Small Pleasures by The School of Life (Part 1)

This book will guide us to the life’s small pleasures

Preface. This book examines the 52 of life’s small pleasures. These are not usually widely celebrated. This book covers each one in detail. Small pleasures are often not well understood.

Small pleasures turn out not to be small at all: they are points of access to the great themes of our lives. – The School of Life

It can at first sound slightly strange to say that we don’t automatically and naturally know how to enjoy ourselves. But the pursuit of pleasure is a skill which we need to learn. – The School of Life

The Fish Shop. You stare in awe of the beauty and strangeness of the sea creatures. Oysters have their own home. They might seem weird, but we co-habit the same planet. We share the same ancestors. Looking at a dead fish can re-enhance us. We become fascinated by nature. Learn to appreciate the smell of salt and water and ice. Learn to develop a sense of pleasure of something wholesome and full.

We’ve been too hasty; we’re overlooked almost everything. The world is full of fascination; there is so much to be explored. And we have been led to this renewed appetite by the head of a fish. – The School of Life

Small Islands. You examine the island from afar, from the comfort of a passenger airline. You will big and in control on a small island. You will feel large. The island is small enough for you to take a drive. The scenery is impressive and you can spot hills and various streets. Life’s problems are not easily solved. Our longing for control leads to frustration. The small island feels good because it is contained and you can get anywhere in a short drive. Things start to become familiar on a small island and you become intimate to them.

A small island is not just a place on the map; it’s a psychological destination, a model of simplifying your life and making do with what is immediately to hand. – The School of Life

Stars. There are so trillions of trillions of stars out there, but we don’t notice them. We feel humbled being so small. From Earth, we can appreciate the magnitude of the cosmos. The stars look packed but in essence, they are so far apart from one another. We have no control over the cosmos and it is wonderful indeed. You don’t need to be a science professional to learn to appreciate the night sky. It is a sense of grandeur.

The stars matter in our lives because they offer a consoling encounter with grandeur, because they invite a helpful perspective on the brevity and littleness of human existence. – The School of Life

The regular appreciation of these and related small pleasures makes a major contribution to the elusive but crucially important notion of the quality of existence. – The School of Life

Grandmothers. You have spent some time just with your grandma. She showed you some of the things that mattered most to her. She can be a transitional object. It provides some form of psychological lifeline back to maternal love and security. The child can feel safe and discuss problems with her. As she is old, she understands fragility well. In addition, she knows her time on Earth is limited and will learn to appreciate its existence. She is still concerned for you, no matter what. She is cozy and wise. It is lovely when she reads to you. Her love is unconditional and she will love you whether you will do well in school or not. She just wants your presence. There is an absence of desire, which is very unique in today’s world. We all like tenderness.

Because her love is unconditional, it has the potentially maddening tendency to look right past some of your actual merits, which are the present focus your own sense of who you are. – The School of Life

The Friend who Listens. We need to learn to focus on friendship. No one has listened to us in the past. Society focuses too much on speaking. People are curious and love to keep asking questions. People who listen reconnect your chat and talk about philosophical ambitions. Good listeners don’t moralize and do not interrupt. They reassure us. They are happy for us to be vulnerable. They separate disagreement from criticism. Good listeners help to make society better for everyone.

Take-off. It is an amazing feeling when the plane first ascends. We can see the immense horizon. We can cover so much ground in the air. It is a display of power. Our eyes try to decipher what we see from the air. From the plane, our world appears so small. The clouds seem like perfect seats for an angel. It seems cool to eat among the clouds and we feel homely. The clouds make it tranquil and life seem peaceful.

And to think that all along, hidden from our sight, our lives were this small: the world we live in but almost never see; the way we must appear to the hawk and to the gods. – The School of Life

A Night Alone in a Hotel. You stay in a hotel overnight near the airport and can hear the planes roaring away. You ordered room service and your food is served. It is difficult for you to fall asleep as you switch on the TV. In a foreign land, not being able to sleep might be a blessing. You get to relax here and return to yourself. That day, you do not think of the difficult questions like where is your career going etc. No one will disturb you and you think about life. For tonight, insomnia is a gift for you to understand yourself better.

Sunbathing. You are in Rhodes to get more sunshine. The sky is blue and you have been craving sunshine for the longest time. You hardly miss winter at all. You feel you long for the sun. Sunshine is indeed a welcome respite. You need the virtues of the South too. You have come in search for wisdom and balance.

Sunshine is an agent of moral qualities: of generosity, courage, the appreciation of the present moment, confidence…When the world seems bountiful, material accumulation looks less impressive. – The School of Life

The Desert. You are in the middle of nowhere and there is nothing to compare to. You will feel intimate with yourself in the desert. Meditate on your utter insignificance. The desert is indifferent to your life. It gives you a renewal of perspective. The Universe is mightier than you and you have to accept its power.

Everything we do and are is in truth meaningless – when considered from a sufficient distance, from the perspective of the timeless stones, the boundless vistas, the infinite heavens. – The School of Life

We are frail and temporary and have no alternative but to accept the limitations on our will; that we must bow to necessities greater than ourselves. – The School of Life

Finding Your Feet Abroad. You might experience language difficulties. Everything seems foreign to you. Shyness is not an option. When you travel, you learn to be more confident. Smiling is indeed really useful. There is nothing to fear.

There is vast quantity of goodwill circulating in the world just below the surface and which we usually delve into too rarely. But now perhaps we can more often. – The School of Life

Being Up Late at Night. Late at night is when your mind has time to wander. There are infinite possibilities. We can tolerate all our possibilities. It is just us and the Universe and there are no expectations of us late at night.

The Charm of Cows. Cows are great and are not selfish. They are also easy-going and easily satisfied. They also protect their dignity. They harbor no bitterness. It doesn’t judge you. They do not care what you think of them. Looking at them can make your day.

Up at Dawn. It’s 5:45am. The sky is starting to turn purple. It looks impressive but you realize you hardly see it because you are asleep. Dawn is when you forgot everything that happened yesterday. This place looks magical. The human world will drown them out. You are missing the delicate things in life. The air feels fresh. You start to pay attention to nature and the things around you more in the morning. There is beauty in the tower block and you realized there is life out and about. You say hi. You feel at ease in the world and you feel serene. Every day is a fresh start and that is the good thing about life.

You can’t make there be 25 hours in the day. Yet now it does feel like you are in possession of an extra slice of existence; it’s always been there, but you’ve only just found it. – The School of Life

Staring out of the Window. It can seem like a waste of time as it serves no purpose. This is associated with boredom. It is essentially about figuring out what is in your mind. There is a lot of unexplored potential in our mind. Looking outside the window will give us a different perspective of life. Our ideas are like birds fluttering. We need purpose-free calm. We should learn the prospect of daydreaming. We miss the simple pleasures of looking out a window.

Window daydreaming is a little strategic rebellion against the excessive demands of immediate pressures – in favour of the diffuse, but very serious, search for the wisdom of the unexplored deep self. – The School of Life

A Hot Bath. It is easy to get carried away imagining a happy life. Focus on the reliable pleasures and satisfaction. A hot bath is one such example. You start by adjusting the temperature. You understand the hard work that is required to bring hot water to you. The bath allows us to be cozy. It is especially good in cold weather. The pleasure of the bath is primarily intellectual. They produce productive thinking. In many religions, bathing is a ritual that is strictly followed. Taking hot baths is your own virtue. They still have a wonderful way of influencing the psyche.

Indulgent Pessimism. Pessimism can indeed be a source of pleasure. It might a good strategy to safeguard happiness. We get disappointed when things go according to expectations. Anticipating the worst is a good idea.

Therefore, the kindest thing we can do for ourselves is to recognize that our griefs are not incidental or passing, but a fundamental aspect of existence which will only get worse – until the worst of all happens. – The School of Life

The pleasure of pessimism isn’t linked to being mean or bitter. It’s grounded, in fact, on sympathy. This is an antidote to the oppressive modern demand to look only on the bright side. – The School of Life

Self-Pity. Self-pity can be painful. We lament our small problems which in the grand scheme of things don’t matter much. We feel it quite often. Life can be harsh sometimes. Therefore, we deserve pity and since no one there to give us any, we shall supply a fair dose of it to ourselves. We should not lose the act of self-pity. Feeling sorry for yourself is a coping mechanism. This will tell us we are misunderstood and undemanding and in need for love.

