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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Disadvantages of Spreadsheets – obstacles to compliance in the Healthcare Industry


How Internal Auditors can win the War against Spreadsheet Fraud


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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Cloud Computing Trends: Where is the Cloud Headed Next?

Cloud adoption has been quick and painless at the consumer level. For instance, everyone’s on Gmail, YouTube, Facebook and Twitter on a daily basis yet most think nothing of the fact that they’re already using cloud-based services. Small businesses have also discovered how cloud solutions have raised efficiency in the workplace up a notch or two, while also bringing about significant cost savings. Cloud applications, particularly those for communication, file sharing, office software, backup and storage, and customer management, have rapidly grown in usage among SMBs.

In the same manner, large corporations are starting to see the potential of moving some of their IT department, whether its infrastructure or network management, to the cloud. By all indications it would seem that whether we are ready for it or not, cloud computing technology is here for the long haul.

So where is the cloud headed to next? In this post we examine the trends in the world of cloud computing and what likely lies in store in the near future for cloud users.

Focus on Security

Security has always been a key concern in the cloud computing industry and this will not go away anytime soon. If anything, data security in the cloud will only get to be in the limelight even more as cloud adopters grow in number. That’s why we expect professional cloud services providers to start implementing measures that will help slowly build up confidence in cloud security.

We should soon see more advanced security techniques and protocols that would increase the overall level of privacy and protection for cloud-stored information. Tighter security for login encryptions and prevention of unauthorized access are priority although there are a lot more issues that may need to be addressed. Now it remains to be seen whether these moves are enough for corporate clients to put their full trust in the cloud. But then again, they can always find ways to stay secure while making use of cloud computing where they can, which brings us to the next cloud trend.

Hybrid Approach

Large businesses are taking a longer time to get used to and actually use cloud services, and understandably so. After all, these companies have more at stake when it comes to dealing with such valid issues as security, compliance, outages, legacy systems, and more. However, they also cannot ignore the very appealing characteristics of the cloud. For big companies that have substantial IT needs, scalability, business agility, and faster deployment are listed as the biggest draws of the cloud.

This is why analysts predict that as as these businesses look toward leveraging the benefits of the cloud while at the same time maintaining control over mission critical data and systems, the use of a hybrid approach, i.e. putting some services in a public and at the same time opting to utilize a private cloud for other applications, will see enormous growth.

Mobile Cloud Computing

The BYOD or Bring Your Own Device business policy is another emerging trend that would not have been possible if not for cloud technology. This practice involves having employees bring their mobile devices to work, allowing them to access company files, data, and applications from their personally-owned gadgets in and out of the workplace.

As with any new business practice, the concept of BYOD can be both advantageous and disadvantageous. On the one hand, some believe it helps increase employee productivity and lifts their morale, while reducing overall IT costs. On the other hand, BYOD also opens up a whole new set of problems that are quite consistent with what many businesses take issue with with cloud technology: security. Do the pros outweigh the cons or vice versa? This much isn’t clear yet but what is evident is that more cloud apps are going mobile.

Efficiency, Innovation

While cost savings has always been one benefit that cloud proponents are quick to point out, its capability to improve and streamline business processes, thereby increasing efficiency and agility within the organization, is another key opportunity that the cloud offers. This is evident when you take a look at the most commonly used cloud services: backup and archiving, business continuity, collaboration tools, and big data processing.

Moreover, the cloud is making it easier for individuals to create new products and produce new lines of business. With access to higher IT capacity at lesser cost and at faster deployment rates, businesses can scale into more innovation without having to worry about the availability of computing resources.

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8 Best Practices To Reduce Technical Debt

When past actions in software development return to haunt you…

Is your business being bogged down by technical debt? Let’s look at measures that you can take to reduce it and scale your operations without the weight pulling you back. 

 

Work with a flexible architecture.

Right from the word go, you want to use architecture whose design is malleable, especially with the rapid rate of software evolution witnessed today. Going with an architecture that keeps calling for too much refactoring, or whose design won’t accommodate future changes will leave you with costly technical debt. Use scalable architecture that allows you to modify or add new features in future releases. While on this, complex features required in the final product should be discussed at the planning stage, that way simplified solutions that will be easier to implement can be identified, as this will lead to less technical debt in the long run. 

 

The Deal with Refactoring 

This is basically cleaning up the code structure without changing its behaviour. With the updates, patches, and new functionalities that are added to the systems and applications, each change comes with the threat of more technical debt. Additionally, organisations are increasingly moving their IT infrastructure from on-premises facilities to colocation data centres and deploying them on the cloud. In such scenarios, some workarounds are often needed to enable the systems to function in the new environments, which they hadn’t been initially developed to accommodate. Here, you will need to take some time to refactor the existing system regularly, streamlining the code and optimizing its performance – and this will be key to pay down the tech debt. When working with a flexible architecture from the start, the amount of work that goes into this will be reduced, meaning there’ll be less tech debt involved. 

