How Internal Auditors can win The War against Spreadsheet Fraud

To prevent another round of million dollar scandals due to fraudulent manipulations on spreadsheets, regulatory bodies have launched major offensives against these well-loved User Developed Applications (UDAs). Naturally, internal auditors are front and center in carrying out these offensives.

While regulations like the Sarbanes-Oxley Act, Dodd-Frank Act, and Solvency II can only be effective if end users are able to carry out the activities and practices required of them, auditors need to ascertain that they have. Sad to say, when it comes to spreadsheets, that is easier said than done.

Because spreadsheets are loosely distributed by nature, internal auditors always find it hard to: locate them, identify ownership, and trace their relationships with other spreadsheets. Now, we’re still talking about naturally occurring spreadsheets. How much more with files that have been deliberately tampered?

Spreadsheets can be altered in a variety of ways, especially if the purpose is to conceal fraudulent activities. Fraudsters can, for instance:

hide columns or rows,
perform conditional formatting, which changes the appearance of cells depending on certain values
replace cell entries with false values either through direct input or by linking to other spreadsheet sources
apply small, incremental changes in multiple cells or even spreadsheets to avoid detection
design macros and user defined functions to carry out fraudulent manipulations automatically

Recognising the seemingly insurmountable task ahead, the Institute of Internal Auditors released a guide designed specifically for the task of auditing user-developed applications, which of course includes spreadsheets.

But is this really the weapon internal auditors should be wielding in their quest to bring down spreadsheet fraud? Our answer is no. In fact, we believe no such weapon has to be wielded at all?because the only way to get rid of spreadsheet fraud is to eliminate spreadsheets once and for all.

Imagine how easy it would be for internal auditors to conduct their audits if data were kept in a centralised server instead of being scattered throughout the organisation in end-user hard drives.

And that’s not all. Because a server-based solution can be configured to have its own built-in controls, all your data will be under lock and key; unlike spreadsheet-based systems wherein storing a spreadsheet file inside a password-protected workstation does not guarantee equal security for all the other spreadsheets scattered throughout your company.

Learn more about Denizon’s server application solutions and discover a more efficient way for your internal auditors to carry out their jobs.

More Spreadsheet Blogs

Spreadsheet Risks in Banks

Top 10 Disadvantages of Spreadsheets

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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Outsourcing

Are you ready to outsource? Do you even need to outsource? We’ll help you answer those and other questions regarding outsourcing and your company.

Once we’ve determined that outsourcing will render your organisation more focused on your core competencies, more cost-effective, and more flexible, we’ll offer you the full spectrum of our services. Our specialists can assist you in every stage of the entire outsourcing life-cycle.

Starting from evaluating what can be outsourced, through finding the right outsourcing service provider, building the contract and agreements, getting everything in place, and managing the outsourcing relationship – we’ll be with you every step of the way.

Learn more about some of the outsourcing services we offer:

Outsourcing Contracts and Agreements

When an outsourcing project fails, both customer and service provider are quick to put the blame on the other party. But in most cases, the actual culprit was really just sitting there since day one – a poorly planned and implemented agreement.

We understand how costly and disruptive a failed outsourcing project can be for your business. That is why we put utmost attention to each contract and SLA (Service Level Agreement) that our customers enter into. This always reduces the likelihood of having unmet expectations, one of the major reasons why some outsourcing relationships fail.

We make sure that each agreement is fair, not only for our customers but also for the service providers themselves. Why? Because a disadvantaged provider will most likely end up delivering poor service as an offshoot of efforts to improve its profitability and ROI.

To accomplish this, we’ll thoroughly assess the infrastructure, resources, and expertise of your potential service provider to ensure they have the capability to meet your expectations. We’ll also make sure that their expectations are realistic and clear to you as well.

Here’s what you can expect from us when we start managing your outsourcing contracts and agreements:

A thorough assessment of your specific needs and the service provider’s profile to determine whether you have the right match before proceeding with any agreement.
Professional assistance when the time comes for you to discuss the scope of work, expected service levels, and when negotiating for appropriate pricing. We’ll also help you set up provisions for possible changes in the scope later on.
Expert counsel during drafting and finalisation of the contract and Service Level Agreements. Whenever applicable, we’ll help you propose penalties whenever service levels are not met and rewards when they are exceeded.
Regular reviews to determine whether everything agreed upon in the past, like pricing and service levels, are still realistic or competitive enough in view of current technological advancements and the prevailing social and economic environment.
Mediation expertise whenever the outsourcing project appears to be falling apart. We’ll work with you and the service provider to resolve conflicts and avoid the expensive exercise of having to terminate the contract. But if the best solution is to part ways, we’ll make sure you make an exit with the least disruption, missed opportunities and financial loss.