Crushes. You cannot stop looking at her. You sense a crush but she disappears afterwards. It can happen to another. This might seem like a small moment but it could be developed into something bigger. This is the perfect form of philosophy. We imagine an image of beauty. In reality, such a person might be different from what we imagined. You can’t put a crush into practice so simply. The pleasure of imagining an ideal person is great and can bring some joy.

Keeping Your Clothes On. It is assumed that sex scenarios are associated with nudity.In fact, it stems between the contrast between prohibition and acceptance. Deliberately keeping clothes on can prove to be a turn-on as a way to heighten excitement. You might retain a sense of anticipation. It might seem thrilling. You are toying or the other party is toying with the privileges of permission when you are trying to keep your clothes on.

Kissing. Kissing is nice. It helps us to deepen our appreciation for someone. Why is kissing so significant and potentially so exciting? Sexual excitement is psychological. Something happens in our brains. Kissing has been built up as a social norm to mean that I accept you – accept you so much that I will take a big risk with you. It is psychologically pleasing. Kissing provides a brief break from loneliness. There is no need to analyze why kissing is pleasurable.

Children’s Drawings. Drawings can be very pleasing. Their artwork possesses a form of inner balance and well-being. Their art is an evidence of trust. Adults are more wary people. We are often hit by waves of anxiety. There is beauty in inaccuracy in children’s art too. They are not concerned with whether what they do is right or not. We live in a complex and modern society. Innocent trust and imagination tend to be lacking in adults. Children’s art provide an opportunity for us to know our own needs.

Crimes in the Newspaper. You had a rough day but you read some articles on crimes in the newspapers. Why should one find pleasure in this sort of things? These criminals actually look normal. The criminals are too strange and make our strangeness seem not that remarkable after all. In contrast to the atrocities that Hitler committed, you are nothing in comparison.

But the truth is we’re not actively egging on criminals, we’re not glad these things happened. On the contrary, it’s the very fact that they are clearly so wrong that generates our moments of satisfaction. – The School of Life

You’ve felt furious, suffered from envy and had periods of money worries – but you never did what they did. You absorbed your pain rather than committed crimes. Their villainy reveals your quiet moral heroism. – The School of Life

Driving on the Motorway at Night. You are driving at 10:15pm. The car feels powerful and you feel purposive. Our mind, at times, doesn’t like to think. While driving, it also helps with our thinking. Driving is not too stressful. Sometimes, our mind might drift but nothing actually happens to us.

You are experiencing an underappreciated but important satisfaction that deserves a special name: driving therapy. – The School of Life

It’s strangely attractive, at night in the middle of a long solo drive, to stop at a service station. Ordinarily that’s got close to zero appeal. But now it’s pleasing to change tempo, to sit silently amongst other human beings and have a coffee. – The School of Life

TSOL_slide_11

The Conquest of Happiness by Bertrand Russell (Part 2)

Envy. Envy is very deep-seated and universal. Humans value distributive justice quite a bit. Adults also feel the same. Envy is the basis of democracy. Jealousy can happen among women too, especially when they get jealous over what each other wears. Women usually regard all other women as competitors. Men view other men in their profession as competitors. He wants to derive others of their advantages and feels good over it. Rather, one should admire rather than simply become jealous. What is the cure of envy? Envy is definitely an obstacle of happiness and largely stems from childhood. Parents who neglect their kids might be one cause of envy. Try to avoid comparing excessively. Envy is like a moral vice. If you compare your salary with someone else who is your equivalent but earning twice as much, that might make you jealous. To solve this, we should exercise mental discipline and not think profitless thoughts. There will always be someone who is smarter than you and earns more than you. If you are too modest, you might be more prone to envious feelings. It is good to be self-confident. Envy is closely connected with competition. Democracy has increased the range of envy. All bad things are interconnected. Fatigue is a frequent cause of envy. One way to diminish envy is to diminish fatigue. If you feel you have enough to bring up your kids the right way, you will be unlikely to feel jealous of others. Instinctive happiness is important. In modern society, the human heart is more prone to hatred as compared to friendship. To find the right road, Man must enlarge his heart as well as his mind.

Of all the characteristics of ordinary human nature envy is the most unfortunate; not only does the envious person wish to inflict misfortune and do so whenever he can with impunity, but he is also himself rendered unhappy by envy. – Betrand Russell

The habit of thinking in terms of comparisons is a fatal one. When anything pleasant occurs it should be enjoyed to the full, without stopping to think that it is not so pleasant as something else that may possibly be happening to someone else. – Betrand Russell

You can get away from envy by enjoying the pleasures that come your way, by doing the work that you have to do, and by avoiding comparisons with those whom you imagine, perhaps quite falsely, to be more fortunate than yourself. – Betrand Russell

When a man feels inadequate to the work he has to do, he feels a general discontent which is exceedingly liable to take the form of envy towards those whose work is less exacting. – Betrand Russell

But by far the most important thing is to secure a life which is satisfying to instinct. – Betrand Russell

The positive sum of pleasures in a modern man’s life is undoubtedly greater than was to be found in more primitive communities, but the consciousness of what might be has increased even more. – Betrand Russell

Man knows there is something better than himself almost within his grasp, yet he does not know where to seek it or how to find it. In despair he rages against his fellow man, who is equally lost and equally unhappy. – Betrand Russell

The Sense of Sin. Sin is one of the main causes in adulthood. Some do not believe that if you sin, your conscience will prick you. Conscience could also mean the fear of being found out. People avoiding sinning because of the risk that they would be discovered. Also, it would be difficult to explain to your friends why you committed a crime. Sin also has its roots in the unconscious. However, one should wallow in self-pity even though you have sinned. Saints would not simply do something because it gave them pleasure. Rationally, drinking would be okay if it gave you pleasure but no counter-balancing pain to oneself or to others. Hence, the logic that saints cannot drink or smoke might be a bit flawed. Sometimes, lying is justified too. The concern are that some adults teach something unwise and the kid develops an irrational sense of sin. Man must not be swayed by their moods. Moments of weakness give less insight than moments of strength. One should examine their reasons for actions and what caused the remorse. Your conscious beliefs should be firm enough to over-write your unconscious decisions. Do not let irrationality dominate you. Do not be partially swayed by reason and partially by infantile folly. A modern man can be tempted to commit harmful acts. Our nominal morality may have been shaped by priests etc and it was not derived from a study of an individual’s duty to the community. Learn to rebel against age-old traditions. A man should question superstitious morality. Sin makes man unhappy and jealous of others having a good time. Different parts of personality should be in sync so that you can be happy. A certain amount of self-reflection a day is useful. Some people think can rationally can kill all deeper emotions. I disagree. Being rational will not make your life dull as you can still pursue things like love, passion in work etc. The less inward conflicts you have, the more you can channel your energies towards the contemplation of the world. Reason is necessary in effecting a cure. The modern man is simply loving strong distractions and because they will prevent painful thought for that reason. Intoxication is his relief from pain. The greater your possession of faculties, the better.

An expansive and generous attitude towards other people not only gives happiness to others, but is an immense source of happiness to its possessor, since it causes him to be generally liked. – Betrand Russell

What I suggest is that a man should make up his mind with emphasis as to what he rationally believes, and should never allow contrary irrational beliefs to pass unchallenged or obtain a hold over him, however brief. – Betrand Russell

Nothing is so dull as to be encased in self, nothing so exhilarating as to have attention and energy directed outwards. – Betrand Russell

The greatest happiness comes with the most complete possession of one’s faculties. It is in the moments when the mind is most active and the fewest things are forgotten that the most intense joys are experienced. The happiness that requires intoxication of no matter what sort is a spurious and unsatisfying kind. – Betrand Russell

Persecution Mania. Persecution mania is a form of insanity. People feel like others will want to cause injury on them. Sometimes, they may commit acts of violence. If someone is victimized, it is likely the cause lies in himself. He might just be seeking attention. Such a patient must be able to understand. You are unlikely to feel happy if you feel you are mistreated by everybody. Almost everyone says malicious things about others. However, when others say malicious things of them, they are filled with indignant amazement. Gossip can lead to persecution mania. We should have to hide our feelings towards our friends. Never think that your misfortunes affords the key to the Universe. Do not be horrified if you do good to others but receive no gratitude. Remember that your motives are not always as altruistic as they seem to yourself. Don’t over-estimate your own merits. Don’t expect others to take as much interest in you as you do yourself. Don’t imagine that most people give enough thought to you to have any special desire to persecute you. The above are very valuable lessons that one should remember. Understand that not everyone else will have the same world-view as you. If nobody likes your work, perhaps it is the quality of work that is no good and one might have to accept this fact. If you want to produce quality work because of fame, it is unlikely that you will pursue the goal with much persistence. People see things from their point of view, which you may not agree. If you are a common man and think that everyone is against you, you are on the road to insanity. Never build your life based on self-deception.

