Spreadsheet Reporting – No Room in Your Company in an Age of Business Intelligence

It doesn’t take a genius to understand why spreadsheet reporting still pervades the enterprise despite the rise of a complex but highly effective IT solution known to big shot CIOs as Business Intelligence or BI.

If you’re still in the dark as to what BI is, don’t worry because we?ll enlighten you shortly.

Business decisions from disparate data sources

In the meantime, let’s talk about how you make business decisions. If you’re a top executive, then you make decisions based largely on reports submitted to you by your managers, department heads, and so on. They in turn obtain information from different sources, like the company ERP and CRM as well as other external sources (e.g. market surveys).

Now, before their reports ever reach your desk, a lot of data is extracted, shared, filtered, analysed, consolidated, and summarised so that they become actionable information. In all these activities, one software tool gets to take part in most of the action – the spreadsheet.

The problem with spreadsheet reporting

The problem with spreadsheets is that they have very poor built-in controls. Thus, they are susceptible to human errors and are vulnerable to fraud. What’s more, collecting data and manually consolidating them into spreadsheets can be very laborious and time consuming.

If you don’t get accurate, reliable information, your judgement will be fuzzy and your business decisions compromised. In addition, if you don’t receive the information you need on time, your business will constantly be at risk of breaching critical thresholds, which may even force it to spin out of control.

Business Intelligence – actionable information on time

This is mainly the reason why large companies implement Business Intelligence systems. BI systems are equipped with built-in features like reports, dashboards, and alerts.

Reports consolidate data and present them in a consistent format composed of intuitive text, graphs, and charts. The main purpose of having a consistent format is so that you will know what kind of information to expect and how the information is arranged. That way, you don’t waste time searching or making heads or tails out of the data in front of you.

Dashboards, on the other hand, present information through visual representations composed of graphs and gauges that are aimed at tracking your business metrics and goals. The main function of dashboards is to feed you with actionable information at a glance.

Finally, alerts keep you informed when certain conditions are met or critical thresholds are breached. Because their main purpose is to prompt you at the soonest possible time wherever you are, a typical alert can come in the form of an SMS message or an email.

As you can see, all three features are designed to get you making well-informed decisions as quickly as possible.

The problem with Business Intelligence and the alternative solution

The usual problem with full BI systems is that they can be very costly. Hence, if your organisation does end up implementing one, chances are, not everyone under you will be able to access it. As a result, some departments will be forced to go back to using spreadsheets.

If your company cannot afford a full BI system, then that probably means you don’t need one. What you need is a more affordable alternative. There are actually Software as a Service (SaaS) Business Intelligence solutions that may not be as comprehensive as a full BI system, but which may suffice for small and mid-sized businesses.

The disadvantages of spreadsheets are more damaging than you could have ever expected. Be free of it now.

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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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How To Get Started with your IT Compliance Efforts for SOX

There’s no question about it. For many of you top executives in the corporate world, all roads leading to a brighter future have to go through SOX compliance. And because the business processes that contribute to financial reporting (the crux of the Sarbanes-Oxley Act) are now highly reliant on IT systems, it is important to focus a good part of your attention there.

It is a long and arduous path to IT compliance, so if you don’t want your company to fall by the wayside due to inefficient utilisation of resources, it is important to set out with a plan on hand. What we have here are some vital information that will guide you in putting together a sound plan for SOX compliance of your company?s IT systems.

Why focus on IT systems for SOX compliance?

We’ll get to that. But first, let’s take up the specific portions of the Sarbanes-Oxley Act that affect information technology. These portions can be found in Section 302 and Section 404 of the act.

In simplified form, Section 302 grants the SEC (Securities and Exchange Commission) authority to come up with rules requiring you, CEOs and CFOs, to certify in each annual or quarterly financial report the following:

that you have reviewed the report;
that based on your knowledge, the report does not contain anything or leave out anything that would render it misleading;
that based on your knowledge, all financial information in the report fairly represent the financial conditions of the company;
that you are responsible for establishing internal controls over financial reporting; and
that you have assessed the effectiveness of the internal controls.

Similarly, Section 404, stated in simplified form, allows the SEC to come up with rules requiring you, CEOs and CFOs, to add an internal control report to each annual financial report stating that you are responsible for establishing internal controls over financial reporting.

You are also required to assess the effectiveness of those controls and to have a public accounting firm to attest to your assessment based upon standards adopted by the Public Company Accounting Oversight Board (PCAOB).

While there is no mention of IT systems, IT systems now play a significant role in financial reporting. Practically all of the data you need for your financial reports are stored, retrieved and processed on IT systems, so you really have to include them in your SOX compliance initiatives and establish controls on them.

