Spreadsheet Woes – Limited Features For Easy Adoption of a Control Framework

Like it or not, regulations are here to stay and for a company to comply with them, its IT and financial systems will have to be equipped with a suitable control framework. One common stumbling block to such an implementation is a company?s over-reliance on spreadsheets.

Why is it so difficult to adopt controls for a system that’s reliant on spreadsheets? To understand this, let’s pinpoint some of the strongest, most powerful attributes of these User Developed Applications (UDA).

By nature, spreadsheets are the epitome of simplicity: easy to develop, easily accessible and easily altered. All computers in your workplace will most likely have them and everyone in your organization may be sharing them, making their own versions, and storing them in personal folders.

Sad to say though, these strengths are also control weaknesses and constitute the very reasons why spreadsheets require effective risk management.

Easy to develop. Being easy to develop, most spreadsheet systems are created by non-IT users who have limited knowledge on best control practices. Being constantly under time pressure, these ?developers? may also relegate documentation, security, and data verification to the back burner in favour of coming up with a timely report.

Easy to access. Information in a spreadsheet can be opened by practically anyone within the organization?s network. Who accessed what? And when? If anything goes wrong, it would be difficult to identify the culprit, and the failure to pinpoint responsibility for erroneous data could lead to bigger, more costly mistakes.

Easy to alter. Lastly, if the information is easy to access, then it can also be easily altered, consequently making reports more prone to both accidental errors and fraudulent modifications.

The rise of multimillion dollar scandals due to accidental and intentional spreadsheet errors have prompted regulatory bodies to publish guidelines for mitigating spreadsheet-associated risks. These controls include:

Change control
Version control
Access control
Input
Security and data integrity
Documentation
Development life cycle
Backup and archiving
Logic inspection/Testing
Segregation of duties/roles, and procedures
Analytics

In theory, these controls should be able to bring down risks considerably. However, because of the inherent nature of spreadsheets, such controls are rarely implemented effectively in the real world.

Take for example Security and Data Integrity. One of the most common causes of spreadsheet error is due to ?hardwiring?. This happens when values are inadvertently entered into a formula cell, naturally changing the logic of the spreadsheet.

As a way of control, cell locking can be applied on the formula cells to prevent users without the proper authority from making any changes. However, when reporting deadlines approach drawing spreadsheets to the forefront of data processing, more people are given access rights to the locked cells. Ironically, it is during these crunch times, when errors are most likely to happen.

Because the built-in features of a spreadsheet support none of the controls mentioned above, some companies are tempted to purchase control-enabling programs for spreadsheets just to continue using them for financial reporting. But although these programs can integrate the required controls, you?d still be interacting with the same complex and outdated interface: the spreadsheets.

Thus, these band-aid solutions may not suffice because the root cause of these problems are the spreadsheets themselves.

Learn more about our server application solutions and discover a better way to implement controls.

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The Matrix Management Structure

Organizations exploit matrix management in various ways. A company, for instance, that operates globally uses it at larger scale by giving consistent products to various countries internationally. A business entity, having many products, does not assign its people to each product full-time but assign those to different ones on a part time basis, instead. And when it comes to delivering high quality and low cost products, companies overcome industry pressures with the help of many overseeing managers. In a rapidly changing environment, organizations respond quickly by sharing information through a matrix model.

Understanding the Matrix Management Structure

A basic understanding of matrix management starts with the three key roles and responsibilities that applies in the structure.

Matrix Leader ? The common person above all the matrix bosses is the matrix leader. He ensures that the balance of power is maintained in the entire organization by delegating decisions and promoting collaboration among the people.
Matrix Managers ? The managers cooperate with each other by defining the respective activities that they are responsible for.

Matrix Employees – The employees have lesser direct authority but has more responsibilities. They resolve differing demands from more than one matrix managers while they work things out upwards. Their loyalty must be dual and their relationships with managers must be maintained.

Characteristics of a Matrix Structure

Here are some features that define the matrix management structure:

Hybrid Structure ?The matrix structure is a mix of functional and project organization. Since it is a combination of these two, matrix management is hybrid in nature.

Functional Manager ? When it comes to the technical phases of the project, the functional manager assumes responsibility. The manager decides on how to get the project done, delegates the tasks to the subordinates and oversees the operational parts of the organization.

Project Manager ? The project manager has full authority in the administrative phases, including the physical and financial resources needed to complete the project. The responsibilities of a project manager comprise deciding on what to do, scheduling the work, coordinating the activities to diverse functions and evaluating over-all project performance.

Specialization ?As the functional managers concentrate on the technical factors, the project managers focus on administrative ones. Thus, in matrix management, there is specialization.

Challenge in Unity of Command ? Companies that employs matrix management usually experience a problem when it comes to the unity of command. This is largely due to the conflicting orders from the functional and project managers.

Types of Matrix Structure

The matrix management structure can be classified according to the level of power of the project manager. Here are three distinct types of matrix structures that are widely used by organizations.

