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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A Definitive List of the Business Benefits of Cloud Computing

When you run a Google search for the “benefits of cloud computing”, you’ll come across a number of articles with a good list of those. However, most of them don’t go into the details, which nevertheless might still suit some readers. But if you’re looking for compelling business reasons to move your company’s IT to the cloud, a peripheral understanding of what this technology can do for you certainly won’t cut it.

Now, cloud computing is not just one of those “cool” technologies that come along every couple of years and which can only benefit a particular department.?What we’re talking about here really is a paradigm shift in computing that can transform not only entire IT infrastructures but also how we run our respective organisations.

I hate to think that some people are holding back on cloud adoption just because they haven’t fully grasped what they’re missing. That is why I decided to put together this list. I wanted to produce a list that would help top management gain a deeper understanding of the benefits of the cloud.

Cloud computing is one bandwagon you really can’t afford not to jump into. Here are ten good reasons why:

1.?Zero?CAPEX and low TCO for an enterprise-class IT infrastructure

2. Improves cash flow

3. Strengthens business continuity/disaster recovery capabilities

4. Lowers the cost of analytics

5. Drives business agility

6. Ushers in anytime, anywhere collaboration

7. Enhances information, product, and service delivery

8. Keeps entire organisation in-sync

9. ?Breathes life into innovation in IT

10. Cultivates optimal environments for development and testing

Zero CAPEX and low TCO for an enterprise-class IT infrastructure

Most cloud adopters with whom I’ve talked to cite this particular reason for gaining interest in the cloud.

Of course they had to dig deeper and consider all other factors before ultimately deciding to migrate. But the first time they heard cloud services could give them access to enterprise class IT infrastructures without requiring any upfront capital investment, they realised this was something worth exploring.

A good IT infrastructure can greatly improve both your cost-effectiveness and your capability to compete with larger companies. The more reliable, fast, highly-available, and powerful it is, the better.

But then building such an infrastructure would normally require a huge capital investment for networking equipment, servers, data storage, power supply, cooling, physical space, and others, which could run up to tens or even hundreds of thousands of euros. To acquire an asset this costly, you’d have to take in debt and be burdened by the ensuing amortisation.

If you’ve got volumes of cash stashed in your vault, cost might not be a problem. But then if you really have so much savings, wouldn’t it be more prudent to use it for other sales-generating projects? An extensive marketing endeavour perhaps?

A capital expenditure of this magnitude and nature, which normally has to be approved by shareholders, can be regarded as a high financial risk. What if business doesn’t do well and you wouldn’t need all that computing power? What if the benefits expected from the IT investment are not realised??You cannot easily convert your IT infrastructure into cash.

Remember we’re talking about a depreciating asset. So even assuming you can liquidate it, you still can’t hope to sell it at its buying price. These factors are going to play in the minds of your Board of Directors when they’re asked to decide on this CAPEX.

Incidentally, these issues don’t exist in a cloud-based solution.

A cloud solution typically follows a pay-as-you-go utility pricing model where you get billed monthly (sometimes quarterly) just like your electricity. ?In other words, it’s an expense you’ll need to pay for?at the end of a period over which the service’s value would have already been realised. Compare that with a traditional infrastructure wherein you’ll have to spend upfront but the corresponding value will still have to be delivered gradually in the succeeding months or years.

demand expense traditional infrastructure

From the point of view of your CFO, what could have been a CAPEX to acquire an asset that depreciates with time (and consequently reduces your company’s net worth), becomes a flexible operating expense (OPEX).?Truly, it is an operating expense that you can increase, decrease, or even totally discontinue, depending on what the prevailing business conditions demand.

demand expense cloud infrastructure

People who think they have done the math in comparing cloud-based and traditional IT infrastructures claim that, although they see how cloud solutions transform CAPEX into OPEX, they really don’t see any significant difference in overall costs.

However, these people have only gone as far as adding up the expected monthly expenses of a cloud solution over the estimated duration of an equivalent IT infrastructure’s effective lifespan and comparing the sum with that IT infrastructure’s price tag. You won’t get a clear comparison that way.

You need to consider all factors that contribute to the infrastructure’s Total Cost of Ownership (TCO). Once you factor in the costs of electricity, floor space, storage, and IT administrators, the economical advantages of choosing a cloud solution will be more evident. Add to that the costs of downtime such as: interruptions to business operations, technical support fees, and the need to maintain expensive IT staff who spend most of their time “firefighting”, and you’ll realise just how big the savings of cloud adopters can be.

Still not convinced? Well, we’re still getting started.?On our next post, we’ll take a closer look at the additional benefits of paying under an OPEX model instead of a CAPEX model.

