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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Using Pull Systems to Optimise Work Flows in Call Centres

When call centres emerged towards the end of the 20th century, they deserved their name ?the sweatshops of the nineties?. A new brand of low-paid workers crammed into tiny cubicles to interact with consumers who were still trying to understand the system. Supervisors followed ?scientific management? principles aimed at maximising call-agent activity. When there was sudden surge in incoming calls, systems and customer care fell over.

The flow is nowadays in the opposite direction. Systems borrowed from manufacturing like Kanban, Pull, and Levelling are in place enabling a more customer-oriented approach. In this short article, our focus is on Pull Systems. We discuss what are they, and how they can make modern call centres even better for both sets of stakeholders.

Pull Systems from a Manufacturing Perspective

Manufacturing has traditionally been push-based. Sums are done, demand predicted, raw materials ordered and the machines turned on. Manufacturers send out representatives to obtain orders and push out stock. If the sums turn out wrong inventories rise, and stock holding costs increase. The consumer is on the receiving end again and the accountant is irritable all day long.

Just-in-time thinking has evolved a pull-based approach to manufacturing. This limits inventories to anticipated demand in the time it takes to manufacture more, plus a cushion as a trigger. When the cushion is gone, demand-pull spurs the factory into action. This approach brings us closer to only making what we can sell. The consumer benefits from a lower price and the accountant smiles again.

Are Pull Systems Possible in Dual Call Centres

There are many comments in the public domain regarding the practicality of using lean pull systems to regulate call centre workflow. Critics point to the practical impossibility of limiting the number of incoming callers. They believe a call centre must answer all inbound calls within a target period, or lose its clients to the competition.

In this world-view customers are often the losers. At peak times, operators can seem keen to shrug them off with canned answers. When things are quiet, they languidly explain things to keep their occupancy levels high. But this is not the end of the discussion, because modern call centres do more than just take inbound calls.

Using the Pull System Approach in Dual Call Centres

Most call centre support-desks originally focused are handling technical queries on behalf of a number of clients. When these clients? customers called in, their staff used operator?s guides to help them answer specific queries. Financial models?determined staffing levels and the number of ?man-hours? available daily. Using a manufacturing analogy, they used a push-approach to decide the amount of effort they were going to put out, and that is where they planted their standard.

Since these early 1990 days, advanced telephony on the internet has empowered call centres to provide additional remote services in any country with these networks. They have added sales and marketing to their business models, and increased their revenue through commissions. They have control over activity levels in this part of their business. They have the power to decide how many calls they are going to make, and within reason when they are going to make them.

This dichotomy of being passive regarding incoming traffic on the one hand, and having active control over outgoing calls on the other, opens up the possibility of a partly pull-based lean approach to call centre operation. In this model, a switching mechanism moves dual trained operators between call centre duties and marketing activities, as required by the volume of call centre traffic, thus making a pull system viable in dual call centres.

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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.

Is the GDPR Good or Bad News for Business

The European Union?s General Data Protection Act (GDPR) is a new data authority coming into force on 25 May 2018. It replaces the current Data Protection Directive 95/46/EC, while extending the remit to include the export of personal data outside the EU. It aims to give EU citizens and residents living there more control over their personal information. It also hopes to make regulatory compliance simpler for participating businesses.

The Broad Implications for Business
The GDPR puts another layer of accountability on businesses falling within its remit. It requires them to implement ?comprehensive but proportionate governance measures? including recording how they make decisions. The long-term goal is to reduce privacy infringements. In the short run, businesses without good governance may find themselves writing new policies and procedures.

Article 5 of the European Union?s General Data Protection Act lays down the following guidelines for managing personal data. This shall be ?
? Processed transparently, fairly, and lawfully
? Acquired for specific, legitimate purposes only
? Adequate, relevant and limited to essentials
? Not used for any other, incompatible purpose
? However it may be archived in the public interest
? Kept up to date with all inaccuracies corrected
? Ring-fenced when the information becomes irrelevant
? Adequately protected against unauthorised access
? Stored in a way that prevents accidental loss
Furthermore, affected businesses shall appoint a ?controller responsible for, and able to demonstrate, compliance with the principles.?

Implementing Accountability and Governance
The UK Information Commissioner?s Office has issued guidelines regarding provisions to assure governance and accountability. These are along the lines of the ?don’t tell me, show me? management approach the office has generally been following. In summary form, a business, and its controller must:
? Implement measures that assist it to ensure demonstrated compliance
? Maintain suitable, relevant records of personal data processing activities
? Appoint a dedicated data protection officer if scale makes this appropriate
? Implement technologies that ensure data protection by design
? Conduct data protection assessments and respond to results timeously

Implementing the General Data Protection Act in Ireland
The Irish Data Protection Commissioner has decided it is unnecessary to incorporate the GDPR into Irish law, since EU regulations have direct effect. The office of the Commissioner is working in tandem with data practitioners, and industry and professional bodies to raise awareness in business through 2017. It has produced a document detailing what it considers the essentials for business compliance. Briefly, these pre-requisites are:
? Ensure awareness among key personnel, and make sure they incorporate the GDPR into their planning
? Conduct an early assessment of quality management gaps, and budget for additional resources needed
? Do an audit of personal data held, to determine the origin, the necessity to hold it, and with whom shared
? Inform internal and external stakeholders of the current status, and your future plans to implement the GDPR
? Examine current procedures in the light of the new directive. Could you ?survive? a challenge from a data subject?
? Determine how you will process requests for access to the data in the future from within and outside your organization
? Assess how you currently obtain customer consent to store their data. Is this “freely given, specific, informed and unambiguous”?
? Find how you handle information from underage people. Do you have systems to verify ages and obtain guardian consent?
? Implement procedures to detect, investigate, and report data breaches to the Data Protection Commissioner within 72 hours
? Implement a culture of always assessing the effect on individual privacy before starting new initiatives

So Is the GDPR Good or Bad for Business
The GDPR should be good news for business customers. Their personal data will be more secure, and they should see their rate of spam marketing come down. The GDPR is also good news for businesses currently investing resources to protect their clients? interests. It could however, be bad news for businesses that have not been focussing on these matters. They may have a high mountain to climb to come in line with the GDPR.
Disclaimer: This article is for information only and not intended as a comprehensive guide.

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