What is “gravitas” and how does one develop it?


I think that “gravitas” means really the opposite of being a visibly light-hearted, humorous and happy-go-lucky person. Therefore you have to be able to switch the level of gravitas on and off, that’s the tricky bit. There are people who get noted for being able to make people laugh and sometimes, if they are not carefully, they become regarded as “clowns” who are not really to be taken seriously. On the other hand, too much of the opposite will mean you are seen as someone with gravitas, but maybe not someone with a great sense of humour, which could create distance in situations where you don’t want it.

A certain dignity in not being too open about one’s personal life is probably good – familiarity can breed contempt, and making sure that your use of humour is aimed at quality rather than quantity will do a lot to enable you to come off as someone with gravitas. Other than that it is something which grows with age, experience and the ability to show a certain classic style of speech, choice of language, dress and posture. But you can’t stand on your dignity the whole time. If you make a mistake and people laugh at you, better join in the joke rather than get offended or that will undermine gravitas quicker than anything else.

Certainly a serious demeanour going hand in hand with a genuine reputation for being ethical and having a flawless integrity, these are things which many of us aspire to and should aspire to. For many successful people, this is what they tend to have in common and for many this is what they will sum up as “gravitas”.

A former boss of mine suggested that I increase my level of gravitas in order to get on, he did not say how I should go about it, but I think to a degree I did it anyway. Now I am pleased to say I can still make people laugh, but I can just as easily get them to take an issue seriously. That’s what I wanted to achieve and that’s a target I recommend people to aim for whenever I hear them talking about gravitas.

What should the relationship of internal and external audit look like?


Not every organisation has both an external audit and internal audit. In some jurisdictions you can get companies that have internal audit but no external audit, while in most countries you get quite a prevalent external audit with far less incidence of internal audits. Russia is a prime example of the latter case.

External audits done under ISAs are supposed to plan and carry out work in order to have a reasonable expectation of detecting fraud and other irregularities, and certainly the expectation of users has traditionally been that external auditors are responsible for finding fraud.

I work both as external auditor and I also carry out internal audits for clients who don’t have their own departments or who do but still need to be beefed up locally by brought-in experts. Therefore I have no particular axe to grind, but I will say this – a lot seems to be expected of external auditors with relation to fraud without giving them the tools necessary to find instances of fraud.

Internal audit departments can, within reason (they cannot supercede data protection law or labour law, etc, or contravene people’s basic human rights when monitoring them) have whatever tools they like if they are within budget. I can just imagine what my clients would think if I as an external would start installing cameras, GPS trackers on company vehicles, doing spot checks for alcohol, lifestyle checks on managers, and all the other things that internals can do. And yet if you take the standards literally I have to do a job not far off that of a policeman as an external auditor.

All we are usually given as external auditors is a couple of generic questionnaires which we try to go through with the client’s management adapting it to the specifics of their business, then we have the duty and hopefully also the ability to map out and analyse the systems of the client, including the controls and to perform walk-through tests and seek to identify key controls. The way an external auditor assesses a key control and the way an internal auditor assesses a key control are also different in a number of ways, and how we define a key control for our respective purposes differs, and then the timing and frequency of checks on that control will differ. Many people who have worked only in external audit won’t know how or why they differ and therefore their ability to get the best from internal if it is even there will be in many cases limited.

Actually most of the fraud questionnaires in use are a good start because they are based in fact on the fraud triangle originally talked about by notable criminologist Donald Cressey back in the 1960s and 70s. This is the triangle of means, motivation and rationalisation or self-justification. It is based on the idea that if a person hasn’t got the opportunity to get around the system, doesn’t really need to and thinks it would be wrong to, then the chances of that person committing fraud are extremely remote. If on the other hand a person thinks that they know how to get away with it, need the money and also think they deserve to do it, then the fraudulent activity by that person is virtually certain. Various permutations of this give varying degrees of likelihood of fraud. The questions in fraud questionnaires would be good at helping to build a “fraud triangle” exercise in a given context, but only as long as the person doing it knows what they are doing both in theory and in practice. Often it is given to quite junior people to carry out and also very often in assessing audits I have seen that the answers don’t necessarily carry through to specific tests relevant to those answers, but instead increase general risk meaning that there is a likelihood that the sample sizes for other detailed substantive tests (by the way the weakest set of tests for detecting fraud) will be higher. And sometimes you are lucky to even get that much of a response.