 

Run discovery tests

Discovery testing essentially takes place even before a line of code is written for the system or application. This takes place at the product definition stage, where human insight software is used to understand the needs of the customer and is particularly helpful in setting priorities for the development work that will be carried out. It gives your business the opportunity to minimize the technical debt by allowing customers to give you a roadmap of the most pertinent features desired from the product. 

 

Routine code review

Getting a fresh look at the product or application from different sets of eyes in the development team will improve the quality of the code, thus reducing technical debt. There’s a catch though – this should be planned in a convenient way that doesn’t end up becoming a burden for the developers. Here are suggestions:

Break down pull requests

Instead of having complex pull requests where numerous changes in the code are introduced at a go, have this broken down into smaller manageable pull requests, each with a brief title and description about it. This will be easier for the code reviewer to analyse. 

● Define preferred coding practices

Documenting the preferred coding style will result in cleaner code, meaning the developers will focus their effort on reviewing the code itself, not losing time on code format debates.

 

Test automation

Relying only on scheduled manual testing opens you up to the risk of technical debt accruing rapidly, and not having sufficient resources to deal with the accumulated problems when they are identified. Automated testing on the other hand enables issues to be uncovered quicker, and with more precision. For instance, you can have automated unit tests that look at the functioning of the individual components of a system, or regression testing where the focus is on whether the code changes that have been implemented have affected related components of the system. However, establishing and maintaining automated testing will require quite some effort – making it more feasible for the long-term projects.

 

Keep a repository that tracks changes made

Do you have a record of changes made in the software? Keeping one in a repository that is accessible by the development team will make it easy to pin-point problems at their source. For instance, when software is being migrated to a new environment, or legacy software is in the process of being modernised, you will want to have an accurate record of changes that are being introduced, that way if there is an undesired impact on the system this it will be easier to zero-down on the cause.

 

Bring non-technical stakeholders on board

Does this conversation sound familiar?

Development Team: “We need to refactor the messy code quickly”

Product Team: “We have no idea what you are saying”

On one hand, you have the management or product team defining the product requirements, creating a project roadmap, and setting its milestones. On the other hand, there’s the software development/engineering that’s primarily focused on the product functionality, technical operations and clearing the backlog in code fixes. Poor communication between the two teams is actually a leading cause of technical debt.

For you to take concrete steps in managing your technical debt, the decision-makers in the organisation should understand its significance, and the necessity of reducing it. Explain to them how the debt occurred and why steps need to be taken to pay it down – but you can’t just bombard them with tech phrases and expect them to follow your thought process. 

So how do you go about it? Reframe the issues involved with the technical debt and explain the business value or impact of the code changes. Basically, the development team should approach it from a business point of view, and educate the management or production team about the cost of the technical debt. This can include aspects such as expenses in changing the code, salaries for the software engineers especially when the development team will need to be increased due to the workload piling up, as well as the revenue that is lost when the technical debt is allowed to spiral. 

The goal here is to show the management or production team how issues like failing to properly define the product requirements will slow down future software development, or how rushing the code will affect the next releases. That way, there will be better collaboration between the teams involved in the project. 

 

Allocate time and resources specifically for reducing technical debt

With management understanding that working with low-quality code is just like incurring financial debt and it will slow down product development, insist on setting time to deal with the debt. 

For instance, when it comes to the timing of application releases, meetings can be conducted to review short- and longer-term priorities. These meetings – where the development team and product team or management are brought together, the developers point out the software issues that should be resolved as a priority as they may create more technical debt. Management then ensures that budgets and plans are put in place to explicitly deal with those ongoing maintenance costs.

 

Retire old platforms

While most of the resources are going into developing new applications and improving the systems being used, the organisation should also focus on retiring the old applications, libraries, platforms, and the code modules. It’s recommended that you factor this into the application release plans, complete with the dates, processes and costs for the systems involved. 

 

Total overhaul

When the cost and effort of dealing with the technical debt far outweighs the benefits, then you may have to replace the entire system. At this tipping point, you’re not getting value from the technical debt, and it has become a painful issue that’s causing your organisation lots of difficulties. For instance, you may be dealing with legacy software where fixing it to support future developments has simply become too complicated. The patches available may only resolve specific issues with the system, and still leave you with lots of technical debt. Here, the best way out is to replace the system in its entirety. 

 

Final thoughts

Every software company has some level of tech debt. Just like financial debt, it is useful when properly managed, and a problem when ignored or allowed to spiral out of control. It’s a tradeoff between design/development actions and business goals. By taking measures to pay down your organization’s debt and address its interest as it accrues, you will avoid situations where short term solutions undermine your long-term goals. This is also key to enable your business to transition to using complex IT solutions easier, and even make the migration between data centres much smoother. These 8 measures will enable you to manage your technical debt better to prevent it from being the bottleneck that stifles your growth.