It does not occur to us that we cannot expect others to think better of us than we think of them, and the reason this does not occur to us is that our own merits are great and obvious, whereas those of others, if they exist at all, are only visible to a very charitable eye. – Betrand Russell

Whatever is to be done can only be done adequately by the help of a certain zest, and zest is difficult without some self-regarding motive. – Betrand Russell

The test is this: do you produce because you feel an urgent compulsion to express certain ideas or feelings, or are you actuated by the desire for applause? – Betrand Russell

Whatever your line in life may be, if you find that others do not rate your abilities as highly as you do yourself, do not be too sure that it is they who are mistaken. – Betrand Russell

Fear of Public Opinion. Catholics do not believe in divorce. Even if your set of values differ from another person, you may be an outcast. Sometimes, if society doesn’t accept your values, you might feel like you have not been treated well. Not many are strong enough to have a brave inner life and ignore public opinion. It can be difficult to go against the social construct. Sometimes, it might be necessary to conceal your real tastes and convictions from most people in order to gain social acceptance. Hence, you mustn’t be afraid of public criticism. Sometimes, it might be good to enter a career which would give you a chance of congenial companionship, even if it means a considerable loss of income. It is okay sometimes to be out of sync with your environment and not be in harmony with it. Never let public criticism embitter you and impair your energy. The old should not simply be allowed to regulate the lives of the young. Do not simply give up because your parents tell you to. However, if professional opinion is against you, you should pay attention to it. One should not voluntarily submit to public tyranny and opinion. A society where everyone is alike can be boring too. People should be allowed to follow their spontaneous tastes. In modern society, it should be much easier to find a congenial soul. Fear of public opinion stuns growth and is oppressive. One should be themselves and have freedom of expression.

Public opinion is always more tyrannical towards those who obviously fear it than towards those who feel indifferent to it. – Betrand Russell

As a matter of fact, any man who can obviously afford a car but genuinely prefers travel or a good library will in the end be much more respected than if he behaved exactly like everyone else. – Betrand Russell

It is essential to happiness that our way of living should spring from our own deep impulses and not from the accidental tastes and desires of those who happen to be our neighbours, or even our relations. – Betrand Russell

Part 2: Causes of Happiness

Causes of Happiness. Happy comes in two forms, one that is plain and fancy or animal and spiritual. I will now describe the 2 forms of happiness. One type is only available to those who can read and write. You can be happy simply from the sufficiency of work and overcoming challenges. An example is that of my gardener. He is interested in slaying rabbits in the course of his work. However, superior people will not unlikely to find joy in this. If you are educated, you would want different activities to achieve the pleasures in life. Don’t be too sure of your abilities in life. There is no need for complex emotions. In general, society respects scientists more than artists. Artists could very well be less happy than men of science. Young people tend to be unhappy that they have no adequate employment for their best talents. Political circumstances in the West are stable and they should affect a young man’s happiness. If you feel powerless, you will not tend to be happy. A powerless guy becomes a reformer/ revolutionary. In life, not only scientists are happy. In fact, it is possible for almost everyone to derive pleasure from their work. The study of shells brings contentment to those who engage in it. There might be less handicraft work in the modern age. The ultimate aim is for machines to perform uninteresting work and humans are reserved for the work involving variety and initiative. Companionship and co-operation also make man happy. Belief in a cause can lead to happiness too. It is useful to find a cause to believe in. One can be absorbed in a hobby, for example, like stamp-collecting. The joy in your hobby can provide consolation to you if you are not making progress at work. We should not think ourselves ‘too superior’ for simple pleasures in life. Hobbies are perhaps not the fundamental source of happiness. A friendly interest in persons and things are more important. Learn to observe people and find pleasure in individual traits. Never try to exert power of others or to make them envy you. One needs to be genuinely happy in himself and not from an idea of self-sacrifice. One can also like things, like how a geologist takes an interest in rocks. Although not as important as being friendly towards others, taking an interest towards things matters too. When you take interest in something, you might be able to acquire a poise and calm which will help you deal with your troubles.

Many of the most eminent of men of science are emotionally simple, and obtain from their work a satisfaction so profound that they can derive pleasure from eating and even marrying. – Betrand Russell

All the conditions of happiness are realized in the life of the man of science. He has an activity which utilizes his abilities to the full. – Betrand Russell

Very few men can be genuinely happy in a life involving continual self-assertion against the skepticism of the mass of mankind, unless they can shut themselves up in a coterie and forget the cold outer world. – Betrand Russell

The pleasure of work is open to anyone who can develop some specialized skill, provided that he can get satisfaction from the exercise of his skill without demanding universal applause. – Betrand Russell

It is easy to find some cause which is in no degree fantastic, and those whose interest in any such cause is genuine are provided with an occupation for their leisure hours and a complete antidote to the feeling that life is empty. – Betrand Russell

We have all experienced collecting small items in boyhood, but have thought them, for some reason, unworthy of a grown man. This a complete mistake; any pleasure that does no harm to other people is to be valued. – Betrand Russell

Being happy in himself, he will be a pleasant companion, and this in turn will increase his happiness. – Betrand Russell

To like many people spontaneously and without effort is perhaps the greatest of all sources of personal happiness. – Betrand Russell

The secret of happiness is this: let your interests be as wide as possible, and let your reactions to the things and persons that interest you be as far as possible friendly rather than hostile. – Betrand Russell

Zest. Zest is the common mark of happy men. There are those who thinking eating is a bore or uninteresting. They regard meals as common occurrences. There are those who eat from a sense of duty. There are those who eat too much as well. It is not vulgar to be able to enjoy your food. The mind needs materials from the external world, or it will remain powerless. Events only become experiences if we take interest in them. Learn to turn your attention outwards. Life is never boring to someone who can pay attention to casual objects. The more things you are interested in, the more you can adapt to the world. You can analyze passer-bys that you see. Some men who not keep an open mind and do not enjoy holidays as much. Some men choose to learn about the place, the culture etc and can better appreciate the place more. The man who has the zest for life has an advantage. Experiencing new things are good, provided they do not harm your health. Zest can be very specialized in nature. It is more important to have a general zest for life. We were not ready to praise the gormandizer. In life, there must be a balance between different activities. Do not do things in excess. Our tastes need to fit in the general framework of life. You must still be able to earn an income to buy necessaries etc. If you like chess, it is okay to look forward to playing after working hours but there is no need to give up your work to play. If you need to make sacrifices in life, ensure that you will succeed. Some men like to drink in order to forget things. Habits are regular whereas impulses are irregular. Most people do not have impulse towards the activity, but towards the rewards of the activity. Hence, people’s zest are somewhat restrained. Spontaneous impulse will not produce the necessary results too. Zest requires high energy levels and is very important. In the past, women learnt not to care about anything. This is rather unfortunate and zest is both important for men and women in life.

The man who enjoys watching football is to that extent superior to the man who does not. The man who enjoys reading is still more superior to the man who does not, since opportunities for reading are more frequent than opportunities for watching football. – Betrand Russell

The more things a man is interested in, the more opportunities of happiness he has, and the less he is at the mercy of fate, since if he loses one thing he can fall back upon another. – Betrand Russell

Life is too short to be interested in everything, but it is good to be interested in as many things as are necessary to fill our days. – Betrand Russell

It is quite impossible to guess in advance what will interest a man, but most men are capable of a keen interest in something or other, and when once such an interest has been aroused their life becomes free from tedium. – Betrand Russell

The man, let us say, who loves chess, if he happens to be a bachelor with independent means, need not restrict his passion in any degree, whereas if he has a wife and children and no independent means, he will have to restrict it very severely. – Betrand Russell

The man who has never been fundamentally thwarted will retain his natural interest in the external world, and so long as he retains it he will find life pleasant unless his liberty is unduly curtailed. – Betrand Russell

9780041710045-us-300

The Conquest of Happiness by Bertrand Russell (Part 1)

‘I think I could turn and live with animals, they are so placid and self-contained. I stand and look at them long and long. They do not sweat and whine about their condition. They do not lie awake in the dark and weep for their sins. They do not make me sick discussing their duty to God. Not one is dissatisfied, not one is demented with the mania of owning things. Not one kneels to another, nor to his kind that lived thousands of years ago. Not one is respectable or unhappy over the whole Earth.’ Walt Whitman

Preface. This book does not contain deep philosophy, but only remarks which are common sense. These are practical steps which has been proven to increase my happiness. By employing the methods suggested, one could be happy.

