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EXCEL NEWS: Excel MVP issues counterblast in the compliance debate. By John Stokdyk

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27th Jul 2006
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Excel and its role in financial compliance has been under the spotlight again, as the UK Financial Services Authority publicly voiced concerns about the uncontrolled use of spreadsheets.

Faced with similar conclusions from market research in the US, Excel expert Kusleika urged accountants to use proper internal controls and stop "maligning the noble spreadsheet".

FSA official Dean Buckner delivered the keynote address at this year's EuSprig conference in Cambridge on 6 July. He commented that financial institutions are beginning to recognise the need to develop risk mitigation and management procedures around their use of spreadsheets. But FSA's visits continue to identify a lack of good training and internal auditing, in spite of all the the good effects of Sarbanes-Oxley compliance.

The EuSpring event brought together academic experts such as Hawaii University professor Ray Panko, the pioneer of spreadsheet error research, plus software industry representatives and officials from HM Revenue and Customs.

Uncontrolled spreadsheet use may concern regulators when they are used to support buy/sell decisions in financial markets, but EuSpring pointed out that the risks are even more significant within businesses that use multiple spreadsheets for budgeting and planning.

Excel's compliance vulnerabilities have opened up a gap for software developers such as Mobius, Qtier, Risk Integrated and Xenomorph, each of which demonstrated spreadsheet control and audit systems at the conference. Microsoft's Brandon Weber was also on hand to discuss the company's spreadsheet compliance strategies.

The spreadsheet's role in corporate compliance is also a live issue in the US, where IDC and RevenueRecognition.com published a report fingering spreadsheets as one of the major weakspots in revenue accounting.

Their joint survey, 'Enterprise Systems and Revenue Recognition: The Missing Link', found that because reporting activities are not automated within many financial/ERP systems, more than half of 685 organisations survey used spreadsheets to create their accounting entries for revenue.

Excel MVP (most valuable professional) Dick Kusleika brought the RevenueRecognition.com survey to our attention in a Daily Dose of Excel blog entry that took a swipe at the "spreadsheets are the devil" tendency.

"What does it mean to rely on spreadsheets for basic accounting entries?" Kusleika asked of the survey results. "Are they using Excel in some way that makes determinations about generally accepted accounting procedures?

"Accounting systems are not black boxes. You don't feed source documents into one end and get financial statements out the other. The process involves human beings that make errors and it always will. If you take away spreadsheets, you will be forcing users to make their errors using some other technology. Give them a pencil and a notepad and see how they do.

"Accountability and proper internal controls are how you produce reliable financial statements, not legislation. And certainly not by maligning the noble spreadsheet who, despite her flaws, has preformed admirably lo these many years."

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