Who’s Auditing The Auditors?

by:

Joe Patti

Credit where it is due, Peter Hansen of NJPAC posted a link on the Performing Arts Administrator’s group on LinkedIn about the £2.3 million judgment entered against former London Philharmonic Orchestra (LPO) General Manager Cameron Poole for financially defrauding that organization.

Even though it was supposed to take 4 people to issue a check, Poole was able to take advantage of operational distractions to perform all the required functions himself, included forging countersignatures. The executive director, Tim Walker, admits some negligence on his part, but is amazed that not only did he and the board not catch it, but the auditors from Deloitte missed it on three separate audits. LPO is currently pursuing a negligence suit against Deloitte.

It raises the question of whether you can really be certain you have proper controls and diligence in place. Deloitte missed, or at least didn’t comment on something that became apparent to Poole’s successor in a couple weeks. Four of the biggest accounting firms in the country never made a sound about the suspicious nature manner in which Bernie Madoff financial reports were generated. (An entirely separate issue from the strangely superior returns his fund was generating.)

One would think that after Arthur Andersen’s accounting arm lost credibility following the Enron scandal, reducing the Big Five accounting firms to the Big Four, greater attention would be paid. But I think people may attribute more competence and honesty to organizations of great size and prestige than is warranted. Even on the non-profit front, I was aware of a number of scandals in the United Way, but I had no idea that there has been large scale mismanagement and embezzlement at four or five locations and alleged smaller scale fraud at over 20 others. One of the Spanish members of the LinkedIn group cited a case similar to LPO’s at Barcelona’s Orfeó-Palau de la Musica Catalana where the general manager embezzled millions of euros (some stories I have seen claim 23 million in over 30 years).

The piece I linked to above about the United Way claims “The nonprofit world has accepted that multi-million embezzlements are a cost of doing business.” As much as I am dismayed by the idea that making great efforts at due diligence may not guarantee security, I would hope no one hiring me would do so assuming there was a good chance I will make off with some of the money.

There is a price for lack of scrutiny when people begin to lose faith in you. About a year ago, there was a piece in the Washington Post about 21 Washington DC area non-profits withdrawing from the local United Way, which had been the subject of one of the larger scandals, in favor of another emerging charitable organization.

I am encouraged by the news that it didn’t take long for Poole’s replacement at the LPO to notice something was strange. It means that misappropriations can be spotted with a little healthy scrutiny that makes no personal judgments about the individual holding the books when you ask to see the raw data rather than the summary reports.

Still, most of us don’t have three weeks to pour over ledgers sorting through it all. So the real question becomes, how do you know you can trust your auditor to be meticulous enough on your behalf? I am sure I could find editorials about how the big firms are so big and so motivated to process as many audits in a year as possible, companies aren’t getting the competence and effort they deserve. I am also pretty sure that laziness and incompetence afflicts the small operations as well as the big ones.

There was an argument back during the Enron scandal that rotating accounting firms would help avoid the conflicts of interest that develop over a long term relationship and cause auditors to look the other way. That was countered by the idea that is wastes a lot of time and money when you have to get a new auditor up to speed about the way your business runs.

I am pretty much on the side of rotating. I don’t think most arts organizations and non-profits in general are so big that it will take too much longer to explain their operations to a new group every few years. That way you avoid any conflicts of interest and lack of rigor.

Leadership By Eyebrow

by:

Joe Patti

Apropos my Inside the Arts co-denizen Bill Eddins post about what it takes to be a good conductor, is the TED video with Itay Talgam talking about the conducting styles of six great 20th century conductors.

Talgam approaches the leadership styles of different conductors from the apparently stifling style of Riccardo Muti to the comparatively free flowing style of Herbert von Karajan. According to Talgam, Muti was asked to resign from his position at La Scala because he wasn’t allowing the musicians any room in the performance. Karajan was apparently quoted as saying the worst thing he can do is give his musicians specific direction. Both approaches put a lot of pressure on the musicians to perform well.