Weak Matrix ? The project manager has limited authority and power as the functional manager controls the budget of the project. His role is only part-time and more like a coordinator.

Strong Matrix ? Here, the project manager has almost all the authority and power. He controls the budget, holds the full time administrative project management and has a full time role.

Balanced Matrix ? In this structure type, both the project and functional managers control the budget of the project. The authority and power is shared by the two as well. Although the project manager has a full time role, he only has a part time authority for the administrative staff to report under his leadership.

Successful companies of today venture more on enhancing the abilities, skills, behavior and performances of their managers than the pursuit of finding the best physical structure. Indeed, learning the fundamentals of the matrix structure is essential to maximize its efficiency. A senior executive pointed out that one of the challenges in matrix management is not more of building a structure but in creating the matrix to the mind of the managers. This comes to say that matrix management is not just about the structure, it is a frame in the mind.

How to be cleaner and greener indoors

The supply of water on planet earth is finite hence the need to conserve this precious resource. Water is a utility that is often used in and outdoors and for that reason, water conservation activities should be undertaken everywhere.

Get greener everywhere
Water saving can be achieved through various ways. Of utmost importance, fixing leaks should be undertaken in all areas. Small household leaks can add up to gallons of water lost every day. It is therefore important to check all water system fixtures and ensure that there are no leakages.

Greener bathroom habits
Turning off taps- this should be practised in the bathroom especially while shaving and brushing teeth. One could also consider using showers instead of baths since showers use less water and get into the habit of taking shorter showers.

Clean and green dishes
The kitchen is one of the areas where a lot of water is used. Some of the ways through which water can be conserved in the kitchen are:

Use of basins when washing dishes by hand
Using a dishwasher – when using the dish washer, it is important to make sure it’s fully loaded. Scraping plates instead of rinsing before loading it into the dishwasher will also go a long way in the conservation of the valuable commodity called water

Green your laundry and earn green bucks
The other area where water saving can be made is the laundry room. Washing only full loads of laundry will ensure that your washing machine is running at full efficiency hence you will be able to maximise your washer for energy efficiency. Always ensure you use the appropriate water level or load size selection on the washing machine. All these will not only save water but energy too and since savings are earnings you can smile all the way to the bank where some green bucks will be credited to your account.

Spreadsheet Woes – Burden in SOX Compliance and Other Regulations

End User Computing (EUC) or end User Developed Application (UDA) systems like spreadsheets used to be ideal ad-hoc solutions for data processing and financial reporting. But those days are long gone.

Today, due to regulations like the:

Sarbanes-Oxley (SOX) Act,
Dodd-Frank Act,
IFRS (International Financial Reporting Standards),
E.U. Data Protection Directive,
Basel II,
NAIC Model Audit Rules,
FAS 157,
yes, there?s more ? and counting

a company can be bogged down when it tries to comply with such regulations while maintaining spreadsheet-reliant financial and information systems.

In an age where regulatory compliance have become part of the norm, companies need to enforce more stringent control measures like version control, access control, testing, reconciliation, and many others, in order to pass audits and to ensure that their spreadsheets are giving them only accurate and reliable information.

Now, the problem is, these control measures aren’t exactly tailor-made for a spreadsheet environment. While yes, it is possible to set up a spreadsheet and EUC control environment that utilises best practices, this is a potentially expensive, laborious, and time-consuming exercise, and even then, the system will still not be as foolproof or efficient as the regulations call for.

Testing and reconciliation alone can cost a significant amount of time and money to be effective:

It requires multiple testers who need to test spreadsheets down to the cell level.
Testers will have to deal with terribly disorganized and complicated spreadsheet systems that typically involve single cells being fed information by other cells in other sheets, which in turn may be found in other workbooks, or in another folder.
Each month, an organisation may have new spreadsheets with new links, new macros, new formulas, new locations, and hence new objects to test.
Spreadsheets rarely come with any kind of supporting documentation and version control, further hampering the verification process.
Because Windows won’t allow you to open two Excel files with the same name simultaneously and because a succession of monthly-revised spreadsheets separated by mere folders but still bearing the same name is common in spreadsheet systems, it would be difficult to compare one spreadsheet with any of its older versions.

But testing and reconciliation are just two of the many activities that make regulatory compliance terribly tedious for a spreadsheet-reliant organisation. Therefore, the sheer intricacy of spreadsheet systems make examining and maintaining them next to impossible.

On the other hand, you can’t afford not to take these regulations seriously. Non-compliance with regulatory mandates can have dire consequences, not the least of which is the loss of investor confidence. And when investors start to doubt the management’s capability, customers will start to walk away too. Now that is a loss your competitors will only be too happy to gain.

Learn more about our server application solutions and discover a better way to comply with regulations.

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Spreadsheet Woes – Limited Features For Easy Adoption of a Control Framework