# Aligning spreadsheet models and enterprise systems-Magazine
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2017-06-02
Category: TECHNOLOGY
Category URL: https://financedigest.com/category/technology
Meta Title: Challenges Facing CFOs in Managing Spreadsheet Controls
Meta Description: Discover how modern CFOs are facing the challenge of ineffective spreadsheet controls and how they can address these issues to ensure regulatory compliance and
URL: https://financedigest.com/magazinealigning-spreadsheet-models-and-enterprise-systemshtml

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_By **Henry Umney**, Director, ClusterSeven_

![Henry Umney](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/henry-umneydirectorcluste-200x300-1736843786110-compressed.jpg)

Henry Umney

The role of the CFO is widely recognised to facilitate and support business strategy so that the organisation can achieve its goals and objectives – be it of profitability, capital, growth or anything else. Shareholders and investors cherish these metrics too. Consequently, CFOs are routinely driving transformation projects via acquisitions, on-shoring, off-shoring, financial restructuring and such, to control and [improve the business](https://www.financedigest.com/how-can-call-tracking-improve-your-business.html "How can call tracking improve your business?") performance of their organisations.

**Tried and tested controls are proving inadequate**

Today however, many of the previously accepted tried and [tested business](https://www.financedigest.com/meningitis-diagnostic-testing-market-analysis-status-and-business-outlook-2017-to-2025.html "Meningitis Diagnostic Testing Market Analysis, Status and Business Outlook 2017 to 2025") controls are failing. The Sarbanes Oxley Act of 2002 (SOX) is a case in point.

The Public Company Accounting Oversight Board (PCAOB) is focused on ensuring that spreadsheet controls in accounting and [finance processes are followed to eliminate errors and fraud](https://www.financedigest.com/finance-brokers-bank-on-red-flag-alert-to-help-beat-fraud.html "FINANCE BROKERS BANK ON RED FLAG ALERT TO HELP BEAT FRAUD"). The PCAOB’s [auditing standard 2](http://www.datasafexl.com/docs/sarbanes_oxley_about_spreadsheets.pdf) expressly demands that controls must include all types of IT used in financial reporting; and auditors are taking it seriously. The [latest survey of 109 organisations by research](https://www.financedigest.com/smart-city-kiosk-market-to-reap-excessive-revenues-by-2028-trends-and-forecast-by-fact-mr-investigated-in-the-latest-research.html "Smart City Kiosk Market To Reap Excessive Revenues By 2028 | Trends And Forecast By Fact.MR investigated in the latest research") house GRC 20/20 reveals that 78% of respondents note that external auditors are applying hardier standards to ensure compliance with the much tougher PCAOB control requirements. So, while previously, minimal, typically manual, spreadsheet controls weren’t viewed as a SOX failing, today they are.

In addition to having to review and improve existing controls, due to the nature of corporate activity, carefully selected, proven and maintained enterprise systems for operational processes are proving inadequate. This is due to their inflexibility to instantly add new processes or amend existing ones in rapid response to the business needs of users. To overcome the limitations of enterprise systems, there is a large parallel universe of unmonitored and uncontrolled spreadsheets created by users for varied strategic business processes. Spreadsheets are flexible and offer good [capabilities for advanced](https://www.financedigest.com/gumgum-and-jw-player-partner-to-integrate-viewability-and-advanced-contextual-capabilities.html "GumGum and JW Player Partner to Integrate Viewability and Advanced Contextual Capabilities") analytics and financial modelling. At the same time, they also pose a huge risk as [finance departments have little control on these applications and their lineages with other data sources](https://www.financedigest.com/uk-finance-minister-hunt-to-make-statement-at-1000-gmt-source.html "UK finance minister Hunt to make statement at 1000 GMT – source").

Consequently, CFOs are struggling to offer watertight guarantees that they are completely in the know of the spreadsheet and other data sources used and the [level of data aggregation and manipulation that has been undertaken by their finance teams](https://www.financedigest.com/zivver-expands-leadership-team-names-three-new-c-level-executives-2.html "Zivver Expands Leadership Team, Names Three New C-level Executives") to arrive at the figures they submit to financial and regulatory authorities.

The GRC 20/20 survey mentioned above shows that nearly half of the respondents do not have a grasp on spreadsheet risks and controls, which might [impact financial reporting](https://www.financedigest.com/industrial-catalytic-converter-market-size-share-forecast-report-2027-covid-19-impact-analysis-fmi.html "Industrial Catalytic Converter Market Size, Share, Forecast Report – 2027 – COVID-19 Impact Analysis | FMI"). More worryingly, 53% stated that they hadn’t identified and built an inventory of spreadsheets and other [end user computing applications](https://www.financedigest.com/industrial-catalytic-converters-market-competitive-growth-strategies-based-on-type-applications-end-user-and-region.html "Industrial Catalytic Converters Market Competitive Growth Strategies Based on Type, Applications, End User and Region") that could potentially lead to material misstatements from their use.  In fact, they don’t have the controls to address [spreadsheet risks; and where they do, the mechanisms are manual, which are error prone, ineffective and lack the agility needed to enforce in such a dynamic and distributed environment](https://www.financedigest.com/incombustible-infrastructures-dousing-the-risk-of-spreadsheet-fires-in-the-financial-sector.html "Incombustible infrastructures: dousing the risk of spreadsheet fires in the financial sector").