Externals go on to make their control tests if they do recognise a key control (and on a worldwide scale I would hazard a guess that tests of controls are still done on only a small minority of audits, with most defaulting to the substantive route based really on lack of time or confidence with control work by the external audit team) and also the other big weapon they have in the arsenal is substantive analytical review. But SAR is only as good as the in-depth knowledge of the branch or business, so externals – especially those which are not branch specific as some Big Four externals are – don’t really have the sector knowledge that the internal audit team have and so their chance of noticing something that doesn’t stack up as they go through their analyses of ratios, or building of expectations and confronting to reality is not as good as that of the internal in many cases.

And then auditors finish every section by mopping up whatever needed assurance they could not derive from the earlier procedures by other substantive procedures based if done properly on a statistical sample, which is designed to get them from the assurance they got from less time-consuming procedures through to within their tolerable error (a function of risk and materiality from their perspective, which again differs from the internal auditor’s perspective which may not even be couched in money figures but in non-monetary terms). However the chances of getting at fraud looking through sampled accounting documents is miniscule, and here many external auditors do the bulk of their work.

So naturally if there is an internal audit team, an enlightened external auditor should be ver anxious to understand how they decided their work plan, what they did, and how many key controls have been checked thoroughly and how many risks are still open. If they want to give the organisation real value for money they will design tests that supplement, rather than duplicate the work of internal auditors.

Internal auditors will encourage this – they too will want to see that the organisation’s budget for external audit work goes on procedures that help to improve the risk heat map and the overall picture for the organisation. This call only be done when each side understands the other and “speaks their language”. Many internals have worked as external but not many are continually doing both types and therefore able to think through an assurance issue from both perspectives.

Plaxo as a personal CRM business tool


In these days of below-the-line marketing, everyone should have a personal social-media CRM independently to whatever CRM they have in their office. This reflects the blurring of the work and play areas of life which is one of the recognised aspects of Generations Y and Z, as well as a very natural result of the interactive technology most of our readers will be native to and working in every day of their lives.

Plaxo (www.plaxo.com) is an address book synchronising and back-up tool which has a number of interesting features such as the ability to access your contacts from the net, to import and export as CSV files, to send greetings cards to check duplicates and synchronise in a limited way with google applications, facebook and other social media.

The interface seems to offer a lot of benefits and certainly the ability to send greetings cards is a useful one. There are, however a whole series of issues and bugs and incomplete aspects to Plaxo which means that it can easily be superseded as the personal CRM of choice by any app maker able to sort out these issues more efficiently.

1) There’s no official Plaxo app on Android phones and so the synchronisation goes via Google Apps and is clunky. Whenever codeword security runs out, it seems to stop synchronising. Also the synchronising doesn’t seem to work well all the time and in my case telephone numbers have been moved from one person to another, which is very troublesome.

2) There are not really enough greetings cards and they are in too few languages.

3) Intelligent updating from the web of what our contacts are doing seems not to be working half the time. Occasionally the robot makes a half-hearted attempt to find and update people, but nowhere near what you’d expect for the annual fee.

4) Above about 3000 contacts and the site works slowly. It is unable to offer you a print out of the whole database at that size.

5) It often loses the pictures it has imported from facebook and doesn’t seem to be able to import any at all from Linked In. It cannot update calendars directly to Android, again only via Google apps.

6) It doesn’t deal properly with any scripts beyond basic Latin script, so it mangles names written even with Polish or Czech letters, leave alone Cyrillics or Chinese names.