Part 1: Causes of Unhappiness

What Makes People Unhappy? Unlike animals, the general lot of humans aren’t happy. Look around you and observe the mood on people’s faces. You will see that unhappiness is all around you. For the working crowd, you will see anxiety, intense concentration etc. You will see people rushing by cars to work, ignoring the scenery. It seems like enjoying the scenery is illegal. Alcohol liberates the sense of sin, which reason suppresses in saner moments. All the unhappiness tends to stem from a social system. The avoidance of war is definitely important, but it won’t be covered here. What is the use of making everyone rich if the rich themselves are miserable? What can a man do to achieve happiness? I will suggest a cure for day to day unhappiness (mistaken views of the world, mistaken ethics, and mistaken habits of life). As a child, I was not born happy. The same could be said of my teenage years. However, I enjoy life now. It is largely due to a diminishing preoccupation with myself. Instead on focusing on my weaknesses and wading in self-pity, I focused on external topics that I had interest in. A man who is conscious of his sins will be in constant disapproval of himself. When he sins, he feels like the act has degraded him. The next is narcissism. It is about admiring oneself and wishing to be admired. It is only bad when it is overdone, example, when a woman feels like every man should love her. This is not love, she just wants to prove her point. Humans are never completely self-centred and hence you will never truly be happy if you are. . The megalomaniac seems to be powerful and also to be feared, rather than loved. Greed is all encompassing, but it doesn’t lead to fulfillment. The worst case is for a man to seek no form of satisfaction, but only distraction and oblivion like from intoxication.

It is held that drink and petting are the gateways to joy, so people get drunk quickly, and try not to notice how much their partners disgust them. – Betrand Russell

And every external interest inspires some activity which, so long as the interest remains alive, is a complete preventive of ennui. – Betrand Russell

External discipline is the only road to happiness for those unfortunates whose self-absorption is too profound to be cured in any other way. – Betrand Russell

The tragedy of one successful politician after another is the gradual substitution of narcissism for an interest in the community and the measures for which lib stands. – Betrand Russell

The typical unhappy man is one who, having been deprived in youth of some normal satisfaction, has come to value this one kind of satisfaction more than any other, and has therefore given to his life a one-sided direction. – Betrand Russell

Drunkenness, for example, is temporary suicide; the happiness that it brings is merely negative, a momentary cessation of unhappiness. – Betrand Russell

Byronic Unhappiness. There is no superior rationality in being unhappy. This could be because you feel you have fully understood the world and that nothing surprises you anymore. There is a difference between a mood and an intellectual expression. If life is too easy, it may rob you of happiness. Sometimes, humans forget that to be without some of the things you want is an indispensable part of happiness. It seems like things are not improving or at least there is no permanent achievement. However, mankind has invented a lot of new things since the ancient times. Some people view travel as unpleasant. It is the destination that is enjoyable, even though one has to return home after that. Mr Krutch feels that science has not done its job, has not fulfilled its promises. When people are poor, there tends to be a lot of pessimists around. I am highly critical of Mr Krutch. Often, people who are skeptical of love are not in harmony with their environment. The type of love I believe in is certainly not the type in the Victorian era, where evil is forgotten. Modern couples could have a more open outlook towards sex, unlike those in the Victorian era. Love is to be valued and this is a source of delight. Love is a source of delight, its absence is a source of pain. It is about to enhance all the best pleasures. Love is able to break down someone’s strong ego. There are only a handful of very successful solitary philosophers. I believe man work better when they co-operate. Those who are unable to find love may become skeptical. Literary men have not experienced the fullness of life, which includes the vicissitudes of life. If your life is boring, take on an interesting vocation.

Ours is a lost cause and there is no place for us in the natural Universe, but we are not, for all that, sorry to be human. We should rather die as men than live as animals. – Joseph Krutch

Man is perpetually toiling, and matter is perpetually in motion, yet nothing abides, although the new thing that comes after it is in no way different from what has gone before. – Joseph Krutch

If I lived forever, the joys of life would inevitably in the end lose their savour. – Betrand Russell

True love is a durable fire, In the mind ever burning, Never sick, never dead, never cold, From itself never turning. – Betrand Russell

To write tragedy, a man must feel tragedy. To feel tragedy, a man must be aware of the world in which he lives, not only with his mind, but with his blood and sinews. – Betrand Russell

Competition. The struggle for life does not affect the enjoyment of existence. It does happen from time to time. Modern problems are not as major as those compared to putting food on the table. This struggle for life is actually a struggle for success. Humans are creatures of comparison. It is like walking on a treadmill. It is normal for a man to want more, at the expense of contributing back to society. If you work too hard, you might neglect your family. Gradually, he is too absorbed in his work and can largely think about it only. If such a businessman wants to be happier, he needs to change his religion. If he continues to be obsessed with success, he will focus too hard and be too anxious. Some Americans are too risk seeking and want quick but risky returns. However, they have a chance to lose all their savings as a result of awry investments. Many people are concerned with their social standing in society. The more money you make, the smarter it seems that you are. Success makes it easier for people to enjoy life, but to what extent should you pursue it? Money, to a certain extent, is capable of increasing happiness. Excellence is also respected, in addition to success. Unlike in Europe, Americans are driven to make more money. The idea is that education is useful because it can help me make money in future. A successful businessman does not know what to do with leisure time. Is success the purpose of life? In modern day, men and women appear incapable of enjoying intellectual conversations. The knowledge of literature is confined within a few professors. What use can knowledge be if it doesn’t help me to make money? The problem is that many view life as a competition. Competition should not be considered the main thing in life. Leisure is also poisoned as a result of competition. The cure is to find a better balance in life.

Everybody knows that a business man who has been ruined is better off so far as material comforts are concerned than a man who has never been rich enough to have the chance of being ruined. – Betrand Russell

What I do maintain is that success can only be one ingredient in happiness, and is too dearly purchased if all the other ingredients have been sacrificed to obtain it. – Betrand Russell

As for the learned professions, no outsider can tell whether a doctor really knows much medicine, or whether a lawyer really knows much law, and it is therefore easier to judge of their merit by the income to be inferred from their standard of life. – Betrand Russell

Unless a man has been taught what to do with success after getting it, the achievement of it must inevitably leave him a prey to boredom. – Betrand Russell

Boredom and Excitement. Boredom has not received a lot of attention. However, it is a great motive power. It seems like a distinctively human emotion. I do not think animals can get bored. Running away from enemies is definitely not boring. One of the essentials is that one’s faculties must not be fully occupied. When you are bored, you crave for something interesting, which may not be a happy event. Humans have this deep desire for excitement. Chasing animals was exciting in the past, but most of us do not hunt in the modern day. Although with shorter working hours and with better technology, we should be less bored. However, we are ever more afraid of boredom. Those who are richer seem to seek more excitement and want it to be more intense. Even if you don’t work a routine job and have a lot of free time, boredom might set in. To me, some element of boredom is essential for life. Many of the sins have been formed because of boredom. However, boredom is not wholly evil. If your life is too exciting, you will crave for even greater events that can bring you that level of excitement. Therefore, there is no need to push to the extremes of excitement. Too much excitement will leave you tired. Every human life has its boring stretches and boring portions. All the best novels contain boring passages. Parents should teach their children that life is more or less monotonous. Too much stimulation when young might not be a good idea. Some good things are not possible except with some monotony. If your life is too exciting, you only crave for the next interesting event and you ignore the long term. Humans should preserve contact with nature and the ebb and flow of life. The joys that nature can being are more permanent and last longer.

