Spreadsheet Fraud

To any company executive or business owner, the mere possibility of fraud can be enough to send alarm bells ringing – for good reason. In a prolonged recession, the last thing investors would want to discover is a huge, gaping hole where supposedly a neat profit should have been. Also to find out that such loss was brought about by deliberately falsified accounting and poor spreadsheet controls only makes the situation even more regrettable.

Why?

Because these losses would not have occurred had there been a stronger risk management program in place and more stringent quality control on critical data to begin with.

But given the nature of a spreadsheet system i.e. its sheer flexibility and easy accessibility, plus the fact that they were never intended to be enterprise-level tools, there are no hard and fast rules for auditing spreadsheets. Also because of the lack of internal controls for end user computing (EUC) applications, in this case spreadsheets, you can’t expect these systems to yield consistently accurate results.

In fact, most managers assume that major spreadsheet errors should result in figures that are blatantly out of touch with how things stand in the real world, making these errors easily detectable.

Well they assumed wrong. You’ll find cases where the losses ran to millions of dollars without anyone being the wiser.

In instances of fraud, the problem becomes more complicated as these errors are deliberately hidden and cleverly disguised, perhaps one erroneous cell at a time. Even if these cover-ups started out with smaller figures that may have had negligible impact on a company?s operation, the cumulative costs of these ?insignificant? errors multiply exponentially as the spreadsheets are reused and utilised as bases for other related reports.

While there is no generally accepted definition of the term ?spreadsheet fraud?, its quite easy to identify one when a case crops up. Fraud arising from spreadsheets are typically characterised by:

Fallacious inputs – correct figures are deliberately replaced with false values.

Erroneous outputs owing to data alteration – hyperlinks are linking to the wrong spreadsheets or cells; use of macros or special lines of code which are understandable only to the person who developed the code.

Concealment of critical information – can be done with easy ?tweaks? such as hidden rows and columns, using the same colour for both the font and the background, or hard coding additional values into a cell.

There is nothing really highly-sophisticated or technical in any of these methodologies. But without internal spreadsheet controls in place, it would take a discerning eye and a thorough review to catch the inconsistencies contained in a spreadsheet fraught with errors. Also, if these errors are knowingly placed there, the chances of finding them are close to nil.

Learn more about our server application solutions and discover a better way to protect your company from spreadsheet fraud.

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Spreadsheet Reporting – No Room in your company in an age of Business Intelligence


Still looking for a Way to Consolidate Excel Spreadsheets?


Disadvantages of Spreadsheets


Spreadsheet woes – ill equipped for an Agile Business Environment


Spreadsheet Fraud


Spreadsheet Woes – Limited features for easy adoption of a control framework


Spreadsheet woes – Burden in SOX Compliance and other Regulations


Spreadsheet Risk Issues


Server Application Solutions – Don’t let Spreadsheets hold your Business back


Why Spreadsheets can send the pillars of Solvency II crashing down

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Top 3 reasons to get into Multi-Channel Retail

Multi-channel retail, which nowadays understandably includes online channels, is something you just have to do this year. Every single day you put off doing it, the competition gobbles up market share that should have been yours. There are a number of reasons why even successful retailers are now going into multi-channel retailing. Here?s three of the most important ones.

1. You’ll get a BIG jump in sales

Not counting this year, which could be getting a big boost from major activities like the Queen?s Diamond Jubilee and the 2012 Olympics, sales of UK retailers have been experiencing tremendous growth particularly from their online channels. Already two years ago (2010), a number of UK retailers boasted significant increases in sales as a result of multi-channel retail initiatives. These retailers included:

  • Argos, which got a whopping ?1.9bn from multichannel sales back then;
  • House of Fraser, which reported a 150% jump in its online sales in just 6 months; and
  • Debenhams, whose profits rose by 20%

There were many others. Now, the reason I?m showing you 2010 figures is because online retail sales increased by 14% in 2011 and those same businesses still added to that growth. So, if only you had enough foresight and started expanding your business to the Web two years ago, you could just imagine what your sales would have been today.

The good news is that, it’s not yet too late if you start now. Here?s why…

2. Those numbers are going to keep on growing

We’re getting all sorts of predictions from leading researchers regarding the possible growth of the Internet economy. All these predictions have one thing in common. They all have a positive outlook. The Boston Consulting Group (BCG), for instance, predicts an average growth of no less than 10% per year in the G-20 nations.

3. Most online retailers aren’t doing it right yet

Although many retailers have already started bringing their business to the Web, most of them are doing it the wrong way. For example, many of them fail to integrate their offline and online channels. This is a serious shortcoming because it leads to customer dissatisfaction.

When a customer goes to your website and sees something he likes, you wouldn’t want him to drive all the way to your store only to find out that the item isn’t available there or, if the item is there, that it isn’t priced as he expected. The lack of multi-channel integration is very common among multi-channel retailers.

These inadequacies are actually good news because it means there are still many areas you can improve on. After improving on them, you can then highlight those areas as your key differentiators.