**[Aligning spreadsheet models with enterprise systems must become](https://www.financedigest.com/becoming-data-ready-for-mtd-for-corporation-tax-aligning-vat-and-ct.html "Becoming data-ready for MTD for Corporation Tax: aligning VAT and CT") a focus for CFOs**

Data is a critical asset and the lifeblood of any business. [CFOs must](https://www.financedigest.com/10-questions-cfos-must-ask-themselves-about-privacy.html "10 questions CFOs must ask themselves about privacy") align and integrate spreadsheet models with enterprise systems to achieve end-to-end transparency of business-critical processes. This includes everything from the creation of a spreadsheet [application by a user](https://www.financedigest.com/metal-bellows-market-competitive-growth-strategies-based-on-type-applications-end-user-and-region28925.html "Metal Bellows Market Competitive Growth Strategies Based on Type, Applications, End User and Region"), visibility of data lineage between files through to their retirement in the corporate system. This will ensure decision-making based on outputs derived from accurate business data.

To achieve the above, new processes are needed. In an IT-led environment, manual processes for [change management](https://www.financedigest.com/ma-integration-challenges-cultural-alignment-and-change-management.html "M&A Integration Challenges: Cultural Alignment and Change Management") and control of spreadsheets across the lifecycle of every single, business critical application, are doomed to fail. Not only is it impossible to [monitor and control](https://www.financedigest.com/renewable-energy-monitoring-and-control-system-market-to-witness-an-outstanding-growth-by-2030.html "Renewable Energy Monitoring and Control System Market to Witness an Outstanding Growth by 2030") spreadsheets in a timely manner, the whole exercise is supremely inefficient and costly, potentially to the tune of hundreds of thousands of dollars. Additionally, due to the way in which spreadsheets are used, if say 50 spreadsheets are decommissioned, it is highly likely that another 50 new ones are created by users in the same timeframe to satisfy a new business requirement.

Automation based on best practice processes for spreadsheet management is a reliable and safe approach. It mitigates risk by continuously monitoring and eliminating errors in business-critical processes based on well-defined [controls to ensure data accuracy across the spreadsheet landscape](https://www.financedigest.com/automatic-door-control-market-2022-outlook-current-and-future-industry-landscape-analysis-2026.html "Automatic Door Control Market 2022 Outlook, Current and Future Industry Landscape Analysis 2026").This is pertinent for SOX and other regulatory compliances that CFOs are responsible for. Technology-driven control over the spreadsheet landscape enables enforcement of policies and [rules as a matter of routine](https://www.financedigest.com/new-china-covid-rules-spur-concern-as-some-cities-halt-routine-tests.html "New China COVID rules spur concern as some cities halt routine tests"), without impacting the benefits of flexibility and agility for data manipulation that users so treasure these applications for. Historical evidence shows that inadvertent misrepresentation of information and acute metrics such as revenue, profitability and sales figures have led to financial and non-compliance penalties, drop in [share price](https://www.financedigest.com/siemens-ceo-watching-the-share-price-of-siemens-energy-ceo.html "Siemens CEO watching the share price of Siemens Energy – CEO"), and so on –  situations that probably keep CFOs awake at night. After all, it is their neck on the line.

**About the author**

Henry Umney is [Director at ClusterSeven and is responsible for the commercial](https://www.financedigest.com/cavai-appoints-jonathan-pacey-as-commercial-director-apac.html "Cavai appoints Jonathan Pacey as Commercial Director, APAC") operations of ClusterSeven, overseeing globally all Sales and Client activity as well as Partner engagements.Henry brings over 20 years of experience in sales and account [management](https://www.financedigest.com/freelancing-finances-managing-income-and-taxes-as-a-freelancer.html "Freelancing Finances: Managing Income and Taxes as a Freelancer") in financial services. Prior to ClusterSeven, he held the position of sales director in Microgen, London and various sales [management positions in AFA Systems](https://www.financedigest.com/a-report-on-global-clinical-trial-management-system-market-by-pmr.html "A Report On Global Clinical Trial Management System Market By PMR") and DART, both in the UK and Asia.

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“Original publication in Finance Digest Issue 1 https://www.financedigest.com/finance-digest-print-magazine/”
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