Spreadsheet Woes – Limited Features For Easy Adoption of a Control Framework

Like it or not, regulations are here to stay and for a company to comply with them, its IT and financial systems will have to be equipped with a suitable control framework. One common stumbling block to such an implementation is a company?s over-reliance on spreadsheets.

Why is it so difficult to adopt controls for a system that’s reliant on spreadsheets? To understand this, let’s pinpoint some of the strongest, most powerful attributes of these User Developed Applications (UDA).

By nature, spreadsheets are the epitome of simplicity: easy to develop, easily accessible and easily altered. All computers in your workplace will most likely have them and everyone in your organization may be sharing them, making their own versions, and storing them in personal folders.

Sad to say though, these strengths are also control weaknesses and constitute the very reasons why spreadsheets require effective risk management.

Easy to develop. Being easy to develop, most spreadsheet systems are created by non-IT users who have limited knowledge on best control practices. Being constantly under time pressure, these ?developers? may also relegate documentation, security, and data verification to the back burner in favour of coming up with a timely report.

Easy to access. Information in a spreadsheet can be opened by practically anyone within the organization?s network. Who accessed what? And when? If anything goes wrong, it would be difficult to identify the culprit, and the failure to pinpoint responsibility for erroneous data could lead to bigger, more costly mistakes.

Easy to alter. Lastly, if the information is easy to access, then it can also be easily altered, consequently making reports more prone to both accidental errors and fraudulent modifications.

The rise of multimillion dollar scandals due to accidental and intentional spreadsheet errors have prompted regulatory bodies to publish guidelines for mitigating spreadsheet-associated risks. These controls include:

  • Change control
  • Version control
  • Access control
  • Input
  • Security and data integrity
  • Documentation
  • Development life cycle
  • Backup and archiving
  • Logic inspection/Testing
  • Segregation of duties/roles, and procedures
  • Analytics

In theory, these controls should be able to bring down risks considerably. However, because of the inherent nature of spreadsheets, such controls are rarely implemented effectively in the real world.

Take for example Security and Data Integrity. One of the most common causes of spreadsheet error is due to ?hardwiring?. This happens when values are inadvertently entered into a formula cell, naturally changing the logic of the spreadsheet.

As a way of control, cell locking can be applied on the formula cells to prevent users without the proper authority from making any changes. However, when reporting deadlines approach drawing spreadsheets to the forefront of data processing, more people are given access rights to the locked cells. Ironically, it is during these crunch times, when errors are most likely to happen.

Because the built-in features of a spreadsheet support none of the controls mentioned above, some companies are tempted to purchase control-enabling programs for spreadsheets just to continue using them for financial reporting. But although these programs can integrate the required controls, you?d still be interacting with the same complex and outdated interface: the spreadsheets.

Thus, these band-aid solutions may not suffice because the root cause of these problems are the spreadsheets themselves.

Learn more about our server application solutions and discover a better way to implement controls.

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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ESOS Guide for UK Manufacturers Available

The Engineering Employers’ Federation (EEF) is the UK’s largest sectoral structure. Its goal is to promote the interests of manufacturing, engineering and technology-based businesses in order to enhance their competitiveness.

EEF has positioned itself in London and Brussels in order to be in a position to lobby at EU and Westminster level. Part of its role is helping its members adapt to change and capitalise on it. When it discovered that a third of UK manufacturers must comply with ESOS (and 49% had not even heard of it) EEF decided it was time to publish a handbook for its members.

According to EEF’s head of climate and environment policy Gareth Stace, For the many manufacturers that have already taken significant steps to improve energy efficiency, ESOS can be viewed as a ?stock taking exercise?, ensuring that momentum is maintained and new measures are highlighted and taken when possible?.

He goes on to add that others that have not begun the process should view it as an ‘impetus’ to go head down and find the most cost-effective ways to slash energy costs. Ecovaro adds that they would also have the opportunity to reduce carbon emissions almost as a by-product.

Firms with more than 250 employees, over 250 million revenue or both must comply with ESOS across all UK sectors. In simplest terms, they must have conducted an energy audit by 5th December 2015, and logged their energy saving plan with the Environmental Agency that is Britain?s sustainability watchdog.

The Department of Energy & Climate Change (DEEC) that oversees it believes that large UK businesses are wasting ?2.8 billion a year on electricity they do not need. Clearly it makes sense to focus on larger targets; however EcoVaro believes those halfway to the threshold should voluntarily comply if cutting their energy bills by 25% sounds appealing.

We are able to assist with interpreting their energy audits. These are often a matter of installing sub-meters at distribution points, and reading these for a few representative months to establish a trend. Meters are inexpensive compared to electricity costs, and maintenance teams can install them during maintenance shutdowns.

Ecovaro helps these firms process the data into manageable summaries using cloud-based technology. This is on a pay-when-used basis, and hence considerably cheaper than acquiring the software, or appointing a consultant.

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.
Spreadsheet Woes – Burden in SOX Compliance and Other Regulations

End User Computing (EUC) or end User Developed Application (UDA) systems like spreadsheets used to be ideal ad-hoc solutions for data processing and financial reporting. But those days are long gone.

Today, due to regulations like the:

  • Sarbanes-Oxley (SOX) Act,
  • Dodd-Frank Act,
  • IFRS (International Financial Reporting Standards),
  • E.U. Data Protection Directive,
  • Basel II,
  • NAIC Model Audit Rules,
  • FAS 157,
  • yes, there?s more ? and counting

a company can be bogged down when it tries to comply with such regulations while maintaining spreadsheet-reliant financial and information systems.

In an age where regulatory compliance have become part of the norm, companies need to enforce more stringent control measures like version control, access control, testing, reconciliation, and many others, in order to pass audits and to ensure that their spreadsheets are giving them only accurate and reliable information.

Now, the problem is, these control measures aren’t exactly tailor-made for a spreadsheet environment. While yes, it is possible to set up a spreadsheet and EUC control environment that utilises best practices, this is a potentially expensive, laborious, and time-consuming exercise, and even then, the system will still not be as foolproof or efficient as the regulations call for.

Testing and reconciliation alone can cost a significant amount of time and money to be effective:

  1. It requires multiple testers who need to test spreadsheets down to the cell level.
  2. Testers will have to deal with terribly disorganized and complicated spreadsheet systems that typically involve single cells being fed information by other cells in other sheets, which in turn may be found in other workbooks, or in another folder.
  3. Each month, an organisation may have new spreadsheets with new links, new macros, new formulas, new locations, and hence new objects to test.
  4. Spreadsheets rarely come with any kind of supporting documentation and version control, further hampering the verification process.
  5. Because Windows won’t allow you to open two Excel files with the same name simultaneously and because a succession of monthly-revised spreadsheets separated by mere folders but still bearing the same name is common in spreadsheet systems, it would be difficult to compare one spreadsheet with any of its older versions.

But testing and reconciliation are just two of the many activities that make regulatory compliance terribly tedious for a spreadsheet-reliant organisation. Therefore, the sheer intricacy of spreadsheet systems make examining and maintaining them next to impossible.

On the other hand, you can’t afford not to take these regulations seriously. Non-compliance with regulatory mandates can have dire consequences, not the least of which is the loss of investor confidence. And when investors start to doubt the management’s capability, customers will start to walk away too. Now that is a loss your competitors will only be too happy to gain.

Learn more about our server application solutions and discover a better way to comply with regulations.

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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