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New Focus on Monitoring Soil

There is nothing new about monitoring soil in arid conditions. South Africa and Israel have been doing it for decades. However climate change has increased its urgency as the world comes to terms with pressure on the food chain. Denizon decided to explore trends at the macro first world level and the micro third world one.

In America, the Coordinated National Soil Moisture Network is going ahead with plans to create a database of federal and state monitoring networks and numerical modelling techniques, with an eye on soil-moisture database integration. This is a component of the National Drought Resilience Partnership that slots into Barrack Obama?s Climate Action Plan.

This far-reaching program reaches into every corner of American life to address the twin scourges of droughts and inundation, and the agency director has called it ?probably ?… one of the most innovative inter-agency tools on the planet?. The pilot project involving remote moisture sensing and satellite observation targets Oklahoma, North Texas and surrounding areas.

Africa has similar needs but lacks America?s financial muscle. Princeton University ecohydrologist Kelly Caylor is bridging the gap in Kenya and Zambia by using cell phone technology to transmit ecodata collected by low-cost ?pulsepods?.

He deploys the pods about the size of smoke alarms to measure plants and their environment.?Aspects include soil moisture to estimate how much water they are using, and sunlight to approximate the rate of photosynthesis. Each pod holds seven to eight sensors, can operate on or above the ground, and transmits the data via sms.

While the system is working well at academic level, there is more to do before the information is useful to subsistence rural farmers living from hand to mouth. The raw data stream requires interpretation and the analysis must come through trusted channels most likely to be the government and tribal chiefs. Kelly Caylor cites the example of a sick child. The temperature reading has no use until a trusted source interprets it.

He has a vision of climate-smart agriculture where tradition gives way to global warming. He involves local farmers in his research by enrolling them when he places pods, and asking them to sms weekly weather reports to him that he correlates with the sensor data. As trust builds, he hopes to help them choose more climate-friendly crops and learn how to reallocate labour as seasons change.

How Small Irish Businesses Avoid the GDPR Sting

Accountants providing chartered accounting services and tax advice are alerting smaller Irish companies to the consequences of the pending General Data Protection Regulation (GDPR). They believe these are going to feel the most pain come 25 May 2018, if they do not implement GDPR by then. We are trying our best to help avoid this situation by providing advice.

How to Kick the GDPR Ball into Play

The Irish Information Commissioner?s Office has produced a toolkit regarding where?s best to start. They suggest beginning with an information security assessment to determine the gaps companies need to close. Once quantified, this leads naturally to a plan of action, and resources needed to fulfil it. Here?s how to go about it:

1. Start by assessing your current ability to identify, assess, and manage threats to customer data security. Have you done anything at all to date? You must be holding some customer information surely, and it is highly likely the GDPR applies to you.

2. Next, review your company?s current customer data security policies. Are they documented and approved, or do new employees discover them sitting next to Nellie? Rate yourself on a scale where ten is successful implementation.

3. Now consider how well you have pinned responsibilities on individuals to implement policies and take the lead on GDPR. The latter should be the business owner, or a board member with clout to make things happen.

4. By now, you should have a grasp of the scale of work ahead of you, remembering the EU deadline is 25 May 2018. If this sounds overwhelming, consider outsourcing to your accountant or a specialist provider.

5. Under the General Data Protection Regulation you have only 72 hours to report a breach of customer data security to the Information Commissioner?s Office. Do you have a quality assurance mechanism to oversee this?

Tangible Things to Bring Your Own People on Board

With all the changes going on, there is a risk of your employees regarding GDPR as ?another management idea going nowhere.? Thus, it is important to incorporate the new EU regulations in staff training, particularly with regard to data security generally. They may fully come on board only once they see tangible signs of progress. You should in any case put the following measures in place unless you already have them:

1. A secure area for your servers and for any paperwork your customers provided. This implies access control on a need-to-know basis to protect the information against loss, damage, and theft.

2. A protocol for storage media and record disposal when you no longer require them or something supersedes them. You are the custodian of other people?s information and they deserve nothing less.

3. Procedures to secure customer data on employee mobile devices and computers: This must extend to work done at home, at consultant sites, and by remote workers.

4. Secure configuration of all existing and new hardware to minimise vulnerability and storage media crashes. These quality assurance measures should extend to removable media and remote backups.

So Is This the Worst of the Pain?

We are at the heart of the matter, although there is more to tell in future articles. You may be almost there, if you already protect your proprietary information. If not, you may have key company information already open to malware.We should welcome the EU General Data Protection Regulation as a notice that it is time to face up to the challenges of data protection and security generally. The age of hacking and malware is upon us. The offender could be a disgruntled employee, or your competition just down the street. It is time to take precautions.

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