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


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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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Which Services to Share?

It often makes sense to pool resources. Farmers have been doing so for decades by collectively owning expensive combine harvesters. France, Germany, the United Kingdom and Spain have successfully pooled their manufacturing power to take on Boeing with their Airbus. But does this mean that shared services are right in every situation?

The Main Reasons for Sharing

The primary argument is economies of scale. If the Airbus partners each made 25% of the engines their production lines would be shorter and they would collectively need more technicians and tools. The second line of reasoning is that shared processes are more efficient, because there are greater opportunities for standardisation.

Is This the Same as Outsourcing?

Definitely not! If France, Germany, the United Kingdom and Spain has decided to form a collective airline and asked Boeing to build their fleet of aircraft, then they would have outsourced airplane manufacture and lost a strategic industry. This is where the bigger picture comes into play.

The Downside of Sharing

Centralising activities can cause havoc with workflow, and implode decentralised structures that have evolved over time. The Airbus technology called for creative ways to move aircraft fuselages around. In the case of farmers, they had to learn to be patient and accept that they would not always harvest at the optimum time.

Things Best Not Shared

Core business is what brings in the money, and this should be tailor-made to its market. It is also what keeps the company afloat and therefore best kept on board. The core business of the French, German, United Kingdom and Spanish civilian aircraft industry is transporting passengers. This is why they are able to share an aircraft supply chain that spun off into a commercial success story.

Things Best Shared

It follows that activities that are neither core nor place bound – and can therefore happen anywhere ? are the best targets for sharing. Anything processed on a computer can be processed on a remote computer. This is why automated accounting, stock control and human resources are the perfect services to share.

So Case Closed Then?

No, not quite. ?Technology has yet to overtake our humanity, our desire to feel part of the process and our need to feel valued. When an employee, supplier or customer has a problem with our administration it’s just not good enough to abdicate and say ?Oh, you have to speak to Dublin, they do it there?.

Call centres are a good example of abdication from stakeholder care. To an extent, these have ?confiscated? the right of customers to speak to speak directly to their providers. This has cost businesses more customers that they may wish to measure. Sharing services is not about relinquishing the duty to remain in touch. It is simply a more efficient way of managing routine matters.

The Connection between Big Data and MDM

Master Data is information that is critical to your business. This could include contracts, proprietary information, intellectual capital and a whole lot more besides. Because this often reposes in a variety of different places, you need a master data management / MDM policy to control it. That way, you can link it all together in a single, secure, backed up file.

This Sounds Like Big Data

Not necessarily: big data refers to extremely large data sets that are best stored and analysed on a cloud using big technology, in order to uncover trends, patterns and associations often relating to human behaviour. Of course, if you run a niche restaurant your critical master data might be limited to a few recipes and the books you do not care to show your accountant.

The distinction is largely a question of size: think of your master data as the subset of big data that you already have your mind around. According to John Case of IBM this is probably already in a structured format and available to share. He goes on to present a cogent case for using this as a peg point around which to systematise the rest. This is because the average organisation already has master data recording customers? and prospects? behaviour.

Do I Still Need My Master Data?

Yes you do, because real people created it with the benefit of human insight. Retain it as a separate set. Then compare it with the results of big data processing for even richer insights. Two heads are better that one and that goes for data processing too.

Trends in CRM Big Data

Adding data via location-aware devices like smartphones and tablets is adding a new dimension to customer information. We now know where they were when they made the enquiry or punched in the information. Use this geo-location data to hone the way you interact with customers and service their accounts. Do not phone a customer who makes decisions at work when they are at home.

Does My Master Data Belong on a Cloud?

There are a number of ?ifs? to consider. How comfortable are you with your service provider. What would happen if someone hacked their server? There are many advantages to cloud technology. Denizon knows of solutions you can rely on, and makes sure its clients have contingency plans to protect them at all times.

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The Future is Smarter with a Smart Meter

Traditionally, electricity and water meter consumption was measured via analogue meters. Utility billing was based on actual consumption units obtained from the meter by meter readers. This entailed physical visits to the metering point. Lots of challenges came with meter reading; talk of customers feeling their privacy is intruded, meter readers encountering hostile customers, dogs, closed gates. The result was estimated bills that were most often than not very high.

Smart meters can be dubbed as the ?next generation? type of meters. Smart meters send wireless electronic meter readings to one?s energy supplier automatically. There are both gas smart meters and electricity smart meters. Smart meters come with in-home displays, which give someone real-time feedback on their energy usage and the associated cost.

Smart meters communicate meter readings directly to utility companies therefore no one has to come to your home to read your meter; and neither are you required to submit meter readings yourself. This not only reduces costs, but leads to more accurate electricity bills practically eliminating estimated bills. Smart meters signal the end of estimated bills, and the end of overpaying or underpaying for energy.

Whereas a smart meter in itself does not save you money, the add-ons (in-home displays) that come with the smart meters and which give someone real-time feedback on their energy usage helps them to reduce the unnecessary energy use and this ultimately leads to better oversight into how to lower utility bills hence better management of one?s energy use.

In summary, a smart meter is a technology that enables energy consumers to see their energy as they use it, a technology where energy is displayed as it is being used and wireless ratings sent. Adoption of smart meters would mean the end of estimated energy bills.

Smart meters are also promising a smart future where all energy consuming devices can be connected to the internet and centrally controlled using computers or smartphones. This means one is able to switch off lights and other energy consuming devices from a central point, hence make savings and this will enable them to have greater control of their energy use, hence more comfort, convenience and life will be cheaper for all. This is the smarter future we are all looking forward to.

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