A life too full of excitement is an exhausting life, in which continually stronger stimuli are needed to give the thrill that has come to be thought an essential part of pleasure. – Betrand Russell

Love is an experience in which our whole being is renewed and refreshed as is that of plants by rain after drought. – Betrand Russell

A happy life must be to a great extent a quiet life, for it only in an atmosphere of quiet that true joy can live. – Betrand Russell

Fatigue. Fatigue can affect happiness. Physical fatigue due to exercise might be a good thing. However, when excessive, is not good. For example, this could refer to child labour or employer abuse. The more common fatigue people face is nervous fatigue. The world is complex and there are many stimuli. Hence, man could feel tired and feel competition with other humans. If you performing unnatural conduct at work to please your boss, it might lead to a nervous strain. The problem with success is the stress that you might have to endure because of it. Some rich people self-inflict fatigue on themselves because they take on too much in life. Worry can be prevented with a better philosophy of life and better mental discipline. People worry even though they can’t do anything to improve the situation. Happiness and efficiency can be increased by cultivating your mind. Use all the information presented to you and make the best decision. Do not revise it unless there is new information that comes about. Indecision is futile and very worrying indeed. Sometimes, the less you care, the better it is as you will feel less nervous and you might in fact perform better. One’s ego is insignificant in this world. Learn to center your thoughts on something that can transcend yourself. The fatigue to be concerned about is emotional in nature, like intellectual fatigue. Emotional fatigue interferes with your daily life. Do not over-emphasize the importance of your work. Work is important, but do not let it consume your life. It is emotional trouble that causes the breakdown. Mental discipline is the key and this means thinking of things at the right time. However, you can’t control unconscious thought. A conscious thought can be planted into your unconscious with sufficient amount of vigor and intensity. If you have learned not to fear, your fatigue of daily life diminishes. Distracting your mind from the fear is not a good idea. The better strategy is to confront it with great concentration, until it has become completely familiar. Courage is something to be respected and that we should exhibit more of. Do not overload yourself with pleasure such that it becomes fatiguing in nature. It is crucial to be in contact with the Earth.

But it is quite possible to shut out the ordinary troubles of ordinary days, except while they have to be dealt with. – Betrand Russell

Our doing are not so important as we naturally suppose; our successes and failures do not after all matter very much. Even great sorrows can be survived; troubles which seem as if they must put an end to happiness for life fade with the lapse of time until it becomes almost impossible to remember their poignancy. – Betrand Russell

When you find yourself inclined to brood on anything, no matter what, the best plan always is to think about it even more than you naturally would, until at last its morbid fascination is worn off. – Betrand Russell

9780041710045-us-300

IIA Magazine Jun 2016 issue

A toxic culture is present when your work negatively affects your health – physically and emotionally. An example of such could be a change in management or management through fear and intimidation. The two options are to leave or to name the problem and discuss to make it better. Payroll should have continuous checks and balances. It is not good to report risks on an ad-hoc basis. Talent issues and development need to be addressed. There is a strong need to fight corruption. However, whistle-blowing hotlines might be underutilized, as employees fear retaliation after reporting. There are some companies which do not trust enterprise cloud deployments still.

The Fire Drill. Auditors can learn to deliver a focused message that results in management action. Effective planning of our work is the key. For instance, we can look at past audit findings. Next, one should compensate with competence, meaning backing up observation with data and experience. Sell with the passion of a champion. Findings should be sold to address a control weakness that is causing an unacceptable risk. One needs to communicate the big risks well. In the end, we need to deliver a focused message that can result in management action.

The Tech-Savvy Auditor. Effective use of audit technology can enable audit departments to provide valuable insights. Most IA staff are not familiar with IT or have weak IT backgrounds. This is not acceptable. Technology can lead to a more efficient audit and also might cut fraud losses. There is a need to improve the audit software. There should be a data analytics centre in-house. There is a need to review software usage.

Integrating Key Risks and Performance Indicators. IA can leverage its risk knowledge to improve operational performance and reduce risks exposures. IA can provide assurance on the achievement of objectives. IA can encourage the formalization of KPIs and KRIs. KRIs can serve as an early signal of increasing risk exposure. There needs to be a formal project charter. There needs to be a KPI framework with proper planning, reporting, monitoring etc. The key metrics need to be identified and a dashboard can help to present graphically the results. The KRI should be closely linked to the KPI.

Toxic Leaders, Toxic Culture. IA can identify unhealthy behaviors that may undermine the organization. Culture will affect an organization’s success. Therefore, identifying the toxic leader is important. Toxic leaders want power and control. These tend to be autocratic leaders. They could have a strong sense of entitlement and focus on themselves and not the organization. Exerting power through fear can undermine morale. They do not like to be challenged and seek to manipulate others. Closed-minded leaders think of ‘My way or the highway’. There is no need to confront the toxic leader. IA can refer the person to compliance or legal counsel. One can use behavioural psychology to analyse. For a more objective method, one can look at the reasons for turnover and examine turnover rates. One can also look at employee engagement survey results. One needs to use experience and facts as much as possible.

Analytics and the small audit department. No matter the size of an audit function, analytics can be implemented for big gains. How to go about using analytics? Some simple ones to consider are benchmarking, variance analysis, ROA, turnover etc. The analytics must have goals and performance measures. Selecting the right data source is the key and there is a need to verify the accuracy of the source. Brainstorming can help to identify key data. It is crucial to have a plan that will allow IA to continue to improve its analytics capability. It is important to attain small wins in analytics.

Business Risk. Keynote speakers for this year’s IIA International Conference identify emerging risks facing organizations. Cyber risks is at the top of the priority list for many. Ransomware is a big threat to hospitals nowadays. Other threats include politics, the economy and terrorism. Social media risks sometimes aren’t within an organization’s control. Auditors should use corporate culture to work in their favour. An organization must monitor the external environment closely. There should be a common understanding of what the risk appetite and risk cultures are. Audit needs to adjust fast and invest continually in education. IA now also needs to learn to be innovative.

An Anti-corruption Check-up. Capability maturity models can help organizations assess the effectiveness of the anti-corruption programs. This model was developed at Carnegie Mellon University. One can use the model to identify strengths and weaknesses. There are basically 4 levels of maturity. There are 7 components that form the basis of anti-corruption maturity model. There is a need to tally the scorecard too.

Craft Our Role. IA should create the role for themselves that is best for both the organization and their own personal development. IA needs to be ingenious, use creativity and resourcefulness when developing their role. Do not limit the scope to be too small. It is important to be familiar with the business in order to value add properly. The control environment needs to be evaluated properly. One can develop business acumen. It is crucial to ask the right questions. IA should network more with the other departments to build rapport and also to get a feel about the management style in the department. Learn to practise combined assurance. One can work with another dept for a joint review. This is the way to maximize external resources.

Fraud and related-party transactions. IA can identify red flags and reduce the risk and impact of related-party fraud. IA need to be able to recognize related-party fraud risks. Providing loans at below market rates is a red flag. Failing to disclose the related-party nature of the loan is a red flag. IA should try to identify related party transactions. Try to identify whether employees have link to companies that transact with the organization itself. It is also possible to compare cost variations among vendors to see how they differ from the average cost. The organization should not pay costs significantly above market prices.

Communicating Results. Sharing audit observations is one of the most important tasks auditors perform. Communicating properly can help enhance rapport. Make sure the observations are correct and are not challenged by management. Plan the timing of issue dissemination, which is as soon as possible. Try not to surprise management at the end of the audit. Write clearly. Exercise diplomacy.

‘One of the quickest ways to lose management’s respect is to make it clear that IA does not understand what is has been auditing. The answer is to take the time to learn the business, processes, and risk associated with the audited area.’

Care and Feeding of The Company’s Culture. How can IA help to ensure a healthy organizational culture? Auditing culture is certainly work examining. Healthy organizations should have guidance on norms and expectations and a healthy tone at the top. Transparency is important. Management should think long term and have a sound strategy. Ask yourself whether the root cause is behavioural or cultural in nature. The problem with culture is that it is not clear cut and might be hard to evaluate. Those who are toxic in nature might be held accountable and be responsible.

