Spreadsheet Use in Commercial Real Estate
In commercial real estate investment, spreadsheets are the weapon of choice for designing investment models. Their power and flexibility enables investment managers to quickly structure deals, analyze market volatility, credit quality, probability of default, and other important investment factors. These spreadsheets are typically used over and over again for multiple deals and contain intellectual property that is proprietary and critical to business operations.
Despite the power and flexibility spreadsheets can deliver, many real estate investment firms have failed to apply the proper safeguards and controls to critical spreadsheets, resulting in errors, financial restatements, lost earnings, non-compliance with regulatory mandates, and shattered shareholder confidence. Due to the criticality and inherent complexity of these spreadsheets, real estate firms must effectively mitigate spreadsheet risk while ensuring compliance with ever-changing regulatory mandates, including SOX 404 and others.
Business Mandates The bottom line: critical spreadsheets should be managed with the highest level of integrity and trust throughout their lifecycle. This requires establishing a spreadsheet 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 Spreadsheet Compliance Edition solution.
Steps to Mitigating Spreadsheet Risk With the Prodiance Spreadsheet Compliance Edition solution, real estate investment firms can:
- Automate spreadsheet discovery, inventory and change management processes
- Improve spreadsheet security and limit access to critical spreadsheets to only authorized personnel
- Automate spreadsheet versioning while providing access to historical data
- Analyze spreadsheets for complexity, risk and structural errors
- 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