One thing we’ve all heard time and time again during our school years was to always “double check” our work.
Even after leaving those educational years behind, these words of advice resonate with us in the professional world. As we embark on tasks designated to us by our respective employers, we are well aware that having a detail-oriented disposition and “double checking” our processes is the key to making well-informed business decisions.
This holds true for corporate accounting, a profession that entails the management of financial transactions. Accountants are expected to possess a meticulous work ethic while handling critical accounting procedures, but there is always room for error, especially when numbers and transactions are recorded into spreadsheets or workbooks. Global consulting firm Protiviti claims its own client-based research shows that a whopping 94 percent of an organization’s spreadsheets contain errors.
The risks associated with spreadsheet errors – from financial losses to fraud – have fueled a necessity for financial auditors, or accounting experts tasked with ascertaining the validity and reliability of financial information. In essence, auditors “double check” the work of accountants and other employees to deliver reasonable assurance that their information is free of material errors.
Because the audit process is an in-depth examination of financial data, time and labor costs can be extensive. This holds true as auditors find themselves racing to complete projects assigned to them by clients. Reviewing complicated spreadsheets, which are often riddled with complex formulas, hidden rows, and conditional formatting, in a time crunch can be a recipe for disaster.
For instance, back in 2010, a Cleveland area school system was withheld $310,000 when the county’s auditor’s office mistakenly included a particular neighborhood and its 62 homes in the wrong school district. Unfortunately, the error went unnoticed until a homeowner observed a $10 hike in his property tax bill and that the money was not allocated for the correct school system, where his children attended.
To reduce time to review and certify spreadsheets, and safeguard from human errors, many of today’s auditing professionals are turning to spreadsheet auditing software applications. A company specializing in tools for forensic accounting tasks, Incisive offers Validate, the premier spreadsheet auditing software application that allows auditors to easily and rapidly review Excel spreadsheet data and deliver better insight into others’ spreadsheets.
Validate acts as an overlay to the spreadsheet to simplify the review period of the auditing process and decrease the hours and costs associated with detecting material errors and fraud in complex spreadsheets. Validate is designed to “drill down” into the structure of the spreadsheet to uncover any inconsistencies, and track and monitor audit activities so users can evaluate, at a glance, where things may have gone wrong.
Validate has been successful for a number of users, including one global technology company that relies heavily on spreadsheets for tasks like payroll and financial planning, tax equity programs and market share analysis. At one time, however, the senior internal auditor found that thoroughly checking all spreadsheet calculations and formulas to ensure consistency would be too time-consuming.
After deploying Validate, the auditor was able to pinpoint a number of inaccuracies involving formulas and anomalies, inspiring other cost accounting and stockholder equity groups within the company to use Validate for their spreadsheet reviews.
“Validate helps me get my work done faster and I can rely on its accuracy,” stated the auditor. “Because of Validate, I’m more productive and able to accomplish other important tasks.”
For more information on Incisive’s Validate solution, click here.
Edited by Amanda Ciccatelli