Application Outsourcing

I’m sure you’ve come to realise that to gain competitive advantage these days, you really need to invest in IT applications.

There are applications for enhancing your customer relationships, speeding up production, streamlining processes, advancing collaboration, protecting your systems from malware and many more. Selecting the right application, testing it, implementing it into your system, and then managing it can deviate resources which would have otherwise been used in other areas to build business value, increase profits, and enhance innovation.

Wouldn’t it be nice to unload yourself of the management processes which usually accompany IT applications? Actually, you can – through application outsourcing. Application outsourcing providers possess the expertise to either partially or fully assume responsibility of your IT applications.

Our job is to see to it that you link up with the provider who can best answer your needs. The overall proficiency of these providers spans both proprietary and opensource solutions, allowing them to cater to a wide range of preferences and budgetary limits. At the very least, they can provide professional support for well established applications.

If needed, they can develop applications for your organisation, taking charge of every step in the system development life-cycle: starting from system initiation, requirements analysis, through design, construction, acceptance and eventually to implementation.

Here are some of the benefits you can enjoy once we start managing your application outsourcing initiatives:

Freedom from time-consuming tasks such as installations, upgrades, configurations and repairs.
Reduced total cost of ownership (TCO).
24/7 support from well-trained personnel. This can substantially cut downtimes caused by inexperienced troubleshooting.
The option to have your applications housed in more secure and reliable environments with much higher availability and much lower planned/unplanned downtimes.
Dedicated specialists who can focus on providing better regulatory compliance and risk mitigation initiatives.

Infrastructure Outsourcing

Keeping up with the competition nowadays usually requires technological advancements as well as the capability to manage and maintain the infrastructure that has to support them. These undertakings can suck your resources dry.

If you’re looking to reduce costs even while improving the performance of your networks, servers, databases, firewalls, desktops and mobile devices, you might want to consider IT infrastructure outsourcing among your top options. Infrastructure outsourcing service providers have the resources dedicated to a stable, secure, scalable and always available IT infrastructure.

Typical service provider facilities include data centrers equipped with high-speed networks, reliable power, dependable security, as well as provisions for upgrades, consolidation, disaster recovery, or even business continuity.

These providers employ specialists and staff who can manage and maintain all of these for you. While your provider juggles your core IT-related tasks, you can keep your eye on the ball and refocus on your company’s business goals.

Here are some of the benefits you can enjoy out of infrastructure outsourcing:

Freedom from time-consuming tasks such as installations, upgrades, configurations and repairs.
Since service providers, who are expected to have better horizontal and vertical scalability, will deal with the technological intricacies, your company’s strategic development initiatives can proceed unhampered.
Greatly reduced electricity expenses as a result of consolidation.
Easier, faster, cheaper, and more reliable disaster-recovery solutions through virtualisation.
Lesser risks of disruptions caused by power outages, cyber attacks, or Internet connection downtimes.

Business Process Outsourcing

With the sheer number of business processes your company has to attend to, it wouldn’t be surprising if you rarely have room to innovate.

Through business process outsourcing, we can free a considerable part of your financial and manpower resources which are currently focused on routine activities. With more resources to drive innovative initiatives, you’ll be able to accelerate production, improve customer service, enhance overall business value, and arrive at a stronger bottom line.

Some of the business processes that may be outsourced include data entry, finance and accounting, form processing, procurement, and HR, among others. If you’re interested in finding answers to the what, how, who, and where of BPO, specific to your organisation, we’ll be happy to enlighten you.

Here are some of the benefits you can enjoy once we start managing your BPO initiatives:

Professional guidance to ensure that your BPO undertakings will really result in substantial savings and significant improvements to your organisation’s business value.
Careful monitoring of service levels to ensure faster turnaround, accurate data, and high quality outputs.
Expert evaluation of information handling processes to guarantee full confidentiality.
Professional and unbiased management dedicated to establishing a strong, reliable, and fruitful relationship between you and your provider.

Solutions to Password Overload

If only technologists had their way, passwords and PINs would have long been replaced with more innovative (and admittedly, better) security solutions. But such is not the case. Those alternative solutions, which include biometrics, smart cards, and password fobs, effective as they may be, are just way too expensive to implement.

So although passwords and PINs may not be here to stay, they certainly won’t be going away soon either.

Why keeping passwords in memory is no longer possible

A couple of decades ago, it would have been nearly impossible to crack an eight-character password using brute force. Today, however, advancements in computing power are rendering the typical passwords of the past easily decipherable, forcing us to come up with passwords that are not only much longer, but also much more complex and hence difficult to recall.

