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.

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

?

Advert-Book-UK

amazon.co.uk

?

Advert-Book-USA

amazon.com

Check our similar posts

How Bouygues manages an Empire-Sized Footprint

Bouygues is into telecoms / media, and building and road construction. It also knows it has to watch its energy footprint closely. Owning 47% of energy giant Alstom keeps it constantly in the media spotlight. Shall we find out more about its facility management policies?

The journal Premises and Facilities Management interviewed MD Martin Bouygues on his personal opinions concerning managing energy consumption in facilities. He began by commenting that this was hardly a subject for the C-Suite in years gone by. Low-level clerks simply paid the bills following which the actual amounts were lost in the general expenses account. That of course has changed.

Early pressure came from soaring energy bills, which were pursued by a whole host of electricity-saving gadgets. However, it was only after the carbon crisis caught business by surprise that the link was forged to aerial pollution, and the social responsibilities of big business to help with the solution. The duty to have an energy strategy became an obligation eagerly policed by organisations such as Greenpeace.

Unsurprisingly, Martin Bouygues? advice begins with keeping energy consumption and its carbon footprint as high up on the agenda as health and safety. ?It needs bravery and a lot of hard work to get it there,? he says, ?so perseverance is the key?. 

The company has developed proprietary software that enables it to pull data from remote sensors in more than 80 countries every fifteen minutes. A single large building can contribute 50 million data items annually making data big business in the system. Every building has an allocated energy performance contract against which results are reported monthly, as a basis for reviewing progress.

The system is intelligent and able to incorporate low-occupancy periods such as weekends and public holidays. What is measured gets managed. We all know that, but how many of us apply the principle to our energy bills. With assistance from ecoVaro, the possible becomes real.

We offer a similar service to the Bouygues model with one notable exception. You don’t buy the software and you only pay when you use it. Our systems are simply designed for busy financial managers.

Do you really need a Cloud Broker?

A cloud broker is someone who can serve as your trusted adviser when it comes to your dealings with a cloud service provider. Sort of an IT consultant who: is familiar with cloud computing, can negotiate a mutually beneficial relationship between you and a provider, and help you manage usage, performance and delivery of cloud services.?But do you need one?

Is it even time for cloud adoption?

Of course, if you haven’t even started considering moving your IT systems to the cloud, what’s the point of reading this article, right? Well, if you’re running a business in Ireland or the UK maybe you should start thinking about it. The benefits (of moving to the cloud) are simply overwhelming. But then that’s for another post.

For now, let’s just briefly talk about the rate of cloud adoption so far. This should give you an idea what other decision makers nearby think about cloud computing and what they’ve done in this regard so far.

According to research conducted by the Cloud Industry Forum (CIF), the number of first-time users of cloud computing in the United Kingdom has risen by about 27% compared to last year.

The study, which was carried out by research company Vanson Bourne and which involved IT decision-makers from both the private and public sector in UK, also showed that 61% of companies are subscribing to cloud-based services. A similar research conducted last year (2011) revealed only 48%.

In Ireland, plans are underway to adopt cloud computing. According to Pricewaterhouse Coopers, 75% of Ireland’s CIOs and IT directors are already adopting a cloud computing strategy.

Definitely, the number of cloud adopters is growing. If that number already includes your hottest competitor, then perhaps there’s no time to waste.

But while a migration to the cloud should be in your pipeline, it shouldn’t be something you should rush into. Generally speaking, there are at least three kinds of services offered by cloud service providers: IaaS (Infrastructure as a Service), PaaS (Platform as a Service), and SaaS (Software as a Service).

Some providers offer variations of these services. You might only need one type of service or a little of everything. There are also technical and regulatory compliance issues that need consideration.

Obviously, if you have no idea where or how to start, you’ll need someone who can help you. But what kind of help do you need?

Let’s proceed by talking about the kinds of services cloud brokers offer as these are obviously indicative of the needs of current cloud customers.

What cloud brokers do?

Cloud brokers offer three main types of services.

Cloud?inter-mediation

Cloud inter-mediation services are designed to add value to existing services and improve capabilities. ?Examples of cloud inter-mediation include managing access to cloud-based services, carrying out performance reporting, and establishing stronger security.

Cloud aggregation

As mentioned earlier, some cloud customers may end up subscribing to multiple cloud services; most likely from different cloud service providers. To get optimal return on their various cloud subscriptions, these customers will need to apply data integration and make these disparate systems work together. They will also have to make sure data flowing from one system to another is kept secure. This is where cloud aggregation comes into play.

Cloud arbitrage

This entails finding the best cloud service provider(s) to solve a particular problem. One example is comparing different providers offering data storage services and identifying the one offering the most competitive rates.

Other cloud arbitrage brokers develop new solutions by combining the services of different cloud service providers and then offer them to cloud customers. While there are similarities between cloud arbitrage and cloud aggregation, the former is more flexible and allows the customer to transfer from one provider to another where conditions are more favourable.

Problems a cloud broker can help you solve

Just like with natural clouds, your experiences in cloud computing won’t be all white and fluffy. You’ll also encounter gray and uncertain (or even stormy) clouds.

One major issue in cloud computing is cloud security. In fact, cloud security (or the apparent lack of it) is the one thing that’s really clouding up the sky of cloud computing. But that doesn’t mean the cloud is totally insecure. Besides, there are certain types of information that really don’t require a high level of security. These types you can easily migrate to the cloud.