7) The folders are a clunky interface, but even when you have done the work of putting contacts into the appropriate folders, they don’t carry through to the greetings cards area, so you cannot, for instance, make a folder of people who would receive, let’s say, and Eidh card or a more/less traditional Hannukah card and then easily access that folder from the greetings card area. Also send outs of more than about 200 cards per time tend to fail and need all that work to be done again.

These are my main Plaxo gripes. I am airing them in the hope that Plaxo will finally get their act together and repair their product before their remaining users find another app on the market among the choice which seems to be growing every day that does all the things that Plaxo is expected to do, but still fails to deliver.

 

 

 

 

I come to bury mind-mapping, not to praise it.


Mind Mapping
Mind Mapping (Photo credit: sirwiseowl)

Tim Brown recently wrote the following small article on Linked In updates, which I found by clicking a link telling me to stop using words to describe things:

Make it Visual

Some things are hard to describe in words. In fact, many things are hard to describe in words. Try describing in detail the bedroom you spent your childhood in. My guess is that you will have a hard time describing it well enough for someone else to recreate it. The same is true for new ideas. Words may be a start, but they often lack the precision and clarity required to describe a new idea to someone else. Photos, sketches, and data visualizations can make complex ideas easier to understand and share. That’s why portfolios beat résumés, and young designers are still encouraged to carry a sketchbook.

This week, try recording your observations and ideas visually, even if just as a rough sketch in a notebook or a picture on your camera phone. If you think you can’t draw, too bad. Do it anyway.

Mind mapping can be an excellent way to get visual about abstract ideas. For example, check out the design thinking mind map used in Change By Design, which you also can see in my recent post, “Start Designing Your Life.

There were nearly two hundred likes on this and a discussion had kicked off which seemed fairly one-sided, with 42 people all agreeing with this premise in one form or another. Oddly they had all used words to express this agreement and not one picture could be seen.

I had to add the contrary view, and did so as follows:

I respectfully disagree with some of the premises in this article. We think with language – I defy anyone to frame a conceptual thought without it – and human language, at least the ones I know, bases on words.

I have looked at Mind Mapping and some of the other inventions of Tony Buzan, I have read several of his books and remain skeptical as to the practical use of them. As far as mind mapping is concerned, its main use in my opinion is to give people of an artistic bent an excuse for doodling in meetings, and at least some direction to the doodling they’d probably be doing anyway.

A tabular approach wins out every time – the human brain loves tables and rectangular things. That’s why we live in rectangular rooms in rectangular buildings with rectangular furniture. Placing any problem into a table immediately highlights areas which are uncovered, and ensures deeper and more consistent thinking on any topic. Even “out of the box” thinking is only possible if you’ve defined a box. None of this happens with mind-maps, which ensure a very subjective and random summary of any topic.

I thought it was worth taking a contrary position and maybe getting some thought and discussion going, so please don’t be offended at my detraction from your premise, which is certainly not intended in an agressive spirit.

I thought we could find out whether the mind-mapping is actually popular among the people who follow or at least stumble upon this service, so please take part in the following poll:

The Money Value of Time


The National Audit Office building, built orig...
The National Audit Office building, built originally as the Imperial Airways Empire Terminal. The statue, “Speed Wings over the World” is by Eric Broadbent” (Photo credit: Wikipedia)

According to page 2 of today’s UK Financial Times, a UK National Audit Office report shows over 6.5m people waited more than 10 minutes to get their calls answered by HMRC, adding £33m to customer’s phone bills and wasting £103m of their time last year.

This snippet of information triggered a few things that I wanted to say to you this morning. The first of these is, that, despite the fact that it is obviously pretty dire that people need to wait so long to get their calls answered by the service they are paying taxes to fund in the first place, at least in the UK there is a body which is concerened at the loss of time and places a value, in monetary terms, on that loss of time by the customer.

Anyone who has spent any time either in government offices, or even banks or supermarkets in this part of the world will probably confirm that the idea that the customer’s time is valuable and should be respected is a rather alien concept. Not so long ago it was an utterly alien concept, but even today it is still a concept which they find rather hard to grasp.

