RESEARCH & RESOURCES

LESSON - Spreadsheets in the Next Generation

By Cate Zovod, Senior Technical Marketing Manager, Actuate

Spreadsheets are a fundamental facilitator of the way in which many financial services institutions seek to conduct their businesses in the 21st century. There is now an acceptance industrywide that spreadsheets can pose a substantial risk to the success of the business, both in terms of pure profit and loss and reputation.

However, the spreadsheet is ingrained in the fabric of the financial services industry, making it too valuable a tool to eliminate. Therefore, banks have focused their attention on how best to mitigate these risks and leverage control across spreadsheets.

In order to identify best practices that tackle the risks, Lepus Management Consultancy interviewed practitioners across a range of tier one and tier two investment banks in order to gain an insight into current industry practices. Lepus looked at how spreadsheets were used across the front, middle, and back offices throughout these organizations.

The best practices deliver live business data within a familiar spreadsheet format, with all the formatting, formulae, and graphs intact and without querying, cutting, pasting, or manual data entry errors. These practices result in instant complete information direct from source, preformatted and ready to go, ensuring accuracy, quality, and control.

Achieving these benefits can be a reality if organizations are able to follow a series of steps that utilize the existing skills of developers but introduce automation to ensure the robustness of the process. These steps are outlined below:

  1. Generate automated, server-based spreadsheets that enable complete version control, eliminate human error, and ensure that the development process is auditable for compliance purposes. This practice allows the organization to maintain a single version of the truth and prevents users from altering the spreadsheet and thus the business process.
  2. Determine a blueprint of what an individual spreadsheet looks like and what functions it must incorporate, thus eliminating spreadsheet development errors and validating the data that exists within the spreadsheet.
  3. Distribute scheduled, manufactured spreadsheets to eliminate spreadsheet changes that can occur in the dissemination process, to generate confidence in data quality, and to ensure reports and analyses are received in real time. The timely distribution of spreadsheets also ensures that business processes are not delayed by inefficient distribution procedures.
  4. Centralize spreadsheet processes and environments to drive accountability and consistency in the level of control leveraged across the business. By leveraging a centralized server and page-level security, institutions are able to deliver spreadsheets to a defined group of users, however small or large, in real time.
  5. Spreadsheets that access all the necessary data sources provide broader insight and better-integrated information to support decision making.
  6. Management of the authorization to create spreadsheets, responsibility for signing off spreadsheets and facilitation of ongoing monitoring in a live environment are crucial to gaining control. The resulting effect is enhanced transparency in spreadsheet use.
  7. Regulatory pressures, such as Sarbanes- Oxley, now make it compulsory for organizations to take the appropriate steps to mitigate the risks inherent in the reporting and analysis performed in spreadsheets. In order to ensure compliance and accommodate the increasing regulatory scrutiny of spreadsheets in the industry, banks must standardize and rigorously manage the development process.

When spreadsheet processes remain manual and unstructured, the risks in spreadsheet use remain high. The automation fundamentally redefines the concept of spreadsheet risk. Where a repeatable development and distribution process is in place, institutions can be confident that they have gained control of, and confidence in, their spreadsheet environments. Adopting these steps will help drive compliance with the increasing regulatory scrutiny of spreadsheet use and strengthen critical business processes.

This article originally appeared in the issue of .

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