Internal-Audit

 

Enough by John C. Bogle

Is there no limit to what enough is in modern society? Capitalism is at play. Management earn obscene amounts of compensation. Greed can cause a system’s downfall. How long can materialism and greed last? I have been given enough, in more aspects than just financially. My great grandfather was incredibly thrifty. My family was fraught with financial difficulty. I had to work when I was young in order to feed the family. I learnt to accept responsibility when I was young. I did well in school and mum put in so much effort into investing in my education. My attitude in life has been influenced by my family. The first ‘diamond’ of my life was my admittance to the Blair Academy. My family was incredibly close-knitted and that helped a lot. Later, I got admitted to Princeton University on a full scholarship. Even then, I had to take up temporary jobs for me to get paid. However, my parent’s marriage fell apart after that. I discovered that the mutual fund was new at that time and wrote about it. Mr Morgan was the boss of Wellington Fund. When I was 35, he said I could take over the firm. After a disagreement with the other shareholders, I got fired. My business model was to manage our affairs internally and not require any external party to manage it. Vanguard would have to do everything in-house if it wanted to succeed. Before 1875, I founded the world’s first index mutual fund. The fund didn’t need to be managed as the returns would track a basket of stocks that were representative of an index. ‘If you build it, they will come.’ Thankfully, we got approval from the SEC too. A donated heart was one of my ‘diamonds’ too. This heart enabled me to live healthily. Be blessed by the number of diamonds you have. Humans are all too interested in short-term gains. Companies should recount their past values which enabled them to thrive. Virtue doesn’t come from money. It comes from doing good.

Some men wrest a living from nature and with their hands; this is called work. Some men wrest a living from those who wrest a living from nature and with their hands; this is called trade. Some men wrest a living from those who wrest a living from nature and with their hands; this is called finance. – Old Epigram from 19th Century Britain

There is a food chain and the investor is at the bottom of it. The financial system cannot be too costly. We are often trading paper and paying bankers too much. In addition, the financial system is fraught with complexity. Young graduates like to enter banking. We should strive to do good in our jobs. Never let money alter your conscience. Do not invest in products which require you to pay high management fees etc. Serving your client is the highest priority. The sub-prime crisis was an example of extreme greed. The finance sector takes up too much of the earnings of the S&P 500. Sometimes, the markets crash but those people in IB keep making money. The ex-CEOs of Citigroup and Merrill Lynch were paid very well just before the sub-prime crisis. They were not penalised heavily after that. However, bankers earned nothing as compared to the hedge fund managers. The hedge fund industry demands high management fees and investors can’t survive. The number of CFAs are increasing all the time. There is an inherent disconnect between cost and value in our financial system. Humans have abandoned the traditional standards of investing. The author looks up to people like Benjamin Graham and uses value-investing. Speculation is rife nowadays. The cumulative costs keep growing. Does the financial system create more value than cost? My fear is that the finance sector is getting too big and out of control. There needs to be a financial system reform. As public investors, we should demand more from our financial system.

The motivation of too many of those rushing into finance is more aligned with what they can get from society than what they can give back to it. – John C Bogle

Too Much Speculation, Not Enough Investment. Investing is about long-term ownership of the business. Speculation is just the opposite and is about short term gains. One of Keynes’ famous works is the ‘General Theory of Employment, Interest and Money’. In the long run, the stock price must be aligned with the business fundamentals. Speculators cannot capture the inherent value in a stock. Markets are volatile because of speculators. In the expectations market, prices are set based on the expectations of investors. These are not based on ‘real value’ per se. We live in an era of speculation. However, it is true that investors win and speculators lose in the long run. Stock markets have crashed, just like on Black Monday in 1987. Short term outcomes can’t be predicted accurately nowadays. There have been little cases of black swans in the long term market. The financial system is prone to innovation. Learn to emulate tortoises. Market timing is not sound. Market timing doesn’t work. It is difficult to make the right decision consistently on market timing. We need to improve the balance between entrepreneurial innovation and more traditional values. We cannot allow the whirlwind of speculation to continue unabated.

In investing, tortoises tend to win far more often than hares over the turns of the market cycle…Placing large bets on an unknown future is worse than gambling because at least in gambling you know the odds. Most of the decisions in life motivated by greed have unhappy outcomes. – Peter L. Bernstein

Too Much Complexity, Not Enough Simplicity. Simplicity has been the key to successful investing. Technology has complicated our lives. There are many middlemen in a CDO offering. Some banks are also not concerned with the creditworthiness of such offerings. The market has been flooded with interest rate swaps, credit default swaps etc. The value of the derivatives market is huge. ‘As long as the music is playing, you have to keep dancing.’ The Federal Government has also backed such offerings. It is better to buy an index fund as it has better returns. Innovations have hurt investors. The winners are usually the fund managers or distributors. Innovations like stock index fund, bond index fund have done investors well. ETFs are great. However, they are being traded too frequently, leading to speculation. Some ETFs also do not contain stocks that track the stock market index. There are many different types of funds nowadays, like market neutral, hedging, commodities, private equity etc. However, please examine the track record before buying. Commodities are purely speculative in nature. Fund expenses must be cut if investors are to gain. Fund failure rate is very high amongst idiosyncratic funds. Some funds are not concerned with shareholder performance. It is time to get down to basics. The author believes that the simple way is the best way. The mutual fund industry often fails to provide market-beating returns. The fund manager should serve investor’s interests.

Too Much Counting, Not Enough Trust. We often place too much emphasis on numbers and trust them. Then, we have optimistic views on the future because of them. Even numbers produced by the government can be questionable at times. We need to understand the sources of stock returns. Do not project future returns based on past historical rates. This causes the expected rate of return of investments to rise. The bubble of investor optimism will have to burst someday. It is smarter to set your expectations for future earnings on basis of current sources of returns. There is a bias towards optimism in the future. CEOs often paint too optimistic pictures for earnings and analysts tend to agree with them. The standard for analysts has changed from GAAP earnings to operating earnings. Pro-forma earnings also exclude all the one-time losses etc. Creative accounting is a big issue nowadays. Pension holders might lose money on their investments and this will have other repercussions as well. Businesses like to use M&A to create ‘value’. For each M&A deal, the bankers and lawyers earn huge sums of money. ‘Paper’ companies have acquired ‘rock’ companies that make. In Vanguard, we believe in organic growth, not forced growth. Nowadays, we do not know how to ask without any numbers and this is a scary fact. Trust is important.

The first step is to measure what can be easily measured. This is okay as far as it goes. The second step is to disregard that which cannot be measured, or give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what cannot be measured really is not very important. This is blindness. The fourth step is to say that what cannot be measured does not really exist. This is suicide. – Daniel Yankelovich

Modern capitalism has two parts: there’s business, and there’s finance. Business is renting you a car at the airport. Finance is something else. – Michael Kinsley

Too Much Business Conduct, Not Enough Professional Conduct. Professional associations are now run like business enterprises. However, professionals should be responsible and selfless in their service towards their clients. Times have changed nowadays. Professional conduct is less well regarded as in the past. Too many banks are seeking competitive advantages at the expense of their customers. The battle for professional independence is never won. Trust and be trusted. Capitalism has eroded as well and this is a big issue. Owners’ capitalism has been transformed to managers’ capitalism. Institutional investors are a big thing nowadays. Managers are not acting as they should for their principal. Beware of negligence and profusion have prevailed among corporate management. How much should the CEO be compensated? It is hard to determine how much value a CEO has added. Sometimes, their salary growth outstrips the corporate profit rate. There are accountability issues. Institutional money managers hold a lot of power. CEO stock based compensation should be based on intrinsic value and not actual stock price. The compensation consultant has also become more popular. Many CEOs are also paid according to how they fair in their peer group. A basic set of ethical principles is needed to guide the profession. Financial engineering is getting more and more popular. Capitalism must be fair, regulated and ethical.

Money management extracts value from the returns earned by our business enterprises, and in the process of maximizing its own commercial benefits, the industry seems to have lost its professional bearings. – John C Bogle

Too Much Salesmanship, Not Enough Stewardship. The industry is characterized by salesmanship too. Mutual fund size has grown by a tremendous rate recently. Fund investors start trading funds instead of simply holding them. The holding period for stocks has been cut from 6 years to 1 year. Fund costs have soared as well. The fund industry is more like a marketing industry now. Investment focus has been truncated. Some funds are only created because of the latest market fad. There is a need for reform. We need to cut down costs for investors. Serve the investor for a lifetime. There are too many choices of funds out there and this makes people confused. There is a need to have long term investment horizons. Serve the long term investors. We must all return to the index fund. Put fund investors in the driver’s seat. Shareholder education takes time. The industry should aim to be objective and unbiased. We need to have an industry that is of the shareholder, by the shareholder, and for the shareholder. We need a mutual fund industry with vision and values. We must build companies that stand for something. Stewardship will pay off. It is important to keep the faith every day.