Talgam contrasts that with the way Carlos Kleiber (in some very humorous clips) and Leonard Bernstein (conducting only with his head) balance exerting control with loosing the reins and giving the musicians their head, providing only minimal feedback.

Obviously, there is a lesson in all this about balance in organizational leadership. It would be the great arts administrator indeed who could run his/her organization just by wiggling their eyebrows like Bernstein.

The Developing Audience Member

by:

Joe Patti

Over the last year, I have written about masterful performances that really affected me: the taiko performance a week ago, the kathak/tap dancing of Chitresh Das and Jason Samuels Smith last year and Bela Fleck, Zakir Hussain and Edgar Meyer’s performance last September. There have been a couple times I have brought up the idea that it takes 10,000 hours to master your craft.

It occurred to me recently that if it takes that long to become a master, it likely takes a fairly significant fraction of that to develop appreciation and discernment of arts and culture. This isn’t something that really gets discussed enough I think. In fact, with all the studies that have done been, I don’t think anyone has ever studied how long it takes for a person to develop an understanding and appreciation for art. I am sure the subject has been studied tangentially in relation to learning and meta-cognition. But has anyone sat down and approached it head on how much time people need to process and internalize experiences?

What I am really getting at is the oft espoused idea that once someone is exposed to some form of art, they will fall in love with it forever after. The fact is, once may not be enough and it is pretty unfair and unrealistic that we expect it to be. We give performers hundreds and thousands of hours to gain proficiency and yet we expect our audiences to absorb just how sublime our work is after just two hours.

Yes, we have a need to have them fall in love quickly because the opportunities for exposure are so few and audience members becoming fewer. We are doing a disservice to our audiences to expect so much from them. We want them to realize what a great experience we are offering, but don’t really know how to guide them to that place and how long it might take.

If you are involved in the arts, then your discernment and appreciation were probably developing roughly in parallel with your mastery of whatever you were pursuing. Even if you stopped, your critical skills may have continued to improve as you processed new experiences through the filter of your knowledge. You likely did not notice it happening and so assume you always had pretty good aesthetic sense. But I bet you can look back and grimace at all the crap you used to like and produce–some of it was probably pretentious crap too. (Of course, it was still better by half than the stuff kids are listening to today!)

So the more I think about it, the more I believe that becoming the audience member we all want is as gradual a process as becoming the master we want them to applaud. As I referenced producing awful stuff when we were younger in the preceding paragraph, I was envisioning my dismal acting skills in college vs. what, in my foolishness, I perceived my acting skills to be. One of the things I clearly remember from that time was a friend telling me he was really getting into Indian raga. I immediately laughed because it seemed absurd to me that anyone who wasn’t of that culture would listen to raga, (I think that was my classic rock phase), and I suspected he was saying that to get women. But he said he was serious.

But today I have cited the excellence of three events, two of which were heavily infused with Indian music and instruments and the last that included taiko drumming. At the time I was making fun of my friend about ragas, I had no concept taiko existed. Now I am encouraging people to see these performances and it is difficult to imagine people not enjoying them.

So while we don’t know how long it make take to bring someone into a receptive outlook about the arts, what we do know is that Generation X is not experiencing the upward bump in classical music attendance as they move into their 40s as previous generations did. Alex Ross doesn’t think it is too late to reverse that trend by increasing exposure through a lot of hard work.

I will openly admit that at this juncture, my thoughts on this matter are completely at a preliminary stage. This idea is only a day and a half old in my mind. But as I think about it, it seems to me that people don’t necessarily need direct experience in a situation to gradually develop the ability to confidently approach it. You may not necessarily need constant exposure to classical music and sculpture to acquire critical evaluation skills in these areas.

