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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Still looking for a Way to Consolidate Excel Spreadsheets?


Disadvantages of Spreadsheets


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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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What is Servitisation?

In the current generation, innovation has transformed industries, businesses, economies, and livelihoods. Those who’ve accepted to embrace the changes have prospered and remained afloat and relevant in their respective industries.?

However, failure to embrace change has seen companies like Blockbuster pushed out of business by more innovative and technology-oriented companies like Netflix.?

What does this tell you?

That the only way to stay in business, despite the many challenges your business could be facing, is to remain alert to the dynamic demands of customers, many of which are dictated by technological advancements.?

So, if you’re a manufacturer and you’re keen on diving deeper into technology to stay on top of the game and beat your competition, you must also be expectant of the fast-approaching servitisation-centred economy. Companies like Rolls Royce that have already embraced servitisation are making great gains in their areas of expertise.?

What is Servitisation?

Servitisation can be defined as the transformation of a manufacturing firm from the mere offering of products to the market to providing innovative and invaluable services alongside their products. By so doing, the sale becomes an ongoing engagement and not a one-off event. Cranfield University professors call it “the innovation of an organisation’s capabilities and processes to better create mutual value through a shift from selling a product to selling product-service systems.”?

As foreign as it may seem for some professionals, servitisation has been a need that, though not embraced, its demand remains evident. Nonetheless, firms have hesitated to implement it. Shifting from manufacturing products only to incorporating product-centric services alongside the products is not a walk in the park. It boils down to completely changing the company’s entire structure and processes.

All the same, change is never comfortable, and that’s why it’s always best to focus on the positive for motivation.

Servitisation Case Study

Some manufacturing firms have already embraced servitisation, and they’re reaping big from it. They’ve understood the benefits of offering more value to customers at less cost. What Rolls Royce is doing currently with its “power-by-the-hour” program is a good example of servitisation.

Instead of selling Aero Engines and letting customers take charge of maintenance and uptime, Rolls-Royce now offers a full package that includes a product and relevant services.?

Essentially, what the company is creating is an intimate and long-term relationship with its customers.

The total care package by Rolls Royce means it’s essentially renting out its engines to customers and monitoring data for potential maintenance needs. The plan guarantees that maintenance is only done when necessary and avoidable damage detected in good time. As a result, there is a clear reduction in the overall cost.

Initially, Rolls Royce would make money by basically selling and repairing engines. That meant that the worse the engines, the more repairs required and the more the money the company would make.?

However, things changed when the company realised there is no demand for a product that’s constantly in the repair shop. That prompted Rolls Royce to embrace servitisation.

Servitisation aligns the interests of the customer and those of the manufacturer to ensure everyone benefits. Rolls Royce has been offering this package to airlines since 2010, and the company has seen significant returns as a result.

Benefits

There are several benefits of incorporating servitisation into your manufacturing firm. Below are three of the strongest benefits

  • Financial Stability– Servitisation establishes a more secure revenue stream because of the long term connection between manufacturer and customer. This also translates to loyal customers, meaning more profit.
  • Strong Customer Retention Rate– Being more experienced about the equipment and the constant tracking and monitoring that comes with servitisation; manufacturers are realising that they can keep more customers.
  • Selling a Solution And a Product– Today customers are not just looking to buy a product, instead, they want both the product and the solution to their problem. Meaning you make more money for the product you manufacture and the service you offer to your customers.

Implementation of Servitisation in the Industry

To effectively implement servitisation, there must be an effective two-way flow of information and data in the supply chain. Meaning you may require software like FieldElite for scalable condition monitoring of performance. With FieldElite, for example, servitisation is made easier for you because it enables you to monitor the performance of your assets remotely.

Maintenance and monitoring of assets were traditionally very expensive and time-consuming until the arrival of intelligent software that makes work easier and cost-effective for manufacturers. FieldElite uses advanced learning algorithms to remotely automate the entire process, allowing you to detect, in real-time, the performance and need for maintenance on your asset.

Required Organisational Changes

A few important steps include;

Companies that invest in continuous training and development always have a more competitive edge than their counterparts. Meaning an important step towards servitisation is training the workforce. This is important, considering that the company structure, focus, and process will have to change.

Set up a team that is focused on the challenge, change, and creation. With this, you can easily adjust to industry changes. The team should always work on knowing what should be adjusted and when it should be.?

