Introduction

The Commodity Procurement System (CPS) is a secure, standardized, and highly configurable application designed to manage the requirements for commodity sourcing, crop traceability, and grower payment. For the majority of clients, the CPS solution has replaced homegrown, legacy applications. Many times, these prior applications were made up of some combination of Excel spreadsheets along with a certain level of custom development.

The purpose of this document is to outline the exposed risks, dangers, and pitfalls for companies that manage portions of their business with Excel spreadsheets.

Risk Areas of Using Excel

  1. Spreadsheet Integrity
    According to both PricewaterhouseCoopers and KPMG, more than 90% of corporate spreadsheets have material errors in them. Estimates suggest that such errors cost between $10,000 and $100,000 per error per month. Meaning, in a company with 10 spreadsheets, nine would have errors. If each has only one error and that error is spotted within three months, then each error costs $165,000 on average. Copyright © , IT-Director.com
  2. Untrained Individuals
    While the information contained in spreadsheets can be critical, it is oftentimes the lesser qualified people within a company that are putting the spreadsheets together.
  3. Multiple Versions of a Spreadsheet Being Used
    A common mistake is to have multiple versions of “the same” spreadsheet floating around, each of which has various changes that have been made, impacting accuracy of data.
  4. Hidden Cells
    Many times, hidden cells within spreadsheets can affect the accuracy of the spreadsheet. This problem can be compounded with multiple versions of the spreadsheet.
  5. Insertion – Rows, Columns and Cells
    Adding rows, columns and cells to a spreadsheet means the cells might not be included in critical formulas, even if the information looks like it is there.
  6. If / Sum / Countif
    If- Sum – Countif commands can cause inaccuracies, especailly if words are slightly misspelled.
  7. Password Protecting
    Password protection in Excel gives a false sense of security. Programs such as “jack the ripper” can easliy hack spreadsheet security in less than 5 minutes.
  8. Critical information cannot be encripted in Excel
    Encriptions are not possible. Informaiton such as bank numbers, credit cards, and Social Security numbers are not safe in Excel spreadsheets.
  9. Spreadsheets Used for Analysis are Easiliy Changed or Modified
    With no audit trail in Excel, fraud is difficult to prevent because numbers are easily changed and if verification is not done independently, there is no way to catch the error.
  10. Duplication of Data – Double Entry
    Multiple spreadsheets for each business segment can cause double entry of information as well as blind spots to information.
  11. Accounts Payable Completed in Excel
    It is easy to make double payments or lose track of when payments are due, unless transactions and workflows are managed in a single system.
  12. Inventory Purchases and Transfers tracked in Excel
    The process of tracking inventory is very time consuming and since there is no audit trail, it can be difficult if not impossible to track how the end number was arrived at in order to identify who made the changes.
  13. Bank Reconciliation
    The ease of modifying and changing numbers allows a false reconciliation to occur.
  14. Creating and tracking Purchase Orders
    Spreadsheets don’t provide the ability to accurately track PO’s or who created them. This can result in Double Entry and the over-purchasing of product. Liabilities and obligations can be huge.
  15. Vendor Master Files
    It is easy to change Vendor Master Files. Without an audit or separation of duties, fraud can occur. Employees have the ability to create factious vendors and pay themselves.

In Conclusion

The adoption of spreadsheets in today’s business environment has become a common practice, which has gradually occurred for a number of reasons. One reason is that organizations may view Excel as giving them an option to manage related business workflows which don’t fit neatly into the functionality provided by their existing ERP systems.

The hidden danger is that Excel spreadsheets do not provide any audit trail or proper security. This opens the company to inaccurate or false information, which in turn exposes the company to huge risks and the possibility of fraud. Biwer’s Commodity Procurement System can eliminate this risk and liability.

A key piece of the CPS application is the CPS Portal. The CPS Portal provides a web layer that delivers flexibility to mange the core and related workflows of each client. Once the related workflows are managed properly, there is no longer a need to have Excel spreadsheets floating around.

The Commodity Procurement System also has complete audit trail functionality and full security based on a user’s roll and password. CPS is a robust, standardized solution, delivering a single version of the truth. These factors are vital in generating accurate reports and making solid business decisions for key executives, managers, and users.

Excerpts of this content were from a document originally created by Schenck CPAs.