Spreadsheet Challenges in Banking & Capital Markets
Spreadsheets are powerful and flexible reporting tools used ubiquitously throughout front, middle and back office operations within financial institutions across the globe. In the front office, traders rely on spreadsheets to analyze market data and create accurate credit risk and cash flow models, and track trades. In the middle office, spreadsheets are used to reconcile trades with ERP systems, and to report on P&L. In the back office, spreadsheets are often used to prepare financial statements, audit checklists, performance plans and management reports.
Despite this ubiquity, many financial institutions have failed to apply the proper testing and controls to critical spreadsheets, resulting in errors, financial restatements, fraud, lost earnings, non-compliance with regulatory mandates, and shattered shareholder confidence. Due to the criticality and inherent complexity of these spreadsheets, banks must effectively mitigate spreadsheet risk while ensuring compliance with ever-changing regulatory mandates, including SOX 404, Bill 198, FRCP Rule 26, SEC, OCC, FDICIA, FSA, MiFID, Combined Code and Basel II.
Mandates in the New Economy In the new economy, both regulators and investors are asking for risk management programs and increased transparency. As such, mission critical spreadsheets, Access databases, and other EUCs should be managed with the highest level of integrity and trust throughout their lifecycle. This requires establishing a spreadsheet and EUC control environment that incorporates: spreadsheet security, access control, segregation of duties and responsibilities, documentation, input control, data integrity, logic inspection, analytics, version control, and change control. These are the critical technology requirements recommended by leading tax and audit firms for establishing effective spreadsheet governance - all of which can be automated by the Prodiance Enterprise Risk Manager (ERM) System.
Mitigating Spreadsheet Risk With the Prodiance ERM System, financial institutions can:
- Automate spreadsheet discovery, inventory and change management processes
- Improve spreadsheet security and limit access to critical spreadsheets to only authorized personnel
- Monitor all changes to spreadsheets and Access databases down to the cell level
- Automate spreadsheet versioning while providing access to historical data
- Analyze spreadsheets for complexity, structural errors, and assess risk
- Prevent and detect spreadsheet fraud
- Enforce spreadsheet development lifecycle policies and best practices
- Automate spreadsheet review and approval via automated workflows and email notifications
- Established a controlled environment for all critical spreadsheets and associated documentation
- Improve management reporting and visibility for all critical spreadsheets
- Improve compliance with regulatory mandates
- Boost productivity through a seamless, non-invasive end user experience