In the shift to servitisation, adopting a comprehensive service technology is an important step. Such service technology software includes FieldElite. This technology will ensure that you’re able to monitor your product in real-time, meaning you can maintain good performance for as long as possible.

Because servitisation essentially focuses on the customer, take time to study customer behaviour. Knowing what your customers need and want will help you remain relevant in the industry.

Conclusion

As the demand for more benefits and long-lasting relationships with dealers grow, so is the need for manufacturers to adjust. Hence more and more manufacturing companies are leaning towards embracing servitisation as a solution to the growing demand.?

In turn, manufacturers who’re attaching service contracts to their product sales are making more than those who remain stuck in the traditional approach to sales.?

Essentially, servitisation will ensure that, as a manufacturer, you remain relevant to your customers now and in years to come. This is a much better arrangement in terms of saving costs and making more returns. Remember to be successful, you have to be flexible enough to change with demand.

2015 ESOS Guidelines Chapter 7, 8 & 9 – Sign-Off, Compliance & Appeals

This is the final chapter in our series of short posts summarising the quite complex ESOS guidelines (click on ?Comply with ESOS? to see the details). This one addresses the legalities to follow to complete your report – and how to appeal if you are not happy with any of the Environment Agency?s decisions.

  1. Director Sign-Off

This is by no means an easy ride. Confirmation of the work at individual or lead assessor level locks the company into the penalty cycle in the event there are significant irregularities. By signing off the assessment, the board level director(s) # agree that they have

  • Reviewed the enterprise?s ESOS recommendations
  • Believe the enterprise is within the scope of the scheme
  • Believe the enterprise is compliant with the scheme
  • Believe the information provided is correct

Having an internal assessor requires a second board-level signature.

  1. Compliance

You report compliance on the internet. This is free and you can do it at any time within the deadline. You can dip in and out of the process as many times as you wish, but must use the link in the receipting email. While this is something a board member must do, there is no reason why the lead assessor should not complete the basics. The online compliance notification addresses the following topics:

  • The ESOS contact person in the enterprise
  • Any aggregation / dis-aggregation during the period
  • The names and contact details of the lead assessor
  • The proportion of energy consumption per compliance route

The Environment Agency will acknowledge receipt. This does not constitute acceptance. You should keep the ESOS evidence pack in a safe place with at least one backup elsewhere.

  1. Compliance & Enforcement Issues

In the event the Environment Agency decides your enterprise has not met ESOS requirements, it may either (a) issue a compliance notice with instructions, or (b) apply one of the following civil penalties:

  • A fine of up to ?5,000 for failure to maintain records
  • A fine of up to ?50,000 for failure to undertake an energy audit
  • A fine of up to ?50,000 for a false or misleading statement

Any enterprise has the right of appeal against government decisions. In the case of ESOS, this is via:

  • The First-Tier Tribunal if your enterprise is England, Wales or off-shore based
  • The Scottish Minister if your enterprise is based in Scotland
  • The Planning Commission if your enterprise is Northern Ireland-based

The notice you appeal against will supply details of the appeal steps to take.

This blog and its companion chapters concerning the ESOS Guidelines as amended 2015 are with compliments of ecoVaro. We are the people who break ESOS data into manageable chunks of information, so that board-level directors have greater confidence in what they sign.

Network Security

The easiest way for an external threat to get to your private data is through your network. The easiest way to eliminate that threat? Get your data out of the network. Of course, we know you wouldn’t want to do that. We also know that while you may want to sniff every packet for anything suspicious, you wouldn’t want your network to crawl either.

That’s why we’re offering to put up the most efficient checkpoints on every route that leads into and out of your system.

So what can you expect from our brand of network security?

  • Review of your policies and processes for weaknesses – If we see a loophole, we’ll recommend modifications wherever necessary.
  • Protection for your applications and infrastructure – Since we’re familiar with both software and hardware-based protection systems, we can recommend which type is best suited for your setup.
  • Automated identification of business and mission critical applications – They’ll be given priority in your network to ensure bandwidth allocation is optimised.
  • Automated network audits and vulnerability management – Tired of getting prompted by pesky vulnerability notices and don’t know what to do with them? Well, that’s why we’re here.
  • Customisable security reports that contain only relevant and accurate data.

We can also help you with the following:

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