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

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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The Types of Industries That Can Benefit from Field Service Software

Initially, field service software was designed with field techs and their managers in mind. However, in the recent past, other industries have taken this path to better the performance of their businesses. Any industry that deploys skilled laborers and assets to off-site locations benefits from field service software. It’s all about resource allocation and data centralization for efficient management and running of the business? activities. With field service software, you got all your business? functions logged in one place.

So, who needs field service management software? Professionals like electricians, plumbers, IT technicians, construction workers, and carpenters all find it useful. Moreover, there?s a wide range of application in many different types of industries.

Here are some industries that benefit from field service management software.

Fire and Life Safety

In a fire and life safety industry, equipment and safety systems should be kept running at peak efficiency. Therefore, it’s necessary to provide appropriate services that will ensure the smooth running of processes. On top of complying with government codes, fire and security systems installed should offer reliable services. Since service is at the core of this industry?s operation, most people in fire and security industries are turning to field service software to automate operations of their service delivery. With the field service software tools, the industry can easily monitor security technologies, quickly respond to customers, and manage compliance, inspections, and procedures effectively.

Medical Device Enterprises

For medical device companies seeking to improve their services, sales, and compliance, field service software becomes very essential for the smooth running and operations of their functions. The medical device enterprises that greatly benefit from this software include those offering installations, repair, and maintenance of medical equipment. With the comprehensive field service tools, service delivery and performance is greatly improved.

Moreover, with the field service software, these industries find better ways of tracking critical records needed for regulatory compliance since the medical industry is one of the most regulated industries in the globe. For the companies doing the manufacturing of medical equipment, they can integrate field service software in their accounting systems to streamline their invoice processes and shorten their billing cycles.

IT and Communications Services Companies

With the remarkable technological advancements in the recent past, Internet service providers, cable companies, and communications organizations are looking for better ways of service delivery to keep up with the pace of the growing technology. Connections are becoming more complex day by day propelled by an explosion in new data sources, and the use of the devices. To keep up with the increased demand for instant services by customers, the IT and communication service companies, are turning to field service software to make their service delivery more effective.

A combination of the robust, advanced scheduling system and rich functionality makes this software very useful to the communication service companies. They can use the software to design and install complex internet infrastructure. Moreover, field service software can be used by these companies to set up recurring maintenance plans to maintain the installed internet systems.

Oil and Gas Enterprises

Most oil and gas industries are faced by complexities which need special handling for better business performance. Since the running of projects is at the cornerstone of their businesses, they’re always looking for better ways to ensure a smooth running of their project activities. For this reason, most of the oil and gas enterprises that have discovered the benefits of field service software are integrating the main activities of their projects in this software.

With the project-based software tools, there?s an efficient flow of information and transparency throughout the enterprise ensuring excellent project management. With the checklist feature included in most field service software, inspections, compliance, site surveys, and maintenance of procedures is made easier in oil and gas companies.

Facilities Management Industry

Given that this is a service industry, high-level of efficiency is paramount. To meet customer expectations and battle against cost, most facility management industries are turning to field service software. With the comprehensive tools included in the field service software, supervisors can assign tasks to their reports, monitor their progress, and receive alerts on critical issues while in a remote place or at the comfort of their office.

Maintenance and emergency repairs in the facility management industry are greatly supported by this software ensuring increased productivity and efficiency. Additionally, with field service software the industries benefit from a streamlined workflow and improved communication that greatly reduces administration time and cost.

Industrial Equipment Enterprises

Industrial equipment companies aim at maximizing their overall productivity and preventing equipment downtime. There?s a wide range of activities that take place in industrial equipment companies which require field service software for higher levels of efficiency.

From load testing, installation projects, and load testing to emergency repairs, this software, enables the managers to design work orders, and get them ready for scheduling, and distribute them in a moment. With the equipment and asset tracking software, the supervisors can gain instant visibility into the equipment and assets in the field to ensure their regular maintenance. The scheduling and resourcing tools ensure the supervisors are in full control over the dispatching of their workforce, their schedules, and the route taken by each for maximum work output. Additionally, with the field service software, industrial equipment companies can meet their customer expectations.

