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.

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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

 

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Spreadsheet Woes – Limited features for easy adoption of a control framework

 

Spreadsheet woes – Burden in SOX Compliance and other Regulations

 

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Why Spreadsheets can send the pillars of Solvency II crashing down

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How Westin Melbourne Hotel Trimmed its Footprint

Becoming sustainable is a three-pronged process. You must save money and push the buttons the government is pressing you to. But there?s a deeper, more urgent issue. If your customers mark you down for not being green enough you are heading for trouble. Let’s see how well this hotel is doing.

The Melbourne flagship of the Westin hotel chain boasts 262 spacious rooms with views of Melbourne Square and surrounding theatres, designer boutiques, galleries and national landmarks. The architects included conference facilities, a wellness centre and sundry bars and restaurants. After climate change arrived to stay, hotel management discovered they had inherited a water and energy-greedy monster. Their solution was to measure what was going through their systems, and then progressively cap the building?s greedy appetite.

The Melbourne Westin Hotel could not have achieved results without these metrics. They began by determining key indicators and measuring them. This provided them with criteria to set achievable, cost effective targets in the following key areas of their business:

  1. Water Management ? Demand-based linen and towel recycling, installation of back-washable water filters, water-saving shower heads, dual-flush toilets.
  2. Waste Management ? Conversion to green products, recycling kitchen oil, moving towards a paperless office, recycling everything possible.
  3. Energy Management ? Energy-efficient light bulbs, standby settings for lights, computers, televisions and air conditioners
  4. Stakeholder Communication ? Staff green-team training, guest education, ongoing employee briefings
  5. Strategic Positioning ? Visible, top-down commitment, optimised carbon offsets from clean, renewable energy sources, clearly stated position in the market

Westin?s Melbourne landmark has made good progress towards becoming the green hotel for others to follow. It has adjusted its environmental policies, increased water and energy awareness and implemented tight waste management.

Consumers are already shopping to make their carbon footsteps lighter. Food stores are on the bandwagon although apparel is lagging. Perhaps it’s time you found out just how your company is shaping up. It’s no longer a matter of ?if carbon taxes?. It’s a matter of ?when it does?.

ecoVaro is a software system-in-the-cloud that lets you enter your water and energy consumption and process it online so you can monitor and manage your usage. In no time at all you could be saving money like Westin Melbourne did. Does that sound like something worth investigating?

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Why DevOps Matters: Things You Need to Know

DevOps creates an agile relationship between system development and operating departments, so the two collaborate in providing results that are technically effective, and work well for customers and users. This is an improvement over the traditional model where development delivers a complete design ? and then spends weeks and even months afterwards, fixing client side problems that should never have occurred.
Writing for Tech Radar Nigel Wilson explains why it is important to roll out innovation quickly to leverage advantage. This implies the need for a flexible organisation capable of thinking on its feet and forming matrix-based project teams to ensure that development is reliable and cost effective.
Skirmishes in Boardrooms
This cooperative approach runs counter to traditional silo thinking, where Operations does not understand Development, while Development treats the former as problem children. This is a natural outcome of team-centred psychology. It is also the reason why different functions pull up drawbridges at the entrance to their silos. This situation needs managing before it corrodes organization effectiveness. DevOps aims to cut through this spider web of conflict and produce faster results.

The Seeds of Collaboration

Social and personal relationships work best when the strengths of each party compensate the deficiencies of the other. In the case of development and operations, development lacks full understanding of the daily practicalities operating staff face. Conversely, operations lacks ? and should lack knowledge of the nuances of digital automation, for the very reason it is not their business.
DevOps straddles the gap between these silos by building bridges towards a co-operative way of thinking, in which matrix-teams work together to define a problem, translate it into needs and spec the system to resolve these. It is more a culture than a method. Behavioural change naturally leads to contiguous delivery and ongoing deployment. Needless to say only the very best need apply for the roles of client representative, functional tester and developer lead.

Is DevOps Worth the Pain of Change?

Breaking down silos encroaches on individual managers? turf. We should only automate to improve quality and save money. These savings often distil into organisational change. The matrix team may find itself in the middle of a catfight. Despite the pain associated with change resistance, DevOps more than pays its way in terms of benefits gained. We close by considering what these advantages are.

An Agile Matrix Structure ? Technical innovation is happening at a blistering rate. The IT industry can no longer afford to churn out inferior designs that take longer to fix than to create. We cannot afford to allow office politics to stand in the way of progress. Silos and team builds are custodians of routine and that does not sit well with development.

An Integrated Organization ? DevOps not only delivers operational systems faster through contiguous testing. It also creates an environment whereby cross-border teams work together towards achieving a shared objective. When development understands the challenges that operations faces ? and operations understands the technical limiters – a new perspective emerges of ?we are in this together?.

The Final Word ? With understanding of human dynamics pocketed, a DevOps project may be easier to commission than you first think. The traditional way of doing development – and the waterfall delivery at the end is akin to a two-phase production line, in which liaison is the weakest link and loss of quality inevitable.

DevOps avoids this risk by having parties work side-by-side. We need them both to produce the desired results. This is least until robotics takes over and there is no longer a human element in play.

What Energy Management Software did for CDC

Chrome Deposit Corporation ? that’s CDC for short ? reconditions giant rollers used to finish steel and aluminium sheets in Portage, Indiana by applying grinding, texturing and plating methods. While management was initially surprised when the University of Delaware singled their plant out for energy assessment, this took them on a journey to bring energy consumption down despite being in an expansion phase.

Metal finishing and refinishing is an energy-intensive business where machines mainly do the work while workforces as small as 50 individuals tend them. Environmental impacts also need countering within a challenging environment of burgeoning natural gas and electricity prices.

The Consultant’s Recommendations

The University of Delaware was fortunate that Chrome Deposit Corporation had consistently measured its energy consumption since inception in 1986. This enabled it to pinpoint six strategies as having potential for technological and process improvements.

  • Insulate condensate tanks and pipes
  • Analyse flue gas air-fuel ratios
  • Lower compressed air pressures
  • Install stack dampers on boilers
  • Replace belts with pulleys and cogs
  • Fit covers on plant exhaust fans

CDC implemented only four of the six recommendations. This was because the boiler manufacturer did not recommend stack dampers, and the company was unable to afford certain process automation and controls.

Natural Gas Savings

The project team began by analysing stack gases from boilers used to heat chrome tanks and evaporate wastewater. They found the boilers were burning rich and that several joints in gas lines were leaking. Correcting these issues achieved an instant gas saving of 12% despite increased production.

Reduced Water Consumption

The team established that city water was used to cool the rectifiers. It reduced this by an astonishing 85% by implementing a closed-loop system and adding two chillers. This also helped the water company spend less on chemicals, and energy to drive pumps, purifiers and fans.

Summary of Benefits

Electricity consumption reduced by 18% in real terms, and natural gas by 35%. When these two savings are merged they represent an overall 25% energy saving. These benefits were implemented across the company?s six other plants, resulting in benefits CDC management never dreamed of when the University of Delaware approached them.

ecoVaro offers a similar data analytics service that is available online worldwide. We have helped other companies slash their energy bills with similarly exciting results. We?ll be delighted to share ideas that only data analytics can reveal.

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