Project Management

In a cutthroat market, where the competition is constantly on the attack to break into your market share, implementing a project-based system can give your organisation the necessary tools to be more efficient and agile.

However, rapidly changing consumer demands, technologies and other factors make it ever more difficult to generate a strategic advantage from projects, let alone develop one. Also since a large organisation can easily end up having to manage multiple projects at the same time, the new management paradigm can appear too complex.

What your company really needs is the expertise that can guide you starting from conception and planning, down through procurement and execution in order to maximise whatever resources you have. Each move must be well thought out so that there are clear goals and objectives as well as methods to achieve them.

Programme Management

Are you running multiple projects pointing to an overall strategic direction? Then you’ll need more than just a “scaled-up” version of project management to make sure every component’s work effort is well coordinated to achieve your enterprise’s desired outcomes.

Through our expertise in programme management, we’ll work with your stakeholders, executives and clients to achieve the following:

  • Design a well-articulated management structure and clearly define decision-making roles & responsibilities – This will ensure decisions are made rapidly with zero to minimal overlapping issues and to promote a unified, well-synchronised advance towards the common objective.
  • Set objectives then make sure they are met by guiding your key personnel in coordinating activities across projects.
  • Design or utilise existing financial models such that they adhere to your enterprise’s financial policies.
  • Develop procedures for reporting expenditures specific to the programme.
  • Establish the programme infrastructure, including
    • The appropriate technical environment and tools (e.g. hardware, software, communication, and other IT-related items)
    • IT staff and administrators
  • Evaluate your enterprise’s current IT architecture to determine whether it will suffice to achieve your objectives. If it doesn’t, propose options you can take to meet what is required.
  • Plan out activities that should take place in different levels in the organisation.
  • Implement a periodic review of the programme progress as well as of interim results to ensure everything is aligned with the strategic outcome.

Programme and Project Reviews

Whether we’ve helped you set up your programme or you did it on your own, time will come when you’ll need to know whether everything is going as planned. If it appears like the entire programme is going smoothly, chances are, something’s going awfully wrong somewhere. Remember, even the most well-planned projects and programmes are still under the mercy of unforeseen variables.

We’ve got highly specialised reviews for either projects or an entire programme. We’ll be able to provide you answers to questions like:

  • Are all projects aligned with the programme’s intended direction?
  • Are the people working on your projects as focused with the business rationale as they have been with meeting deadlines and utilising resources?
  • Where are your risks and exposures? How can they be remedied?
  • Is the project viable at all?

We understand how your staff would want to function normally as quickly as possible. Rest assured, our programme and project reviews are conducted swiftly and efficiently so that both interruptions and oversights are brought to a minimum.

After we’re done, you can expect a detailed quantitative assessment of your programme and/or projects’ status.

Basically, we’re not here to find mistakes; we’re here to help you find ways to correct them. If a project rescue is required, we’ll be the first to lend a hand.

Project Rescue

Believe it or not, many of our clients approached us not before or during their project’s planning stages. But rather, after having gone through sloppy execution, when they end up losing control. In other words, we’re usually at the receiving end of the distress signal, after they’ve punched the panic button.

While obviously this isn’t the ideal time to seek the aid of any expert because it means you’ve incurred unnecessary losses already, all is not yet lost. If the appropriate remedial actions are taken in a timely manner, you can still achieve highly acceptable end results.

In fact, in most of our experiences with project rescue operations, we’ve been able to put projects back on track – just the way the planners wanted them to be. We’ll also help you devise airtight strategies to prevent your project from going astray again.

At the end of our project rescue,

  • You’ll regain complete control
  • Milestones will be reached as planned
  • Requirements will be accomplished, and
  • The project will be realigned with ideal business directions

Project Governance Processes

Constructing a firm underlying structure is essential in any organisation. So before we’ll institute project management, we’ll do the following first.

  • Set up a PMO or Project Management Office to ensure, among others, that
    • Utilisation of facilities, budgets, technical support and other resources will be well coordinated
    • Work products can be tracked and reviewed
    • Issues regarding methodology and processes will be given appropriate attention
    • Training can be organised
    • Project management discipline be instilled in the IT department
  • Establish a steering committee to oversee the implementation of IT and business strategies
  • Fill up slots for a project manager, IT executive and a business sponsor and define the roles of each
  • Infuse project management practices to all affected units of the enterprise

Establishing PMOs, steering committees and other management structures is the easy part. Many organisations spend so much in order to create the structures related to project management, only to find out later that the effort has been all for naught. That’s why we won’t end there. Our objectives will therefore include the following:

  • To plant and cultivate an environment appreciative of project governance i.e. one that does not project it as just a bunch of bureaucratic processes and protocols.
  • To establish an organisational culture that starts at the top.
  • To make everyone involved understand that the power of project governance still lies in the hands of those who will ultimately implement it.

A project-driven enterprise is never propelled by a single project. Since multiple projects require a more complex governing structure, you’ll need to understand the intricacies of programme management.

Ready to work with Denizon?