This winter I went to a number of contemporary art museums and I think that I gained the confidence to do so from having built and lit sets for the theatre. Even though I haven’t done so for awhile, all the times I have watched a show and evaluated these elements since then has improved my ability to recognize how certain effects have been accomplished. That in turn gave me the confidence to walk into an art museum and understand a great deal about what I was looking at. Granted, it might not be what the artist and the critics intend me to understand and perhaps that will come later. For now I am deriving enjoyment when I visit.

I had a similar experience with sumo wrestling. I really don’t watch a lot of sports at all. I have seen a little baseball, football, hockey, soccer, wrestling and martial arts in my time. I went to a sumo event a few years ago knowing nothing and was soon enjoying myself. I think the little bits of experience from these other sports provided a context for the sumo bouts. Though admittedly, sumo is pretty easy to understand. None of my past sports experience is likely to be much help with cricket.

I will concede there is a great theatricality in the sumo ritual and my experience in that area probably helped as well. I have tried to watch bouts online since and find those videos which edit out a lot of the ritual unsatisfying.

Anyway, my point is– the skills/tools/abilities needed to appreciate an arts experience isn’t necessarily cultivated solely by exposure to the arts. While one exposure may not be enough, devising a way to nail people’s feet to the floor en masse so they can’t leave won’t be necessary either. There are myriad situations which are improving people’s capacity to understand and enjoy occurring all the time. The trick is to identify these situations and make people aware of the connections. I felt confident walking into a museum because I knew my comprehension of the use of light and shadow in a performance could translate to visual art because I was aware of their use in that discipline.

Goin’ Mobile With The Orchestra

by:

Joe Patti

I was driving home a week ago when I heard an interview on the radio with a couple talking about founding the Orchestra of the Hawaiian Islands. (MP3 download) Now given that the Honolulu Symphony has just declared bankruptcy after years of financial struggles, this elicited a “say what?” moment for me.

It turns out this is a program of American Music Festivals, a once Chicago and now I guess Hawaii based organization. The organization was founded in Chicago and created project based ensembles to perform cultural exchange concerts in Russia and Eastern Europe in addition to the Chicago area. Apparently this was accomplished by contracting freelance Chicago Symphony Orchestra musicians.

American Music Festivals is run by a husband and wife, artistic director and executive director team. When she was offered a job at a school on the Big Island of Hawaii, they moved their operations to that state. Their intention is to utilize Honolulu Symphony musicians to increase the size of their projects from their current 12 piece string ensemble up to full symphony size.

They aren’t looking to replace the Honolulu Symphony at all. If the symphony is revitalized, they envision themselves complementing its outreach efforts. Much of their interest is in local and international outreach. Their plan is to institute cultural exchanges with Japan and perhaps other Asian countries. They hope to bring Hawaiian music to Japan and add the music to their existing exchanges in Eastern Europe.

What interested me about the interview was the concept of how technology, transportation and communications allows endeavors like this to be so mobile. Where they live seems to have little bearing on whether they can accomplish their goals.

Of course, part of this is due to the fact their organization has no fixed orchestra. When asked whether he might one day want to establish an orchestra with regular salaried members, Artistic Director Philip Simmons said, “Why would I want to do that though? Why would I want to create all those problems for myself?” The organization focuses on project driven events which provides them with the flexibility to do different things with a variety of groups locally and worldwide.

Simmons suggests that maybe the old models and formulas for a concert experience aren’t working anymore. He doesn’t say his structure is necessarily the new way, but offers it as an alternative.

Given that the Honolulu Symphony has talked about operating with a much reduced ensemble, perhaps a collaboration between them and the Orchestra of the Hawaiian Islands (OHI) can bring enough funding together to assemble the numbers the Honolulu Symphony had performing for them in the past. They wouldn’t necessarily be competing for the same funding pot. The OHI is serving an area of the state the Honolulu Symphony once did but really hasn’t had the funding to do so in recent past. OHI may be able to gain funding from people interested in supporting local performances.