Not as bad as China, though, from what I heard and also saw. People being expected to queue all day outside the Chinese consulate for their visa and then at the very moment that the scheduled closing time of the office came the shutters come down like with Kiosk Keith and that was that. The spare time of the employees was utterly sacrosanct, that of the customer not at all. This of course shows an elitist mentality, which can be found in almost all state sector offices to one or another degree anywhere in the world. Expect it and try somehow to deal with it.

Much less acceptable is the wasting of the customer’s time in business. If the customer is paying then they have a right to have their matters expedited and people who keep people waiting ought either to invest in more infrastructure to avoid it or to wonder if they are in the right business. Continue reading “The Money Value of Time”

Opinion Piece – Amazon and Google and the prickly question of UK Corporation Tax


Luxembourg
Luxembourg (Photo credit: epha)

This week has seen the issue of corporation tax paid – or rather not paid – in the UK come to the boil, after simmering for several weeks with the articles of various MPs from various parties in various newspapers. It has now made the front page news and there has been an open harangue on three companies, Starbucks, Google and Amazon in the Public Accounts Committee by a group of British MPs headed up by Margaret Hodge.

The argument of the Committee is that these are companies who have made a good deal of turnover in the UK but they haven’t paid any tax. The way in which this has occurred is that they haven’t shown much by way of profits in the UK. They are now being told by Mrs Hodge that she doesn’t believe that they have not made profits in the UK given so much turnover, she thinks that profits are being salted away to other countries, like Luxembourg or Holland, using various techniques such as management charges, royalty fees, transfer prices, etc.

There are of course laws which are set up to determine whether profits in the UK are being assessed fairly – there is transfer pricing legislation and the Inland Revenue are able to investigate whether Transfer Pricing has been used. However, in the end what Mrs Hodge’s argument has boiled down to is the fallacious “argument from incredulity” – she cannot believe that the businesses have not made bigger profits (she seems to be oblivious to the fact that there is a recession going on out there and has been for some time, and that companies in all sectors and of all sized are bankrolling losses), and since she cannot believe it, it cannot be true.

In the case of Amazon a particular point was made – in addition to the insulting of Amazon’s spokesman Mr Andrew Cecil by accusing him of “gross ignorance” – namely when he pointed out that of course Amazon has paid taxes, only not corporation tax, they have paid VAT and employment taxes and created jobs – Hodge said that this argument was irrelevant because also the corner bookshops which would have sold those books would have created those jobs (fictional employment was always beloved by the left) and that Amazon, by making offshore structures involving Luxembourg, were making those little corner bookstores less competitive.

The fact is, however, that Amazon is not competing with little bookstores – it’s the Internet, new technology, which is competing with physical bookstores, but anyone with any kind of memory ought to be able to remember how a few large stores like WHSmiths and Waterstones already managed to put the corner shop bookstores out of business long before the Internet came along. Also if you look at markets like Poland or the Czech Republic, where they have online stores for books but not so much by way of the colossal physical bookstores the way the UK has, there the corner bookstore is alive and well. So Mrs Hodge has absolutely the wrong villain in her sights if she wishes to defend the corner store bookshop. But if she really was interested in championing them, then where was her voice railing against expansions by Waterstones and Smiths ten to fifteen years ago, which transformed that industry then just as much as the internet does now? Where is her voice against the Net Book Agreement, which makes it very hard in the UK for small businesses to deal in new books against larger companies? Tax is important, but it is only a thin layer of icing on that particular rather thick cake.

She admitted also that she wasn’t accusing Amazon of being illegal, only of being “immoral”. I am sorry, but is Luxembourg not another EU state in good standing? Is it now “immoral” to use the EU structures that were offered to us as the bait for getting us to sign up to the Single Market in the first place? Well, if there is any immorality in all of this, I can’t see it on the part of the private businesses. I see immorality and utter hypocrisy in the way these MPs, elected members of a government, blame business for their own failures. Failure in so many years of our being in the EU to sort out some kind of harmonisation in income taxes and corporate income taxes meaning that people are able to doing interesting kinds of arbitrage between EU legislations both in terms of their personal taxes and corporate profits taxes. They have had so many years and so many terms of office to sort this matter out.