Now that that’s settled, your next question could very well be: How do you know what controls to install and whether those controls are already sufficient to achieve compliance?

Finding a suitable guide for IT compliance

The two bodies responsible for setting rules and standards dealing with SOX, SEC and PCAOB, point to a well-established control framework for guidance – COSO. This framework was drafted by the Committee of Sponsoring Organisations of the Treadway Commission (COSO) and is the most widely accepted control framework in the business world.

However, while COSO is a tested and proven framework, it is more suitable for general controls. What we recommend is a widely-used control framework that aligns well with COSO but also caters to the more technical features and issues that come with IT systems.

Taking into consideration those qualifiers, we recommend COBIT. COBIT features a well thought out collection of IT-related control objectives grouped into four domains: Plan and Organise (PO), Acquire and Implement (AI), Deliver and Support (DS), and Monitor and Evaluate (ME). The document also includes maturity models, performance goals and metrics, and activity goals.

A few examples of COBIt’s detailed control objectives are:

DS4.2 – IT Continuity Plans
DS4.9 – Offsite Backup Storage
DS5.4 – User Account Management
DS5.8 – Cryptographic Key Management
DS5.10 – Network Security
DS5.11 – Exchange of Sensitive Data

By those titles alone, you can see that the framework is specifically designed for IT. But the document is quite extensive and, chances are, you won’t need all of the items detailed there. Furthermore, don’t expect COBIT to specify a control solution controls for every control objective. For example, throughout the control objective DS4 (Ensure Continuous Service), you won’t find any mention of virtualisation, which is common in any modern business continuity solution.

Basically, COBIT will tell you what you need to attain in order to achieve effective governance, management and control, but you’ll have to pick the solution best suited to reach that level of attainment.

Articles highly relevant to the one you just read:

Month End Accounting The Way It Should Be Today
Spreadsheet Woes ? Burden in SOX Compliance and Other Regulations
Spreadsheet Woes ? Limited Features For Easy Adoption of a Control Framework
How Internal Auditors Can Win The War Against Spreadsheet Fraud

Saving Energy Step 1 ? Implementing a Management System

There has been much hype down the years regarding whether management is art or science. Thankfully, where people are concerned the pendulum has swung away from standard times in sweatshops in the west. However, when it comes to measuring physical things like harvest per square meter and the amount of energy consumed there is no substitute for scientific measurement, and this implies a system.

Managing energy cost and consumption down is like any other strategy. American engineer / statistician / management consultant W. Edwards Demming may have passed on in 1993. However he was as right as ever when he said:

When people and organizations focus primarily on quality, this tends to increase and costs fall over time.

However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time.

Demming believed that 90% of organizational problems arise from systems we put in place ourselves. This can be because we are so accustomed to them that we fail to notice when they are no longer relevant. The currently prevailing laissez faire towards energy is a case in point. What is managed improves and what is not, deteriorates. We know this. Let us take a look at how to apply this principle to energy management.

First, you need to get the subject out the closet and talk about it. How often do you do this is your boardroom, and how does energy rank against other priorities? Good governance is about taking up a position and following through on it. Here is a handy checklist you may like to use.

Do we use a consistent language when we talk about energy? Is it electricity, or carbon emitted (or are we merely fretting over cost).

How well engaged are we as a company? Looking up and down and across the organization are there points where responsibility stops.

How well have we defined accountability? Do we agree on key performance areas and how to report on them.

Are we measuring energy use at each point of the business? When did we last challenge the assumption that ?we’re doing okay?.

Have we articulated our belief that quality is endless improvement, or are we simply chasing targets because someone says we should.

A management system is a program of policies, processes and methods to ensure achievement of goals. The next blog focuses on tools and techniques that support this effort.

How to carry out an Operational Review

A mobile workforce management software is key to managing an efficient field workforce.? Managing a staff of people can be tricky in any industry. Try keeping track of employees on shifting jobsites, many whom are paid hourly or temporary workers. The added pressure of ensuring the right workers get to the right sites at the right times, but they also need to track hours, parts used, vehicles and equipment assets.

In a previous post, we defined what is an operational review and why they play a key process in the continual evolution of successful businesses.?

Operational reviews allow the organization members to evaluate their performance, according to the procedures, resources properly, timescales and budgets.

Denizon – Operational Reviews Defined

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In this post, we’ll take a closer look at how to implement an operational review and the steps typically undertaken to help you and your organisation to implement an operational review.

What the steps in a Operational Review Process

There are typically six steps in an operational review that range from preparatory work conducting interviews and collecting documents to the presentation of the final written report.

An audit should be customized to meet a organisatons specific needs, so standard steps can and should only serve as a guideline.? Management and internal and external auditors should adjust the process to address the company’s particular goals and objectives.