If you’re still looking for more reasons on why you should go into multi-channel retailing, read this post:

“5 Numbers Showing Why the Time to Invest on eCommerce in the UK is Now”

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Data Replication

Medical Data Form

These days, not many companies can continue to operate once their entire computer system goes down. All the information needed in daily operations are stored in databases while the interfaces that make use of them all come in the form of software applications.

Software applications can be rapidly reinstalled and configured for as long as the necessary programs are available. Data, however, cannot be reconstructed as quickly even with hard copies available. It is therefore necessary to store your data in a replicated setup so that when one section goes down, operations can proceed without interruption.

For instance, if a category 5 hurricane renders your main office useless, you can simply rent workstations elsewhere, connect to the Internet and continue with your usual transactions for as long as data is readily accessible.

So how do we ensure the accessibility and reliability of your data? Here’s what we’ll do:

  • Activate data replication on your database management system. If your DBMS does not support replication, we’ll migrate all your data to one that does.
  • If absolutely necessary, we can allow modernised systems to run parallel to your legacy systems and prepare both for full modernisation when you’re ready.
  • Implement fail-over technologies where applicable to provide for automatic switching to a backup data server or network from one that has just failed.

We can also assist you with the following:

Systems Integration as a means to cost reduction

System integration in an organisation refers to a process whereby two or more separate systems are brought together for the purpose of pooling the value in the separate systems into one main system. A key component of process consolidation within any organisation is the utilisation of IT as a means to achieve this end. As such, system integration as a means to cost reduction offers organisations the opportunity to adopt and implement lean principles with the attendant benefits. The implementation of lean techniques requires an adherence to stated methods to facilitate the elimination of wastage in the production of goods and services. In summary, the lean philosophy seeks to optimise the speed of good and service production, through the elimination of waste.

While analysing some of the traditional sources of waste in organisational activities, things like overproduction, inventory, underutilised ideas, transmission of information and ideas, transportation of people and material, time wastage and over-processing stand out. The fact is that companies can eliminate a significant portion of waste through the utilisation of IT to consolidate processes within their organisation.

Adopting lean principles calls for the identification of all of the steps in the company value stream for each product family for the purpose of the eliminating the steps that do not create any value. In other words, this step calls for the elimination of redundant steps in the process flow. This is exactly what the utilisation of IT to consolidate processes offers a company. For instance, the adoption of a central cloud system across a large organisation with several facilities could increase efficiencies in that company. Such a company would drastically reduce the redundancies that used to exist in the different facilities, eliminate the instances of hardware and software purchase, maintenance and upgrade, modernise quality assurances processes and identify further opportunities for improvement.

Perhaps, from the company’s point of view, and from the perspective of lean process implementation, the most important factor is?the effect it has?on the bottom line.’reducing the number of hardware, eliminating the need for maintaining and upgrading hardware, removing the necessity for software purchase and upgrade across facilities also contributes to a significant reduction in operational costs.?This reduction in the cost of operations leads to a corresponding increase in the profit margin of the company.

Applying system integration as a means to cost reduction can also lead to the reduction in the number of people needed to operate the previous systems that have been integrated into one primary unit. Usually, companies must hire people with specialised knowledge to operate and maintain the various systems. Such employees must also receive special training and frequent ongoing education to constantly stay informed of the latest trends in process management. With the integration of the system, the number of people needed to maintain the central system will be significantly reduced, also improving the security of information and other company trade secrets.

Based on an analysis of the specific needs that exist in a particular company environment, a system integration method that is peculiar to the needs of that organisation will be worked out. Some companies may find it more cost-effective to use the services of independent cloud service providers. Others with more resources and facilities may decide to set up their own cloud service systems. Often, private cloud service system capabilities far exceed the requirements of the initiating company, meaning that they could decide to “sell” the extra “space” on their cloud network to other interested parties.

A company that fully applies the lean principles towards the integration of its systems will be able to take on additional tasks as a result of the system consolidation. This leads to an increase in performance, and more efficiency due to the seamless syncing of information in a timely and uniform manner.

Companies have to combine a top-down and a bottom-up approach towards their system integration methods. A top-down approach simply utilises the overall system structure that is already in place as a starting point, or as a foundation. The bottom-up approach seeks to design new systems for integration into the system. Other methods of system integration include the vertical, star and horizontal integration methods. In the horizontal method, a specified subsystem is used as an interface for communication between other subsystems. For the star system integration method, the subsystems are connected to the system in a manner that resembles the depiction of a star; hence, the name. Vertical integration refers to the method of the integration of subsystems based on an analysis of their functionality.

The key to successful system integration for the purpose of cost reduction is to take a manual approach towards identifying the various applicable lean principles, with respect to the system integration process. For instance, when value has been specified, it becomes easier to identify value streams. The other process of removing unnecessary or redundant steps will be easier to follow when the whole project is viewed from the whole, rather than’the part. Creating an integrated system needs some?patience?in order to work out kinks and achieve the desired perfect value that creates no waste.

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