In fact the answer in Amazon’s case is ridiculously simple – the UK has held a zero rate of VAT for books in order not to penalise reading, but bookselling companies paid the same profits taxes as any other kind of company. That means that book VAT in the UK isn’t even propely harmonised with the rest of the EU. VAT cannot easily be evaded, and even Margaret Hodge couldn’t deny that Amazon paid VAT, merely dismissed it as irrelevant. So what the government can do to produce a more level playing field is to put the general rate of VAT on books and reduce the profits tax for companies all of whose income comes from the sale of books. This would force booksellers who are in a lot of different businesses to be just in books in order to profit from the reduction, and it would mean that it would be of less worry who used corporate income tax reducing techniques, as they would be spending time and money reducing a smaller imposition anyway, and therefore would be less likely to do it.

Schools could be enabled to reclaim the input VAT, the students of university colleges also, therefore the impact on education would be minimised.

I wonder whether anyone in Government will consider this solution, or work towards the harmonisation of EU member state corporation taxes which we all believed back in 1993 was likely to happen before the turn of the Millennium, or whether they will continue, like Margaret Hodge, to blast other people in the private sector for doing their jobs properly while government continues to neglect its own job with impunity.

 

 

 

 

 

 

 

Why do Governments try to make competitive businesses follow the same kind of labour law that applies in their own offices?


Labour law concerns the inequality of bargaini...

I was reading on Linked In today a post by someone blaming Labour Law, and the risks associated with having employees, as one reason why Europe is having more difficulties getting out of the Crisis than maybe some other places.

I think his comments were quite true. There are now, in situations where employers even have any choice, serious reasons not to employ anyone whatsoever and just go for self-employed subcontractors. Reasons include:

1. What you said, the inability to sack anyone, and the huge potential claims if you bungle the sacking of an employee

2. Employees cost more because the social insurance regime in most EU countries is expensive on employment and the onus falls on the employer

3. Self-employed people are likely to be more entrpreneurial anyhow. They already showed themselves to be less supine than the chronic employee by dint of actually going on the self-employed subcontractor route.

The problem is, where does this leave people who cannot deal with the challenge of saying, “to hell with my social shield in employment law, I will put my self out as self employed and stand and fall on my daily performance, and not on the basis that I have accrued rights that make me unassailable even if I become useless”? Even those who genuinely intend to be conscientious and profitable parts of a boss’s team often can’t get their heads around the transition to self -employment, and simply remain unemployed. And where does this leave bosses in businesses in places or sectors where the tax office doesn’t smile on people being self-employed and calls it “crypto employment”?

The reform of labour law to be a little bit more business-friendly is long overdue in most of Europe. And it’s not just the EU. I did some work in the Ukraine a few years back and what I heard about the claims wrongly sacked people can bring about there I found simply astounding. I learned that if the employee who sacks a person – even in a disciplinary way which is fully justified, and fails to pay them all they owe by accident – if it is found even 5 or so years later that they did not pay them everything, even if they were under by a miniscule amount, they now owe that ex-employee their whole final monthly salary for each month of the intervening period as if they had been working!

Have people in Government who write these laws got some kind of grudge against business or what? Certainly they are welcome to have such luxurious laws to protect Government workers if they want to, but why do they insist on forcing them on private businesses? They don’t seem to understand, these Governments, that even though the government of the Czech Republic is not in competition with the government of China for the role of running this Central European country, the same is not true of Novak s.r.o., competing against China or anywhere else in the world with lower social leveraging, in order to make money which, if it is succesful, pays for the taxes that pay for the salaries of these Czech Government people. They certainly don’t create any wealth themselves – excpet for those politicians who have real business interests also, that is. And often the less there is said about that, the soonest mended.