Curing those Spreadsheet Blues: Automating Spreadsheet Management for Compliance & Productivity
Which is your spreadsheet nightmare? You expend hundreds of man hours reviewing spreadsheets and find an error in one cell? Or, you miss that error and one cell rolls up into a costly problem for your company—and lots more nightmares?
The Sarbanes-Oxley Act has forced companies to examine the role spreadsheets play in their financial reporting processes as well as the financial decisions based on the use of spreadsheets. Section 404 of the act requires management to establish and maintain adequate internal controls and procedures for financial reporting and to assess the effectiveness of those controls.
It sounds simple. But the internal controls for the spreadsheets that collect and consolidate financial data for reporting are weak at best. No matter how well-defined and well-documented the rules that produce the data, once those data are imported into a spreadsheet, control is lost and, with it, the ability to ensure accuracy. Some studies have uncovered errors in more than 90% of the spreadsheets audited and some research indicates that each spreadsheet error costs between $10,000 and $100,000 for each month that it goes undetected. Adding to this cost, but harder to calculate, are the devastating and long-lasting consequences that result from restating earnings due to spreadsheet errors.
Spreadsheets Are Here to Stay
Whatever their potential for serious and frequent errors, spreadsheets are here to stay. As many as 95% of US companies use spreadsheets for financial reporting, and eliminating their use is seldom a viable option. Since their introduction in the 1980s, spreadsheet usage has exploded and their utilization in the organization has become more entrenched and mission-critical. So with spreadsheets as one of the most likely points of Sarbanes-Oxley non-compliance, how can an organization ensure their accuracy?
Some do it the old-fashioned way, deploying a small army of people to check and re-check spreadsheets and to find the one cell among thousands that holds the potential for disaster. That may seem like risky business if you are giving that responsibility to the very people who may have created the spreadsheets—and the errors—in the first place. The problem multiplies exponentially when spreadsheet roll-ups are considered. One company whose annual planning process required rolling up data from 1,200 Excel spreadsheets—one for each cost center—spent six to eight weeks each year just to work out all the errors.
The solution is to manage spreadsheets throughout their lifecycles with automated capabilities for version control, security, change management and collaborative review-and-approval processes.
In evaluating spreadsheet management systems, there are several key considerations:
- Make the process easy for preparers and reviewers—don't try to change their working environment. Look for a solution in which the user continues to work almost entirely in Excel, with tracking and management functions taking place in the background;
- Ensure secure user access with robust capabilities for user privileges. In addition to system- and document-level security, you need password-protected selective cell locking so key fields, such as formulas, cannot be changed;
- Provide change and version control that tracks who made changes, when, the precise nature of the change, and the reason. Your system should automatically log the date and time of each edit, prevent users from disabling the tracking feature and make the log easily searchable;
- Automate the review-and-approval process with a complete audit log of all reviews, approvals and comments within a secure repository; and
- Store essential spreadsheets as business records. You must be able to provide retention management for spreadsheets that are critical business records, ensuring their availability and protection from tampering.
Effectively automating spreadsheet management with solutions such as Mobius' ABS for Spreadsheet Compliance will enhance reporting accuracy, enable a sustainable compliance process, improve the productivity of the reporting cycle and reduce the costs of auditing and certification. Knowing your spreadsheets are effectively managed may even get you a better night's sleep!
Mobius Management Systems, Inc. (
www.mobius.com) is a leading provider of integrated solutions for content and records management. The company offers a comprehensive suite that integrates content across disparate repositories, supports regulatory compliance, and provides content-enabled applications that automate business processes.