Too Much Management, Not Enough Leadership. Our large corporations are over-managed but underled. Managing and leading are completely different. The leader is more original. The leader should be able to inspire. They should care about the deeper values of the organization. There are 10 rules for building a great organization. 1) Make caring the soul of the organization. 2) Forget about employees (call them crew members instead). 3) Set High Standards and Values – and Stick to Them. 4) Talk the Talk. Repeat the Values Endlessly. 5) Walk the Walk. Action Speaks Louder than Words. 6) Don’t over-manage. 7) Recognize Individual Achievement. 8) Loyalty is a Two-Way Street. 9) Lead and Manage for the Long-Term. 10) Press On, Regardless. A superior company thinks about its dream. It also applies unconventional thinking. We were based on value profit chain concepts. I built a company that would endure. Businesses should have purposes besides making money.

The institution must be the object of intense human care and cultivation. Even when it errs and stumbles, it must be cared for, and the burden must be borne by all who work for it, all who own it, all who are served by it, all who govern it. Every responsible person must care, and care deeply, about the institutions that touch his life. – Howard W. Johnson

Too Much Focus on Things, Not Enough Focus on Commitment. Where are the things by which one measures one’s life? Don’t let things measure the man instead. Life is never smooth and we might lose our wealth one day. However, your character is the one that will endure. Boldness and commitment is all important. Commit the most to make a second life. It is crucial to be committed to your family. Commitment to neighbours and the community is also important. We thrive as human beings and have faith in ourselves. Give credit to those who have helped you along the way. You didn’t succeed on your own. Be bold and summon your magic.

Too many 21st century values, not enough 18th century values. Do not move away from the truth. Facts are everywhere. The Age of Reason occurred in the 18th century. Many of the great leaders spoke about the period of Enlightenment. Benjamin Franklin was a great leader in the 18th century. Joseph Schumpeter also described what an entrepreneur ought to be. Entrepreneurs and capitalists are not the same. Have the will to conquer, and the joy of a good battle. Franklin invented many tools for the public’s benefit. There are other motives for business other than profit. A man should have a mind to improve, a heart to cultivate and a character to form. Keep striving to improve. Return stewardship to capitalism. Lead with purpose. Virtue is all important. Franklin listed 13 virtues. He started his day by asking ‘What good shall I do this day?’ and ended it with ‘What good have I done today?’ His energy and persistence helped him in his public life.

Knowledge is not the personal property of its discoverer, but the common property of all. As we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours, and this we should do freely and generously. – Benjamin Franklin

The real test for an honest and productive society is not what a society has achieved, but what it aims to achieve. It can put honest people on a pedestal even if they do not maximize their personal benefits and preferences…and discard and shun as models of failure dishonest people who achieve their highest ambitions by fraud and abuse of trust. – Tamar Frankel

Too Much ‘Success’, Not Enough Character. We often chase success but success continually eludes us. Is success all about achieving wealth and fame? Financial wealth is not a good measure of success. Fame is a flawed measure too. Fame is used for other purposes now. One can contribute to society in a great way but yet not be famous at all. Power should not be used capriciously and arbitrarily. Power should be used for a worthy cause. Have we been chasing the fake rabbit of success? Success isn’t about meeting other people’s expectations too. You should just base success on your own expectations and make the most of your talents. We should admire those people in professions where they can contribute to society, but not achieve any fame or recognition. Modern life has forced people to be competitive. Life demands much more of us nowadays. What are you competing for? Without character and courage, nothing else lasts. To hone character, one must undergo tribulations etc. Be yourself and strive to be better. With age, you should better understand where the rabbits are. Challenge yourself and strive to be better. Chase the real rabbits of your life.

Success can be measured in our contributions to building a better world, in helping our fellow man, and in raising children who themselves become loving human beings and good citizens. Success, in short, can be measured not in what we attain for ourselves, but in what we contribute to our society. – John C Bogle

I long to accomplish a great and noble task, but it is my chief duty to accomplish humble tasks as though they were great and noble. The world is moved along, not only by the mighty shoves of its heroes, but also by the aggregate of the tiny pushes of each honest worker. – Helen Keller

Highly educated young people are tutored, taught, and monitored in all aspects of their lives, except the most important, which is character-building. But without character and courage, nothing else lasts. – David Brooks

What’s Enough? What is the relationship between happiness and success? Success is not the key to happiness, happiness is the key to success. Humans are resilient. Money only provides a transitory form of happiness. Autonomy, social interaction and competence are all important. How much money do you need? I want to give something back to the less fortunate. For example, give back to your alma mater. I also offered scholarships to the Blair students. It has been a thrilling ride indeed. I was born to save rather than spend. Our shareholders also have received superior returns. I do not like extravagance. My retirement plan is the largest in the family balance sheet. Saving early and regularly is the key for wealth accumulation. Postpone your first payment for Social Security. Stick with low-fund fees. There are still many people living in poverty in the US. The income disparity is growing. You must remember that you are fortunate but not all fellow Americans are enjoying it. The domination of the US will not happen forever.

LIVE.Books_Enough

 

 

IIA Magazine Aug 2016 issue

Cybersecurity is an area where it is lacking among major companies. Companies need to step up to beef this area up. Productivity is a main concern for employees. Ethical pressure is greater during organizational change. The COSO framework is expected to be updated in 2017. It will be updated to include the latest risk management thinking and principles. IoT is going to have a big impact moving forward and there needs to be a comprehensive approach to go about doing it.

Analytics-Driven Audits. Before tackling data analytics, internal auditors need to understand the types of data, how it is stored, and how to apply it. Automated audits are the new trend now. It can be applied to many aspects of the audit too. Understand what are qualitative and quantitative data and their measurements. Understand how data is stored and the various formats. Any outliers should be thoroughly investigated. There are 4 types: descriptive, diagnostic, predictive and prescriptive. Learn to gain insight into the business.

The Mind of a Credit Card Hacker. Smart hackers usually lay low. They can steal credit card details and then sell them. Hackers use a vector to steal data, such as phishing. They also need to collect the data quickly and then cover their tracks. The hacker will verify that the cards are valid and start off with transactions of small amounts. If they go undetected, they may get bolder. IA can encourage the company to encrypt the credit card information and monitor access to networks. Access control needs to be checked too. IA is the third line of defence.

Make the Most of Assurance. Assurance maps can enable internal audit to team with other assurance providers to visually convey how risk is managed. IA can work with other assurance providers and depict the results in an assurance map. The map allows one to spot gaps in risk coverage or any overlaps. Assurance maps can enhance and give value to AC too. The map should not be too complex.

Tough Consequences. Adequate contract administration can save organizations a tremendous amount of grief and money. It is important to monitor vendor contracts properly. The contract administrator should be the liaison party and highlight any non-compliance. There needs to be adequate financial controls over the cash receipts and revenue cycles at the vendor’s end.

A World of Connections. The IoT requires IA to confront risks that are not so neatly contained. The impact of this is growing. IoT is about interacting with the environment for business benefit. Emerging risks from IoT must be monitored closely. There are many benefits from using IoT devices too. Management needs to be aware of the risks too. There needs to be a deployment strategy too. A policy needs to be drawn up.

Cyber Resilience. IA should work collaboratively and proactively to address breaches and build resistance to future attacks. Banks need to protect the SWIFT codes. A cyber breach might definitely occur in future. There is increasing use of software to pick up behavioural anomalies. There needs to be both a protective and detective strategy. A response plan is important. Customer data should be given top priority in a cyberattack response. IA needs to understand IT from a technical and controls perspective.

Auditing the Cloud. IA should delve into the complexities and unique risks of moving to a cloud platform. Many companies are making use of the cloud as compared to traditional data center infrastructure. Less manpower is needed to maintain a cloud as well. Servers can be added on demand too. IA needs to verify the security, reliability and availability of the data. No two clouds are the same but the common ones are infrastructure as a service, software as a service, platform as a service etc. It is good to obtain the SSAE 16 report on the vendor as evidence of its controls. It is difficult to track cloud deployment. Cloud assets can keep varying as well and it is difficult to monitor. The data is now stored on the same physical equipment as other organizations and there is a risk of leakage. A security program is still a must. Penetration testing needs to be done periodically to prevent hackers. Relying on the SSAE 16 report is useful, but not sufficient.

