appear on the income statement but do not affect cash such as depreciation and amortization expense, items where the timing between accrual and cash is different (eg., changes in accounts receivable, accounts payable, prepaid), as well as items that appear on the income statement but are not categorized as operating activities for cash flow purposes. (eg. Gain/loss on PPE) – ChinHwee Tan & Thomas R. Robinson

Evaluating Corporate Governance and Related Party Issues. When the investor and manager are the same, there is an alignment of interest. However, in big companies, this is not possible. Corporate governance is the system of internal controls and procedures by which individual companies are managed. Good corporate governance is essential. The board must largely consists of independent members. An independent board reduces the possibility of inappropriate related-party transactions. It is recommended that at least 50% of the board be independent non-executive directors. The minority rights should be protected. Related-party transactions are quite common. Examine the structure to see if there are interlocking directorship or ownership situations. Learn to scrutinize related party transactions closely. It is unusual for compensation of executives to be paid through another company as consulting fees. It is worse when they are accrued but not paid. Look out for poorly designed compensation plans and excessive compensation. Be wary of embezzlement of funds from the company. Major transactions must be explained clearly. Strong internal auditors are important to ensure that strong internal controls are in place. It is important to make independent assessment over revenue projections.

Summary and Guidance. There have been many global scandals along the way. Be diligent in evaluating accounting games. The games cannot continue forever and will be revealed eventually. Understanding the business is the key. Gather and read through all of the financial statements and footnotes for the last several years. Prepare a common-sized analysis of the balance sheet and income statement.