For sensitive information, you really need to conduct due diligence to make sure your cloud service providers’ data centres are secure enough.

Where exactly will your data be stored? Are there enough provisions for regulatory compliance? How will your data be segregated? Does the infrastructure readily support ?data forensics? Is there a sound disaster recovery/business continuity plan? These are just some of the questions that need clear answers before you sign a contract with a cloud service provider.

Suggested reading: 9 Cloud Security Questions You Need To Ask Service Providers

Also, before you sign, you need to study the SLA (Service Level Agreement) very carefully. Look at the guaranteed uptime. Is it enough to meet your own desired service levels?

Bear in mind that the answers to these questions may be too technical. This is one of those instances when a cloud broker can come in handy. As your trusted adviser, your cloud broker can break down the technical jargon and present everything in a language that you can make intelligent decisions from.

A cloud broker will also be able to study the cloud provider’s security architecture and policies and determine whether they’re sufficient to meet your own security requirements. Basically, a cloud broker will not only help you obtain answers to your questions.

He will also know exactly what vital information to extract from providers in order to ensure that you find the best deal possible.

Contact Us

  • (+353)(0)1-443-3807 – IRL
  • (+44)(0)20-7193-9751 – UK
Data Leakage Prevention – Protecting Sensitive Information

When DuPont lost $400 million in intellectual property, it wasn’t because a hacker from the other side of the world infiltrated their system. The information was simply stolen by a former employee. Alarmingly, data loss incidents are not always caused by deliberate actions.

A file containing personal information accidentally attached to an email and sent to multiple recipients; financial data stored in a USB pen drive, accidentally left in a restaurant; or bank account data of colleagues, inadvertently posted on a company website – these are also some of the everyday causes of data loss.

A report done by research company Infowatch regarding global data leaks in 2010 showed that there were actually more accidental data leaks in that year compared to intentional ones. Accidental leaks comprised 53%, while intentional leaks comprised 42% (the rest were unidentified).

But even if they ?only? happened accidentally, breach incidents like these can still be very costly. The tens of thousands of dollars that you could sometimes end up paying in civil penalties (as in the case when you lose other people?s personal information) can just be the beginning. More costly than this is the loss of customer and investor confidence. Once you lose those, you could consequently lose a considerable portion of your business.

Confidential information that may already be leaking out right under your nose

With all the data you collect, process, exchange, and store electronically every day, your IT system has surely now become a storehouse of sensitive information. Some of them, you may be even taking for granted.

But imagine what would happen if any of the following trade secrets fell into the wrong hands: marketing plans, confidential customer information, pricing data, product development strategies, business plans, supplier information, source codes, and employee salaries.

These are not the only kind of data that you should be worried about. You could also get into trouble if your sloppy IT security fails to protect employee or client personal information such as their names; social security numbers; drivers license numbers; or bank account numbers and credit/debit card numbers along with their corresponding PINs.

In some countries, you could face onerous data breach notification requirements and heavy fines when these kind of data are involved.

There are now more holes to plug

It’s not just the different varieties of sensitive electronic information that you have to worry about. Because these data can take on different forms, i.e. data-at-rest, data-in-motion, and data-at-the-endpoints, you also need to take aim at different areas in your IT system.

Sensitive information can be found ?at rest? in each of your employees? hard disks, in your servers, storage disks, and in off-site backup disks. They can also be found ?in motion? in email, instant messaging, social networking messaging, P2P file sharing, ftp, http, and so on.

That’s not all. Your highly mobile workforce may have already introduced yet another high-risk area into your system: data-at-the-endpoints. This includes USB flash-disks, laptops, portable hard disks, CDs, and even smartphones.

The main challenge of data leak prevention

Having been made aware of the various aspects of data leakage, have you already come to grips with the extent of the task at hand?

There are two major things you need to do here to prevent data leakage.

One, you need to identify what data you have that can be considered as sensitive/confidential information. Of course you have financial information and employee salaries in your files. But do you also store personally identifiable information? Do you have trade secrets that are stored in electronic form?

Two, you need to pinpoint their locations. Are they only on your hard disks and laptops? Or have they made their way to flash drives, CDs/DVDs, or portable HDDs? Are they being transmitted through email or any other file transfer media?

The reason why you need to know what your sensitive data are as well as where they are is because you would like all efforts of securing them to be as efficient and unobtrusive as possible.

Let’s say, as a way of protecting your data, you decide to implement encryption. Since encryption can consume a lot of storage space and significantly reduce performance, it may be impractical to encrypt your entire database or all your files. For the same reason, you wouldn’t want to encrypt every single email that you send.

Thus, the best way would be to encrypt only the data that really need encryption. But again, you need to know what data needs to be encrypted and where those data can be found. That alone is no simple task.

Not only will you need to deal with the data you already have, you will also have to worry about the data that will go through your systems during the course of your day-to-day transactions.

Identifying sensitive data as it enters or leaves your system, goes through your network, or gets stored in your file system or database, and then applying the necessary security actions should be done automatically and intelligently. Otherwise, you could end up spending on a lot of man-hours or, worse, wasting them on a lot of false positives and negatives.

Contact Us

  • (+353)(0)1-443-3807 – IRL
  • (+44)(0)20-7193-9751 – UK

Ready to work with Denizon?

Contact Us Today