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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Eliminate The Complexities Of Your IT System

There may have been times when you actually spent on the right IT system but didn’t have adequate expertise to instil the appropriate learning curve for your end users. Oftentimes, users find a new system too complicated and end up spending more hours familiarising with intricate processes than is economically acceptable.

There are also applications that are just too inherently sophisticated that, even after the period of familiarisation, a lot of time is still spent managing or even just using them. Therefore, at the end of each day, your administrators and users aren’t able to complete much business-related tasks.

The first scenario can be solved by providing adequate training and tech support. The second might require enhancements or, in extreme cases, an overhaul of the technology itself.

For instance, consider what happens right after the conclusion of a merger and acquisition (M&A). CIOs from both sides and their teams will have to work hard to bring disparate technologies together. The objective is to hide these complexities and allow customers, managers, suppliers and other stakeholders to get hold of relevant information with as little disruption as possible.

One solution would be to implement Data Warehousing, OLAP, and Business Intelligence (BI) technologies to handle extremely massive data and present them into usable information.

These are just some of the many scenarios where you’ll need our expertise to eliminate the complexities that can slow your operations down.

Here are some of the solutions and benefits we can offer when we start working with you:

Consolidated hardware, storage, applications, databases, and processes for easier and more efficient management at a fraction of the usual cost.
BI (Business Intelligence) technologies for improved quality of service and for your people, particularly your managers, to focus on making decisions and not just filtering out data.
Training, workshops, and discussions that provide a clear presentation of the inter-dependencies among applications, infrastructure, and the business processes they support.
Increased automation of various processes resulting in shorter administration time. This will free your administrators and allow them to shift their attention to innovative endeavours.

Find out how we can increase your efficiency even more:

Contact Us

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

Saving Energy Step 3 ? Towards a Variable Energy Bill

Do you remember the days when energy was so cheap we paid the bill almost without thinking about it? Things have changed and we have the additional duty of reducing consumption to help save the planet. This is the third article in our mini-series on saving energy. It follows on from the first that explored implementing a management system, and the second listing practical things to implement on the shop floor. These open up the possibility of the variable energy bill we expand on as follows.

If ?variable energy bill? sounds strange to you, I used the unusual turn of phrase to encourage you to view things in a different light. We need to move on from the ?pie chart? mentality where we focus on the biggest numbers like materials, facilities and labour, and zoom in on energy where we can achieve similar gains faster with less pain. But first, we need to see beyond the jargon that governments and consultants love, and get to grips with the reality that we can vary our energy bill and bring cost down.

As executives we recognise this, although other pressures distract us from accepting it as a personal goal. And so we delegate it down the organisation to a level where it becomes ?another crazy management idea? we have to follow to stay out of trouble. I read somewhere that half the world?s organisations do not have energy as a defined objective to monitor in the C Suite. No wonder commerce is only pecking away at energy wastage at a rate of 1% per year.

Find out where you are ?spending energy? and relate this to your core business. If there are places where you are unable to make a connection, challenge the activity?s right to exist. Following the energy trail produces unexpected benefits because it permeates everything we do.

Improved product design reducing time spent in factory
Streamlined production schedules reducing machine run times

Less wear on equipment reducing costly maintenance

A more motivated workforce that is prouder of ?what we do?

As you achieve energy savings you can pass these on in terms of lower prices and greater market share. All this and more is possible when you focus on the variables behind your energy bill. Run the numbers. It deserves more attention than it often gets.

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.