Construction Industry

Since construction work involve both site work and office work, building industries find field service software very useful in integrating their field and office activities. Field service software is designed to establish effective communication between the office staff and the field operators. With inclusive software tools, the supervisors can easily manage daily inspections and receive feedback from the field workers without leaving the office. Moreover, documentation is simplified, and everything is documented in a central place so that it’s easier to retrieve important information at any time. With field service software, building industries can manage their construction efficiently while minimizing cost, and saving on time.

Filed service software is gaining popularity in the industrial world as most enterprises seek to improve their business? performance, and keep up with the competition. Moreover, more companies are expected to come on board as the field service software companies work extra hard to add more tools to suit a wide range of functions.

Is Change Management a Myth or a Possibility

The theory that it is possible to manage organisational change (Change Management) in a particular direction has done the rounds for quite some time, but is it true about Change Management. Was Barrack Obama correct when he said, ?Change will not come if we wait for some other person or some other time. We are the ones we have been waiting for. We are the change that we seek.?
Or, was business coach Kelly A Morgan more on the button when she commented, ?Changes are inevitable and not always controllable. What can be controlled is how you manage, react to, and work through the change process.? Let us consult the evidence and see what statisticians say.

What the Melcrum Report Tells Us

Melcrum are ?internal communication specialists who work alongside leaders and teams around the globe to build skills and best practice in internal communication.? They published a report after researching over 1,000 companies that attempted change management and advised:

? More than 50% report improved customer satisfaction

? 33% report higher productivity

? 28% report improvements in employee advocacy

? 27% improved status as a great place to work

? 27% report increased profitability

? 25% report improved absenteeism

Sounds great until we flip the mirror around and consider what the majority apparently said:

? 50% had no improvement in customer service

? 67% did not report increased productivity

? 72% did not note improvements in employee advocacy

? 73% had no improved status among job seekers

? 73% did not report increased profitability

? 75% did not report any reduction of employee absenteeism

This shows it is still a great idea to hear what all parties have to say before reaching a conclusion. You may be interested to know the Melcrum report gave rise to the legend that 70% of organisation change initiatives fail. This finding has repeated numerous times. Let’s hear what the psychologists have to say next.

There is a certain amount of truth in the old adage that says, ?You can lead a horse to water but you cannot make him drink.? Which of us has not said, ?Another flavour of the week ? better keep heads down until it passes? during a spell in the corporate world. You cannot change an organisation, but you can change an individual.

At the height of the Nazi occupation of 1942, French philosopher-writer Antoine de Saint-Exup?ry said, ?A rock pile ceases to be a rock pile the moment a single man contemplates it, bearing within him the image of a cathedral?. Psychology Today suggests five false assumptions change management rests upon, THAT ARE SIMPLY NOT TRUE.

1. The external world is orderly, stable, predictable and can be managed

2. Change managers are objective, and do not import their personal bias

3. The world is static and orderly and can be changed in linear steps

4. There is a neutral starting point where we can gather all participants

5. Change is worthy in itself, because all change is an improvement

Leo Tolstoy wrote, ?Everyone thinks of changing the world, but no one thinks of changing himself.? A prophet can work no miracles unless the people believe. From the foregoing, it is evident that change management of an organisation is a 70% impossibility, but encouraging an individual to grow is another matter.

A McKinsey Report titled Change Leader, Change Thyself fingers unbelieving managers as the most effective stumbling stones to change management. To change as individuals ? and perhaps collectively change as organisations ? we need to ?come to our own full richness?, and as shepherds lead our flock to their ?promised land?, whatever that may be. Conversely, herding our flock with a pack of sheepdogs extinguishes that most precious thing of all, human inspiration.

