Miguel
Fraud 101
Conflict of interest is the issue my friend. Unbiased decisions cannot happen when one has an other-than-work-relationship with the persons they are dealing with.
Any relationship that is, or appears to be, not in the best interest of the organization. A conflict of interest would prejudice an individual’s ability to perform his or her duties and responsibilities objectively.
IIA Standards Glossary of Terms, Conflicts of Interest.
An audio version of the alignment problem from a deep learning perspective by Richard Ngo Et Al
Hello Wil,
I commented this in Nathan’s post earlier and this is a best practice that the EA governance team may consider creating...
To point out what key features that EA may take seriously if setting up an Internal Audit Team is in its future plans based on standards
The internal audit activity must be independent, and internal auditors must be objective in performing their work. (Performance Standards)
The chief audit executive must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. The chief audit executive must confirm to the board, at least annually, the organizational independence of the internal audit activity. (Performance Standards)
The chief audit executive must effectively manage the internal audit activity to ensure it adds value to the organization. (Attribute Standards)
The internal audit activity must evaluate the effectiveness and contribute to the improvement of risk management processes. (Attribute Standards)
There are many more standards that acts as safeguards to how an internal audit activity be done objectively and prevents large scale errors or frauds to happen.
These SOP in Internal Audit are proven methods ran by almost all large corporations and banks all over the world.
All the best,
Miguel
Archetypal Transfer Learning: a Proposed Alignment Solution that solves the Inner x Outer Alignment Problem while adding Corrigible Traits to GPT-2-medium
I don’t know if what I saw was a real record? It’s just a balance sheet on excel. Not even a proper accounting system generated financial statement.
I’m getting the same read Liv.
I expected when I came here to be honest that a movement as big as this has some notion of best practices as far as governance is but unfortunately it was not, what is installed seems erring on the side of investigation and rather than detection or prevention.
EA has to add some parts of how scaling issues had been addressed by big multibillion industries. I understand that the movement is still new to this but again, fraud has been there forever where money is in play and human nature is involved.
Very interesting how people disliked / disagreed my feedback after reading Chloe’s narration. I have been in her situation before (encountering malevolence in humans) and there is a process to recovery, probably could have phrased my comment better but I take the good and the bad of trying to do more good in this lifetime—even as little as trying to give honest feedback.
FTX prob related: Strongly Recommending Creating An Internal Audit Committee that will Periodically Assess EA Organizations, Its Objectives And Processes Based on IIA Standards
As a guy who failed a business 5 years ago, accepting the situation for what it is—no matter how hard it is have helped me go to the next step. Losing money is the sublayer of the issue but the bigger downfall can rise from us losing our values that kept us moving towards the right direction. There is no one size fits all acceptance mechanism but the sooner one gets to admit how painful a certain situation is—the faster the recovery will be..
Hmmmmmm....probable yearly cost of a decent Internal Audit Team:
Chief Audit Executive: 100,000 USD to 150,000 USD
Two staff internal auditors: 45,000 to 65,000 each
Opex: 40,000 usd approx.
Roughly 320,000 USD per year...to ensure that controls are reviewed and assessments are made to EA organizations. I don’t know how many are there but let’s say its 5 institutions that it will review each year then there is a 64,000 USD per company additional cost
Considering the funding that EA organizations get − 64K USD is like .5% to 3% of the yearly funding. Investing in this will very much improve the operations and safeguard from large scale errors and fraud.
Obviously these are just estimates, but I’m trying to literally make the numbers much more easier for people to view or understand as most are not familiar as to approach the problem of creating teams from cost benefit perspective.
Fraud and error will always be a part of money allocation—it just is and have seen this personally as I have worked across the world where either big or small companies take their own inventive ways on how to handle the problem of money. Unfortunately our human nature seems so prone to bad ideas that the humanity in us just leaves us when there is a gap that presents...this is where fraud starts.
Independent audits should be installed in EA organizations especially if it is handling tremendous amount of resources or funds, so fraud can be avoided in the future...
ChatGPT can write code! ?
If you guys need help with ideas on improving oversight or adding internal audit reviews for future EA projects, let me know. It’s always the lack of governance measures that leads to these unfortunate events.
I have submitted an application no need to reply!
In my experience as an accountant for 10 plus years, never has any kind of fraud or misappropriation have been accepted. However big or small deception is, it will always and unequivocally be not tolerated.
Another great point, transparency—I want Wil to be transparent as to his involvement in that given his reach and influence on EA, he should be able to explain his thought process as to what was the objective of his endorsement.
Thank you Pranay for checking on me and why my message was framed as requiring justification from Wil.
My understanding is if you are to vouch for someone over some deal, my best estimation is at the very least one is knowledgeable of the person’s character—So the understanding I took from reading the exchange of messages was Wil is certifying for SBF to a degree and he knew him well enough over that sum of money which is not at all small. Well there are also blindspots in people’s characters—narcissistic personality disorders or psychopathy that can literally hide their true identity through fictitious masks people wear which might also be the case given that fraud was committed by SBF.
I see Wil as the largest person in spreading what the EA community is and the reason why I’m here in the first place—I hope he can share his opinion on the matter as his actions can really impact the movement at scale.
Hello Guys, I’m Miguel, creator of whitehatStoic ! That focuses on sharing my journey helping the idea of Effective Altruism grow. New To The Forum but have been involved to altruistic projects here in there over the years. Glad to be here and have a nice day!
Hi Milan,
I come from the traditional accounting/ internal audit where governance teams and internal controls at the very least are installed and due diligence is a best practice especially in large sums of money being distributed. I am new here to the EA community and have expected similar protocols are in place as large scale fraud is not some new thing—it had brought down the accounting profession in 2001 (Enron) and the mortgage crisis in 2008 (Lehman).
I guess what is clear to me is EA lacks the expertise on fraud / error detection, moreover has to make some improvements in the near future.
All the best,
Miguel