Data Assurance: Spreadsheet Integrity Review

Spreadsheet models are developed to fill the gap between the information needs of an organisation and the information it actually obtains from existing systems. It is not surprising therefore that spreadsheet models are widely used throughout organisations and in particular their finance departments. As a result, the use of the spreadsheets is an integral part of the information and decision-making framework.

Spreadsheet models are most of the times not developed and supported in a controlled environment. This will in most of the times lead to one or combination of the following:

• Input error: Errors that arise from flawed data entry, inaccurate referencing or other simple cut-and-paste functions.
• Logic error: Errors in which inappropriate formulae are created and generate improper results.
• Interface errors: Errors from the import or export of data with other systems.
• Other errors: Errors include inappropriate definition of cell ranges, inappropriately referenced cells or improperly linked spreadsheets.

Unnoticed errors in spreadsheets seem to occur in a small percentage of all cells, meaning that for larger spreadsheets, the issue is not whether errors exist but how many errors there are. Every study that has attempted to measure the magnitude of the errors, has found them at rates that would be unacceptable in any organisation. As a result of the above, a number of companies base critical decisions on misstated numbers and questionable analyses. In reality, unnoticed errors in spreadsheets have resulted around the world in significant financial losses and damage to reputation of respectable organisations.

If you use spreadsheets:

• To facilitate monitoring and tracking of workflow to support operational processes, such as listing of open claims, unpaid invoices and other information that previously would have been retained in manual, paper folders.
• To support analytical review and management decision-making, such as disposal decisions and bids for major contracts.
• To directly determine financial statement transaction amounts or balances that are populated into the general ledger and/or financial statements.

Then PwC can help you

We can identify the most critical files, assess the controls and integrity of the data, and develop a long term strategy to effect timely, accurate, and flexible reporting. In particular we can:

• Determine whether the calculations in your models are in all material respects internally consistent and mathematically correct. We provide a report with detailed explanation of the errors noted and suggested actions for improvement (i.e. standard industry practices).
• Comparison reviews of changes to updated versions of models.
• Identify whether there are appropriate controls to mitigate the risks inherent in a spreadsheet environment and document them. Examples of such controls are change control, version control, access control, logic inspection, security etc.
• Evaluate existing controls against a checklist of "necessary" controls. Any gaps between existing and “necessary” controls will be identified as remediation items as well as any gaps in operating effectiveness.
• Develop an action plan for each control gap identified.