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How To Get Started with your IT Compliance Efforts for SOX

There’s no question about it. For many of you top executives in the corporate world, all roads leading to a brighter future have to go through SOX compliance. And because the business processes that contribute to financial reporting (the crux of the Sarbanes-Oxley Act) are now highly reliant on IT systems, it is important to focus a good part of your attention there.

It is a long and arduous path to IT compliance, so if you don’t want your company to fall by the wayside due to inefficient utilisation of resources, it is important to set out with a plan on hand. What we have here are some vital information that will guide you in putting together a sound plan for SOX compliance of your company?s IT systems.

Why focus on IT systems for SOX compliance?

We’ll get to that. But first, let’s take up the specific portions of the Sarbanes-Oxley Act that affect information technology. These portions can be found in Section 302 and Section 404 of the act.

In simplified form, Section 302 grants the SEC (Securities and Exchange Commission) authority to come up with rules requiring you, CEOs and CFOs, to certify in each annual or quarterly financial report the following:

that you have reviewed the report;
that based on your knowledge, the report does not contain anything or leave out anything that would render it misleading;
that based on your knowledge, all financial information in the report fairly represent the financial conditions of the company;
that you are responsible for establishing internal controls over financial reporting; and
that you have assessed the effectiveness of the internal controls.

Similarly, Section 404, stated in simplified form, allows the SEC to come up with rules requiring you, CEOs and CFOs, to add an internal control report to each annual financial report stating that you are responsible for establishing internal controls over financial reporting.

You are also required to assess the effectiveness of those controls and to have a public accounting firm to attest to your assessment based upon standards adopted by the Public Company Accounting Oversight Board (PCAOB).

While there is no mention of IT systems, IT systems now play a significant role in financial reporting. Practically all of the data you need for your financial reports are stored, retrieved and processed on IT systems, so you really have to include them in your SOX compliance initiatives and establish controls on them.

Now that that’s settled, your next question could very well be: How do you know what controls to install and whether those controls are already sufficient to achieve compliance?

Finding a suitable guide for IT compliance

The two bodies responsible for setting rules and standards dealing with SOX, SEC and PCAOB, point to a well-established control framework for guidance – COSO. This framework was drafted by the Committee of Sponsoring Organisations of the Treadway Commission (COSO) and is the most widely accepted control framework in the business world.

However, while COSO is a tested and proven framework, it is more suitable for general controls. What we recommend is a widely-used control framework that aligns well with COSO but also caters to the more technical features and issues that come with IT systems.

Taking into consideration those qualifiers, we recommend COBIT. COBIT features a well thought out collection of IT-related control objectives grouped into four domains: Plan and Organise (PO), Acquire and Implement (AI), Deliver and Support (DS), and Monitor and Evaluate (ME). The document also includes maturity models, performance goals and metrics, and activity goals.

A few examples of COBIt’s detailed control objectives are:

DS4.2 – IT Continuity Plans
DS4.9 – Offsite Backup Storage
DS5.4 – User Account Management
DS5.8 – Cryptographic Key Management
DS5.10 – Network Security
DS5.11 – Exchange of Sensitive Data

By those titles alone, you can see that the framework is specifically designed for IT. But the document is quite extensive and, chances are, you won’t need all of the items detailed there. Furthermore, don’t expect COBIT to specify a control solution controls for every control objective. For example, throughout the control objective DS4 (Ensure Continuous Service), you won’t find any mention of virtualisation, which is common in any modern business continuity solution.

Basically, COBIT will tell you what you need to attain in order to achieve effective governance, management and control, but you’ll have to pick the solution best suited to reach that level of attainment.

Articles highly relevant to the one you just read:

Month End Accounting The Way It Should Be Today
Spreadsheet Woes ? Burden in SOX Compliance and Other Regulations
Spreadsheet Woes ? Limited Features For Easy Adoption of a Control Framework
How Internal Auditors Can Win The War Against Spreadsheet Fraud