Fear Not The Software
The spreadsheet is one of the most brilliant software tools for almost any industry including accounting and finance. However, because everyone is so comfortable with them, spreadsheets can be excellent tools for committing fraud. Also, they have little to no security in controlling changes within the worksheets. For example, a general ledger in its original form may be secure from misstatements but once exported to Excel for posting an adjusting journal entry all changes can be made without control.
Spreadsheets therefore become the least expected weak link in the financial statement chain. Aside from fraud, they're also ripe ground for errors because of their open nature for change. One improperly copied formula can spell disaster in a spreadsheet that serves as the basis of a month-end journal entry. Examples of such errors and fraud are rampant and have been summarized by the European Spreadsheet Risks Interest Group at the following link: www.eusprig.org/stories.htm. Following are some case
- AIB/Allfirst Trading Fraud - The fraudster substituted links to his private manipulated spreadsheet which exaggerated bonuses by more than half a million dollars.
- HealthSouth - Two ex-HealthSouth executives admitted that they prepared a false spreadsheet for auditors that inflated HealthSouth's assets and made the company appear to be worth more that it was.
- CFX - The Internal Audit Department noted in its investigation that management created spreadsheets showing desired results first and then adjustments were made to the accounting system to match the spreadsheet.
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