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

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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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IT Transformation Defined

Businesses depend on IT to effectively manage business processes and to provide products and services to clients. As IT technologies advance, it is crucial that businesses update their hardware to remain competitive. But businesses should do more than simply upgrade their servers and should really strive to effect IT transformation.

What is IT Transformation?

IT transformation is the ongoing process of changing the way that a company uses IT to better align it with current business goals. Through the IT transformation process, businesses try to determine whether they are meeting mission-critical benchmarks through the incorporation of new IT technologies for corporate transformation.

For example, if one of the current business concerns is whether the company can improve customer service, the IT system will need to evolve in such a way that improves customer service in a measurable way.

Successfully Aligning the Technology to Business Goals

In order to successfully align the IT system with business goals, it is important to understand the newly integrated technologies to understand how they can change business processes. If a new feature is intended to make the server more secure, the management should know exactly how the feature will improve the security of the server and whether the new implementation is redundant.

Once the business objectives have been identified, IT transformation is carried out by changing both the software and hardware used by the company. An example would be the growing trend of server migration to the cloud. Cloud computing is the growing trend of making files and data accessible from anywhere. If an organisation believes that it can improve productivity through a server cloud migration, it will need a way to test this.

The IT Transformation Process

Given that IT transformation is directly related to the core business, the IT transformation process must begin by identifying which aspects of the company must be changed. Then, the company must determine?IT services that could potentially be integrated into the business in a way that will help the company achieve benchmarks. After the key decision-makers understand the IT network well enough to effectively implement it, the company must efficiently manage the transformation process. Then, after the IT has been integrated, the company must have a system in place to measure business transformation in a numerical way.

For example, when assessing customer satisfaction, one effective strategy would be to distribute customer satisfaction surveys that ask customers to rate their experiences on a scale of one to ten. The company can then measure the results of the customer satisfaction survey to determine whether the new IT implementations are accomplishing their intended goals.

If the expected benchmarks are not being met, the next step in the IT transformation process is to determine if there is a specific reason for that. Is there a way that the feature can be better integrated to achieve desired business objectives? Are there other features that can help the company better achieve its goals?

Upgrading a network can be an expensive process and it is important to identify early on which options are the most likely to benefit the company’s bottom line.

Reducing Your Carbon Footprint

Climate change creates a loud buzz across the globe. People are talking about how extreme the weather is, how polluted the environment has become or how devastating the results of carbon emissions are. While it is true that humans contribute a large impact to the worsening climate situations, people are also the most influential key towards making this world a better place. As much as the increase in carbon emissions results from what you do, the healthy change can also start in you.

Although it is a bit difficult to determine what you can do to help the society, do not be disheartened. The devastating forces may be massive for you to work through, but there are countless simple actions?you can take to reduce your carbon footprints day by day.

Home

While you are in the comfort of your home, you can start saving energy to reduce your carbon emission. You could’replace your standard light bulbs with compact fluorescent ones. A compact fluorescent bulb saves more than 2/3rds or up to 1,300 pounds of carbon dioxide in its lifetime. This bulb contains mercury, so make sure to choose a brand that has lower mercury than others.

Another thing, you can do to reduce your carbon footprint at home, is to mind your electronics. When you do not use your gadgets and appliances, make sure you unplug them. If you buy new ones, take time to look at the energy rating of the electronics to save you more energy in future use.

Alternative renewable energy is also a good thing to shift into. Try solar, hydro or wind power at home. Setting up your own residential solar panels and building your own turbines are excellent ways to choose green energy.

Food

The food industry is one of the largest contributors of carbon emissions. You may not have control over the food processing, but you can lower your carbon footprint by buying local products in the market. These local products are not transported from far off places, so the carbon dioxide released from them is lower compared to imported ones. Take a look at the packaging as well; less packaging means less waste.

If you have a big backyard, you could use your it to grow food. ?Eating food, either fruit or vegetable, which you grow at home is energy efficient. No more fuel combustion from transportation and other consequent food processing.

Travel

When you have your own car, accelerating it slowly and smoothly, as well as maintaining speed while driving will help lower your carbon emissions. If you drive a lot, it would be better to get a green car. As of now, you can consider using?public transportation and go for road travel rather than air travel when you take long distance trips. But when you need to take planes, better choose a non-stop flight instead of connecting ones.

Indeed, there are many ways you can combat global warming and climate change. The road to improved life quality through energy efficiency might be hard, but a transformed lifestyle can make a big difference. Start now ? lighten your carbon footprint and help save the world.

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What is Servitisation?

In the current generation, innovation has transformed industries, businesses, economies, and livelihoods. Those who’ve accepted to embrace the changes have prospered and remained afloat and relevant in their respective industries.?

However, failure to embrace change has seen companies like Blockbuster pushed out of business by more innovative and technology-oriented companies like Netflix.?