Trust but Verify. Control self-assessments can increase audit efficiency and spread control awareness throughout the organization. This is for process owners to self-evaluate the effectiveness of controls. This could be done via workshops/ questionaires etc. Sometimes, it is not possible to deploy a team to perform audits in every area. When CSAs are used, IA needs to explain the rationale to the management. The process owners must be identified clearly. IA needs to independently verify some of their responses. For example, only key controls or only those rated as ineffective may be selected for further testing. Continuous support is a must and training must be provided. The right level of project sponsorship is important too. It can be implemented gradually. CSA enables IA to allocate resources to focus on areas with significant control weaknesses.

Audit Never Sleeps. IA must keep innovating and improving and focus on the organizations that we love. We need to constantly do the right thing and hone our communication skills. Effective communication is the key and getting to know the auditees well is the key. Listening well is crucial too. Nowadays, IA should adopt an integrated mindset. We need to broaden our IT knowledge to meet stakeholder expectations. Applying soft skills are important too. Our work must be guarded by ethics and transparency. We need our approach our work with a strategic focus too. There is also a need to focus on our future.

Optimizing IA. IA are being continually challenged to improve their effectiveness to better meet growing expectations and workloads. IA staffing levels remain relatively constant. IA must be aware of strategy and ensure that procedures align with that strategy. IA should understand what the external risks are. As for operational efficiency, IA should offer cost effective and sustainable solutions. Quality assurance is important to ensure quality and compliance with regulations. IA should identify cost savings, understand business goals, increase collaboration, optimize technologies and strive for continuous monitoring.

pic_internal_audit_big

IIA Magazine Oct 2016 issue

There needs to be reporting beyond just financial type. There is a need for a risk-based approach and to look at the major objectives of the organization. It is important to have a policy for conflict of interests. Do not simply give customers what we think we can deliver, but ask them what they need. Company culture is crucial in the employee rating of their CEO. Those CEOs who are the founders, have lower pay, have good profitability usually have better ratings. Some FIs are concerned by the staffing of their AML team and the adjustment needed for new regulations. The US is the most cyber aware country. However, there are some countries which are lacking in cybersecurity preparedness and that is a concern. Brexit might have the effect of changing the impact of globalization over time.

The Art of Recommending. Internal Auditors walk a fine line when presenting recommendations to management. IA needs to show how the recommendations fix gaps and mitigate risk. There needs to be a cost vs benefit analysis too. Recommendation can either be to address a gap or as a suggestion for improvement. There needs to be both internal and external sources of information. One needs to spend time documentation down potential recommendations. It should address the root cause. Avoid addressing a person. Indicate a repeat finding. Explain how the recommendation will mitigate the risk. For areas for improvement, list them separately from the gaps. Some external info could be ‘IIA research materials, professional literature, networking, procedures from other organizations.’

‘It is a good practice to jot down recommendation ideas as soon as they come to mind, even though they may not find a place in the final report. Even if internal audit testing does not result does not result in a finding, the auditor may still recommend improvements to the current process.’

‘It is internal audit’s prerogative to provide recommendations, regardless of whether management agrees with them. Persuasive and open-minded discussions with process owners are important to achieving agreeable and implementable recommendations.’

Big Data and IA. Today’s data analytics expand auditors’ ability to tap into all types of info generated by the organization. Auditors can mine data and analyse them. IA can use statistics or visualization tools to help them too. One can test all the transactions now. There is also a great variety of data available. Velocity of data now makes it possible for IA to perform continuous auditing. Learn to understand the data and acquire the analytics tools. It is also important to develop a road map too. Big data can be harnessed in a meaningful way.

Is IA in your Audit Universe? IA should seek to enhance and protect organizational value. IA should be audited via a QAR (quality assurance review). One can evaluate the IA’s conformance to the standards, code of ethics, efficiency and effectiveness of the IA activity. It must be conducted by someone who is objective in nature. An external assessment needs to be conducted once every 5 years.

Blurred Lines. Internal auditors need to have the skills and perspective to deal with frauds that don’t match the standard villain story. One needs to look for the motivations and benefits. IA needs a clear perspective on how to approach fraud. One needs to analyse why did the fraudster want to commit the crime.

Taking the Lead on Nonfinancial Reporting. Internal audit is well-positioned to examine how its organization reports on nonfinancial issues. European companies now need to disclose in the annual report how they are discharging social, environmental and ethical issues. Non-financial info is important to gauge the society’s impact. Management needs to be concerned over non-financial reporting. Sustainability reports should disclose how the company performs in some specific areas. You need good non-financial reporting systems. In the US, sustainability reporting is not mandated and not practiced by many companies. Non-financial data are often over-looked by IA. IA needs to have the right process competencies for effective non-financial reporting. There needs to decisions on materiality over nonfinancial reporting. Strong communication skills are the key. It is possible to create a multidisciplinary team that can provide combined assurance. IA needs to engage the first line of defense first.

Audit processes take flight. The updated COSO Internal Control-Integrated Framework is at the heart of Boeing’s internal audit work. The new COSO framework has 17 guiding principles across the 5 control components. The principles-based approach is being used. It is important to give weight to all of the COSO components. Keep the focus on inherent risks. Every audit requires a detailed process flowchart.

Privacy in the workplace. Organizations must find ways to accommodate employees’ personal technology use while also meeting regulatory and other requirements. Digital technology has changed a lot of things. Privacy issues are becoming more important. Employees tend to violate privacy risks more. IA should be able to understand where the risks lie. A lot of data is being collected and analysed. Some form of employee monitoring is necessary, but not excessively. Who is responsible for lost data on a cloud? In the US and Europe, there are a lot of acts that company must comply in relation to global privacy laws and regulations. In Europe or Japan, the privacy laws are more absolute. There needs to be a strong governance/ privacy framework in place. A risk assessment should be performed on a frequent basis to evaluate the impact of changes to regulation. If an organization expands, IA should make sure controls are in place to manage privacy. Training and awareness needs to be made at every level. Trust must be built between employers and employees.

A Unified Approach to Compliance. Failure to comply with regulation could lead to fines and reputational damage. There needs to be a co-ordination between IA and compliance function. IA needs to understand the business goals and how the compliance team plans to assist the business in achieving them. One can examine from both a macro and a micro level. The IA charter should clearly document the role of the IA team in compliance. We should focus on the foundations of the assessment. IA should sound out levels of residual risks that are greater than risk appetite. How does the organization ensure completeness in the assessment? IA can rely on the compliance team to update them on the regulations. Key compliance decisions must be documented. IA and compliance teams should meet to discuss once in a while. IA can share audit reports with the compliance teams. IA can leverage and use the compliance risk assessment. However, IA should check whether it is complete. To achieve the IA mission, IA needs to include compliance too.

The Power of Rhetoric. Understanding the powers of persuasion and applying key rhetorical skills can improve the work of any IA. IA needs to possess rhetoric to persuade the auditee to accept the recommendations. The key elements are speech, audience, text. The author is usually the engagement lead. All members and groups of audience needs to be considered. The audit report is the written text. The team selected must be capable and know how to perform the engagement. Logos appears to one’s logic and the supporting documents. Pathos focuses on the audience’s irrational modes of response and is an appeal to emotions. Design of slides must be beautiful and also simple to read. Word selection is important and IA should give a balanced view.

The Red Flags of Fraud. Internal auditors’ knowledge of the business makes them ideal candidates to detect unethical behaviour. Fraud affects the bottom line and active measures to detect it are better. Red flags are signs that it could occur. IA can do a red flag analysis. There are different types of fraud, financial statement fraud, employee fraud, tech fraud etc. For FS fraud, personal enrichment is common. IA can scan the GL to look out for unusual trends etc. Analytical procedures can be used too. Employee theft of cash is possible. Other types of fraud are employee expense reimbursement fraud, payroll fraud and kickback scheme. Most frauds usually happen only after a year of service, because the employee needs to learn of the internal controls first. The chance of fraud is greater if the person is in financial difficulty. Data analytics can help to review red flags. Anti-fraud training must be conducted. Early detection is the key as if the fraud persists, the loss will be even greater.

‘Ethos is established when the audience determines that the author is qualified, trustworthy, and believable.’

Anticipating Information Security Regulation. As threats and data breaches become more common, so will regulatory oversight. Data breaches are more common and the risk to consumers are growing. One needs to establish a security risk assessment process. IA can adopt ISO 270001 to enhance their information security program. An employee security awareness program is very important too. IA needs to validate and assess the control environment too.

pic_internal_audit_big