After a spreadsheet error affected a financial statement, this insurance provider decided to plug this gap in their operational risk management strategy. Our solution was selected out of a number of different technologies on the market.
Our technology has enabled the organization to demonstrate compliance with model audit rules, by providing auditable evidence that the organization has all the necessary controls in place to ensure corporate governance and financial accountability.
The use of spreadsheets is widely prevalent in the Health Insurance Provider’s organization, especially in the finance and accounting department for complex data modelling, manipulation and account reconciliation. Several years ago, an inadvertent mistake occurred in a financial statement, due to a formula being accidentally changed in one of the spreadsheets that was feeding into the report.
While the error was caught in a timely manner, the risks that spreadsheet errors posed to the business clearly came to light. At the time, the organization had no reliable controls in place to ensure the accuracy and integrity of data that was being used for financial and regulatory reporting.
“Spreadsheets errors are a source of financial, operational and reputational risk, which can cause significant and long-term damage to a business,” elaborated Henry Umney, CEO, ClusterSeven. “Due to the complexity of spreadsheet applications, manual processes for spreadsheet control and management always fall short.”
Recognizing the gap in the organization’s risk management processes, the Health Insurance Provider’s board decided to proactively undertake measures to pre-empt such errors from repeating.
The Health Insurance Provider investigated a number of spreadsheet management solutions, selecting us for our consultative approach and a widely deployed and proven product portfolio in the financial services sector.
All the most business critical spreadsheets are registered in the ClusterSeven platform and are routinely, non-intrusively monitored for changes with authorization and escalation processes to ensure integrity of data and that information that is being fed into financial statements is accurate and correct. Our solution has been configured to allow the organization to manage the review and sign off processes, right down to critical cells in high-risk spreadsheets Today, the platform is deployed in the organization’s finance department with over 50 employees using the solution.
The finance department at the Health Insurance Provider has a complete understanding of its spreadsheet landscape based on a thorough inventory of files, the relationships between them alongside the associated risks. Our solution enabled the department to categorize the spreadsheets, tiered by their criticality and risk to the business.
As a not for profit organization, the Health Insurance Provider is subject to the Model Audit Rules, the industry’s counterpart to the Sarbanes Oxley Act of 2002 (SOX). Our technology is enabling the organization to demonstrate compliance with MAR, by providing auditable evidence that the organization has all the necessary controls in place to ensure corporate governance and financial accountability.
“We see ClusterSeven as a major control to help ensure regulatory compliance and accuracy of financial reporting,” the Manager, Finance Compliance at the Health Insurance Provider commented.
“In the current business environment where financial and regulatory scrutiny is at its highest yet, spreadsheet management is a key risk management function,” the Manager, Finance Compliance added. “We are now looking to upgrade to the latest version of ClusterSeven’s platform to benefit from more advanced functionality and will be exploring all options for deployment, including in the cloud.