For instance, memorable words like your favourite character (e.g. ‘skywalker’) may have been acceptable then, but not anymore. Today?s security systems will encourage you to insert numbers or even other keyboard characters as a means to once again counter brute force. Hence, ‘sk5%ywa936lker@#’ may be more acceptable.

Remembering that one alone can be pretty daunting.

To further complicate matters, the number of applications that require passwords for access is much greater than before even for a single end user. Ordinary end users have to keep track of passwords for their email account, network login, workstation login, online services, and so on.

The burden is even greater for your IT admins, who have to remember a larger collection of passwords that protect business critical systems and applications. Clearly, the team in charge of your IT security will need a way to manage all these passwords.

Password management solutions

Existing password management solutions typically come in the form of software applications that store passwords. Basically, all you need to remember are your login details for the app a.k.a. the ?master password?. Once you’ve gained access inside, you can then retrieve any password you stored there.

Some of these apps are installed in portable devices like Pocket PCs, PDAs, or smartphones, which you would normally take along with you. For as long as the device stays with you, your passwords will be in safe hands. What’s more, you can retrieve them anywhere you go.

But obviously, there’s a problem. What if the device gets misplaced or stolen? Although the person who ends up with your device may not be able to gain access into the app and your passwords, neither will you. A better solution would therefore be an app that can be accessed anywhere but is not susceptible to getting lost.

Web-based password manager

A web-based password manager fits the bill. You don’t have to take it with you, but still you can access it almost anywhere. A typical web-based password manager will have all your passwords stored in a centralised, highly secure location.

If you want, you can even use your mobile password manager along with the web-based one. Ideally, your web-based password manager would have a copy of all the end-user passwords as well as the master passwords of your organisation.

With an easy to access but highly-secure web-based password manager, you no longer have to come up with passwords that (ironically) are supposed to be easy to remember but hard to crack at the the same time.

Furthermore, password managers are ideal for keeping passwords that have to be changed every-now-and-then; a requirement that’s becoming all too common in organisations bent on enforcing more stringent controls.

Energy Savings Opportunity Scheme (ESOS): An Overview

Energy management is crucial to most businesses in the UK. This is primarily because energy usage substantially affects all organizations, whether large or small. The good news is that, energy costs can be controlled through improved energy efficiency. And this is exactly why Energy Savings Opportunity Scheme (ESOS) came into being ? to promote competitiveness among businesses.

Energy Savings Opportunity Scheme is the realisation of the UK Government’s ambition towards achieving the maximum potential of cost-effective energy in the economy. ESOS aims to stimulate innovation and growth, cut emissions and support a sustainable energy system.

ESOS at a Glance – Legal Perspective

The EU Energy Efficiency Directive took a major step forward on November 14, 2012 and headed towards establishing a framework to promote energy efficiency across various economic sectors. To interpret Article 8 of the Directive, the government has given birth to ESOS; requiring large enterprises to undergo mandatory energy audits and energy management systems by December 5, 2015 and at least every 4 years thereafter.

Large enterprises include UK companies that have more than 250 employees or those businesses whose annual turnover exceeds ?50 million and whose statement of financial position totals more than ?43 million. With this, over 7000 of the biggest companies in Britain will need to comply with ESOS as an approach to review their total energy use in buildings, business operations, transport and industrial processes.

Generally, ESOS is both an obligation and an opportunity. It is an obligation for the indicated target companies since they need to submit to additional regimes; focus on audit evidences; act in accordance to group structures and compliance; and observe limited penalties and note retention periods. Moreover, it is also an opportunity for companies to strive for more savings on energy projects; attempt to standardise their potential market; and effectively lower debt and legal costs.

ESOS Audits ? Looking Beyond

According to the Department of Energy and Climate Change (DECC), average first audit costs would be estimated at about ?17,000 and subsequent ones at around ?10,000. As expected, these audits will result in energy saving recommendations, of which companies need not proceed for a follow up; and substantially improve businesses in their energy management issues. DECC further states that every business that complies with ESOS could save an average of ?56,400 each year from an initial investment of ?17,000 only.

Currently, up to 6,000 UK businesses are already subject to existing CRC Carbon Reduction Scheme, Mandatory Carbon Reporting, Climate Change Levy and other compliance. This signifies that ESOS may overlap with prevailing energy efficiency legislation and may put additional pressure on energy administration. While this is true, however, ESOS holds extensive benefits. Although the scheme can be viewed as another costly compliance to environmental standards, ESOS goes straight to the bottom line and provides the organisation with competitive advantage. If large businesses act now and comply with it, they will be able to enjoy maximised payback in the long run.

Indeed, Energy Savings Opportunity Scheme is already here. It is mandatory with minimal investment. And all you have to do is act quickly, implement new improvements and earn more.

Contact Us

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(+44)(0)20-7193-9751 – UK