Friday

Sanity is seeping back into my soul. I have fallen in love with South-Eastern Idaho, of all places. I love long road trips alone.

Thursday

I'm off to Utah/Idaho/Montana/Wyoming for 5 days. Hopefully the big sky will work its restorative magic on my brain and soul. Don't know if I'll blog or not from the road.

4:34

I think I have to declare myself officially behind schedule. Yesterday was not very productive, and I thought that was okay, since I have been going non-stop for ages now. But today was pretty worthless too. And not just because I am tired, but because this chapter is hard, and I'm not sure I'm getting it right at all.

I may need to do real work over the long weekend at AM's wedding. Which kind of makes me want to cry.

Wednesday 12:50

This reorganization process I am trying to do to the current chapter I am working on is turning out to be very difficult. It is hard because of the amount of material (~70 pages) and because my original organization was pretty bad. I think it was bad all along, but it is particularly bad in the emerging logic of everything that is preceeding it.

So I cut the entire chapter and dumped it into a different document. I am now going through and trying to move it back in rearranged bits and pieces. And really, I am taking one paragraph from one section, the next from another. It gets very confusing very quickly.

And then I am making the argument kind of in reverse order. Before, I started with the puzzle of the expectation gap. (For those who are interested: Auditors believe they are not responsible for finding fraud, despite demand for them to do so and its codification in law and professional standards. Their argument is that since they cannot be expected to find every single tiny fraud, they shouldn't be asked to try to find anything. Just imagine if airplane engineers took the same attitude towards, say, making sure airplanes don't fall out of the sky. They call this blatant shirking of their statutory responsibilities the "expectation gap", meaning that silly non-auditors are naive and have unrealistic and unfair expectations of what auditors are responsible for...But I digress..) I then showed that the strange competitive environment they live in explains the bizarre argument.

Now, I start with the bizarre behavior of auditors caught in the major fraud scandals, which does not conform with the behavior predicted in the model of earlier chapters. I ask, is my model wrong? Or is there an extension of the model that will explain the unexpected behavior, but one that is fundamentally consistent with the dynamics I describe? Of course, lucky me, the answer is the second. Evidence for this is:

1. Audit firm incentives do not reward good auditors, so the problem is not just rogue auditors.

2. The model does not look at which auditor is selected. There might be something interesting going on there that changes auditor behavior.

3. Lo and behold, competition for engagements changes auditor behavior, since management gets to hire the auditor (effectively if not officially).

Around here is where I am currently bogged down...

4. This competition process has developed lots of subtle ways of financing those bribes I was talking about. Only this is an opportunity to bribe the auditor not to audit from the start, rather than collude after the fact. Hence the lame auditors in all of the scandals...

5. Then there is that pesky penalty for audit failures. How to reduce that, so that auditors can compete more completely for those bribes? Well the penalty is a conglomeration of legal penalties, loss of reputation, and personal and professional shame. Loss of reputation hasn't seemed to matter much, and the industry stopped going to trial to keep some of their more egregious behaviors from coming to light. Auditors have been pretty effective in reducing legal penalties through political lobbying, which is probably a cheaper way of reducing overall risk than incremental improvements in audit intensity. Then, the profession invented the expectation gap to help with the shame aspect: if it wasn't your responsibility to find the fraud, why should you particularly care if you didn't find it? It also helps with the reputation and legal penalties...

4:33

I seem to have pushed through the sleepiness, though I'm not sure how much longer I'll last at this particular location.

Tuesday 2:57

I'm really sleepy--one of those nice sleepy feelings that come from a good workout. I did need to go to the gym, and I feel much better physically, but I can't afford to be sleepy!

I'm at a coffee shop right now, but I may give up soon and go back home. Maybe even take a nap and then try to work later into the evening...

6:49

Am now finished with the bribing stuff and am happy with how it sets up the next chapter. Printing the bribe section plus the next stuff to read tonight to see how best to rearrange and rewrite for this draft.

6:25

Despite occasional tears today, I have gotten a lot done. My dissertation is now more than 200 pages long. While technically behind schedule, I am feeling more than capable of getting finished on time.

Goodbye Tuxedo

We had Tuxedo put to sleep this afternoon. She had not eaten for a couple of days, was isolating herself in odd corners of the house, did not want a lap or petting, was not purring. We decided it was kinder to bring the end a few days sooner.

We are both very, very sad. The house already seems empty. There will be lots of points where we will realize we have to behave differently.

But we feel both Tux and Willie had a good run. 18 years is a long life for a cat. Some get a little older but not many. And we took good care of them.

With tears,
Mom

2:09

I do love the ZZZZ Best fraud. It is so flamboyant. This site is a freely available introduction, though the full glory of it all is better recounted in articles behind various money barriers...

11:05

Ahh...babies...and I always thought biological clocks were an old wives tale.

FJ was here with BT for the final check out and I got to babysit. Pure bliss. I didn't get much work done, but I feel calm and focused and happy. Worth every minute.

7:16

I am getting quite hungry, so I think I will go now, bringing the glorious ZZZZ Best fraud home with me to write up this evening.

6:13

I'm still in the office, still hard at work and getting close to finishing the bribing section. I'm actually surprised how much I have been getting done. I was skeptical when I took over an hour for an early lunch/wander around the farmer's market. I may not finish everything I want tonight, but I can be happy with what I have done today.

4:16

Done with the opinion shopping section--phew! It has taken long enough. I hope that the bribing scenario section will go much faster...

FJ is in, packing up her side of the office :( I will miss her!!!

Deadlines update

COB today: opinion shopping history and bribe history.
Tuesday: re-arrange, re-write model extensions chapter.
Wednesday: draft of reform history outline using GAO report.
(Thursday-Monday at AM wedding. Bring computer for sole purpose of entering bibliography as time permits.)
Thursday, July 27: Finish draft policy chapter.
Sunday, July 30: Send off drafts for conferences in Copenhagen and Toronto.

That means I get to clean, pack and prepare for 3 weeks away in the evenings...and no room for error...

Sunday 9:42

Sunday morning and I've already been at the office for a half hour or so. I just have to remind myself that it is only a few more days of pain and then it will all be worthwhile--and I can SLEEP!

It will be hard in London--all I'll want to do is lie in bed and read dumb novels...

Until then, here is an update:

Got lots of good material at the law library yesterday. I should have enough to do a passable FIRST DRAFT job of the opinion shopping and collusion scenarios. The opininon shopping scenario is STILL not done, but it is getting close and I feel like I am working both shopping and collusion scenarios almost in parallel, so I am not too behind.