Initial Management Meeting

Understanding the problem is the first crucial step of an operational review. This is one of major areas of discussions when the audit team meets with the management, and department heads will be asked to identify any specific areas of concern. Once the problem is identified, it would be easier to come up with workable solutions.

Conduct Interviews

The next step in the evaluation is carried out with experienced teams doing interviews and keeping close observation. Each team essentially watches how employees carry out their responsibilities. This is considered a key part of the process.

When doing the interview, it is also vital that the observing team gains the employees? trust and confidence. Likewise, the staff must be assured that whatever transpires between the team and the employee will be kept confidential. Management must therefore guarantee anonymity to anyone who offers critical information, lest employees withhold vital information and render the data gathered inaccurate.

Systems Review

Employees and management practices will be reviewed by the assessing team according to the standard policies and guidelines of the company. The effectiveness of the controls in place as well as their appropriateness to the current operating conditions will also be evaluated.

Reporting

A documentation of the data gathered and the assessment of the evaluating team, will be submitted to the management after the review process. Flow charts and written narratives of departmental activities are usually part of this report. This is also where observations and recommendations of the team will be presented to the department heads concerned.

Review Results

While the operational review is being conducted, it is important to take into account the vital factors that affect the company: the people, processes, procedures, and strategies. These four factors can determine the company?s progress in the future.

Key Areas of focus in operation reviews

At a minimum an operational review should include the following key ares of assessment

Management Control

Responsibilities, authority, and the scope in which an employee has the freedom to act must be clearly defined and documented. A complete and specific job description for instance, would give the employee a clear perspective on how he acts and functions within the company.

Boundaries should be set not only to benefit the employer but more so the employee as well.

Moral and Ethical Guidelines

Moral and ethical guidelines are just as important to ensure for a smoother employer?employee relationship. Otherwise, personal issues such as work ethics, work attitude and personal values may post problems in the long run if such guidelines are not drawn properly before relationships are established.

Processes and procedures

Evaluating processes is only beneficial if the company itself updates its processes and procedural manuals regularly, or at least when needed. Such protocols may need revision and some steps may be obsolete already. Improving a company?s processes and procedures doesn’t always entail cost. In fact, improvised procedures may even be cost-effective and could make the processes more manageable.

Communication and reporting standards

Gaps in communication could result in serious lapses in internal controls, putting the company and/or its assets at risk. This is where the importance of timely and clear communication comes in. Likewise, reports must be useful, and the flow of information and how it is processed must keep pace with the company?s growth.

Information technology (IT) and security controls can also be included under the communication clause. Proper IT security policies must be in place, state-of-the-art protection techniques employed, and everything be documented, periodically updated, and continually monitored.

Strategic planning and tactics

No company can ever be complete without its strategies. It would unwise for any organization to proceed without first knowing where it stands and what direction it wants to take. Strategic planning draws such a map. It must be aligned to the mission and vision of the company, and should also coincide with the organizational goals set. Strategic planning deals with these three key questions:

What do we do now
Whom do we do it for?
How can we overcome competition

Without clear strategic direction, expectations would likely differ between ownership and management.

Contingency planning, testing and recovery

Contingency plans must be up-to-date, and are essential to the organization. If one course of action fails, the company should have plan B, C and so on. In addition, an organization should be prepared to respond to interference’s.

This includes establishing a formal process to review transactions processing during both disruption and recovery.

Presentation of Report

Based on your objectives and our findings, we will develop detailed recommendations to improve your company?s performance and productivity. Our written report will include a list of both short-term and long-term projected improvements and courses of action, to be mutually agreed upon by both parties.

To ensure the achievement of the improvements we outlined, our team will also assist in the implementation of these modifications.

The plan has three levels of recommendations: one for executives, another for management, and a third one for staff.

The executive summary concentrates on your company?s strengths, weaknesses, opportunities and threats to its entirety. It includes recommendations for any needed changes in policy or governance.

The management plan is based on employee feedback and includes areas of immediate improvement as well as identification of potential problem areas. Concerns from the bottom level management can now be forwarded to the top level management in formal writing. Better working relationships may evolve from this, thereby setting the work environment for a higher productivity ratio.

Lastly, the staff report deals with topics like charting the hierarchy of the organization, and discussing in detail specific control objectives that are critical to the company?s mission. Part of our goal is to encourage personnel to pay close attentions to such changes, if any, as these efforts are essential if they want to bring about both organizational and personal success.

If you would like to further discuss how our operational review services can benefit your company, please feel free to contact us at your convenience to schedule an initial consultation. We?ll be more than happy to assist you.

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