What does this tell you?

That the only way to stay in business, despite the many challenges your business could be facing, is to remain alert to the dynamic demands of customers, many of which are dictated by technological advancements.?

So, if you’re a manufacturer and you’re keen on diving deeper into technology to stay on top of the game and beat your competition, you must also be expectant of the fast-approaching servitisation-centred economy. Companies like Rolls Royce that have already embraced servitisation are making great gains in their areas of expertise.?

What is Servitisation?

Servitisation can be defined as the transformation of a manufacturing firm from the mere offering of products to the market to providing innovative and invaluable services alongside their products. By so doing, the sale becomes an ongoing engagement and not a one-off event. Cranfield University professors call it “the innovation of an organisation’s capabilities and processes to better create mutual value through a shift from selling a product to selling product-service systems.”?

As foreign as it may seem for some professionals, servitisation has been a need that, though not embraced, its demand remains evident. Nonetheless, firms have hesitated to implement it. Shifting from manufacturing products only to incorporating product-centric services alongside the products is not a walk in the park. It boils down to completely changing the company’s entire structure and processes.

All the same, change is never comfortable, and that’s why it’s always best to focus on the positive for motivation.

Servitisation Case Study

Some manufacturing firms have already embraced servitisation, and they’re reaping big from it. They’ve understood the benefits of offering more value to customers at less cost. What Rolls Royce is doing currently with its “power-by-the-hour” program is a good example of servitisation.

Instead of selling Aero Engines and letting customers take charge of maintenance and uptime, Rolls-Royce now offers a full package that includes a product and relevant services.?

Essentially, what the company is creating is an intimate and long-term relationship with its customers.

The total care package by Rolls Royce means it’s essentially renting out its engines to customers and monitoring data for potential maintenance needs. The plan guarantees that maintenance is only done when necessary and avoidable damage detected in good time. As a result, there is a clear reduction in the overall cost.

Initially, Rolls Royce would make money by basically selling and repairing engines. That meant that the worse the engines, the more repairs required and the more the money the company would make.?

However, things changed when the company realised there is no demand for a product that’s constantly in the repair shop. That prompted Rolls Royce to embrace servitisation.

Servitisation aligns the interests of the customer and those of the manufacturer to ensure everyone benefits. Rolls Royce has been offering this package to airlines since 2010, and the company has seen significant returns as a result.

Benefits

There are several benefits of incorporating servitisation into your manufacturing firm. Below are three of the strongest benefits

Financial Stability– Servitisation establishes a more secure revenue stream because of the long term connection between manufacturer and customer. This also translates to loyal customers, meaning more profit.
Strong Customer Retention Rate– Being more experienced about the equipment and the constant tracking and monitoring that comes with servitisation; manufacturers are realising that they can keep more customers.
Selling a Solution And a Product– Today customers are not just looking to buy a product, instead, they want both the product and the solution to their problem. Meaning you make more money for the product you manufacture and the service you offer to your customers.

Implementation of Servitisation in the Industry

To effectively implement servitisation, there must be an effective two-way flow of information and data in the supply chain. Meaning you may require software like FieldElite for scalable condition monitoring of performance. With FieldElite, for example, servitisation is made easier for you because it enables you to monitor the performance of your assets remotely.

Maintenance and monitoring of assets were traditionally very expensive and time-consuming until the arrival of intelligent software that makes work easier and cost-effective for manufacturers. FieldElite uses advanced learning algorithms to remotely automate the entire process, allowing you to detect, in real-time, the performance and need for maintenance on your asset.

Required Organisational Changes

A few important steps include;

Companies that invest in continuous training and development always have a more competitive edge than their counterparts. Meaning an important step towards servitisation is training the workforce. This is important, considering that the company structure, focus, and process will have to change.

Set up a team that is focused on the challenge, change, and creation. With this, you can easily adjust to industry changes. The team should always work on knowing what should be adjusted and when it should be.?

In the shift to servitisation, adopting a comprehensive service technology is an important step. Such service technology software includes FieldElite. This technology will ensure that you’re able to monitor your product in real-time, meaning you can maintain good performance for as long as possible.

Because servitisation essentially focuses on the customer, take time to study customer behaviour. Knowing what your customers need and want will help you remain relevant in the industry.

Conclusion

As the demand for more benefits and long-lasting relationships with dealers grow, so is the need for manufacturers to adjust. Hence more and more manufacturing companies are leaning towards embracing servitisation as a solution to the growing demand.?

In turn, manufacturers who’re attaching service contracts to their product sales are making more than those who remain stuck in the traditional approach to sales.?

Essentially, servitisation will ensure that, as a manufacturer, you remain relevant to your customers now and in years to come. This is a much better arrangement in terms of saving costs and making more returns. Remember to be successful, you have to be flexible enough to change with demand.