Spreadsheet Error And Role of Euc Assignment

Running head: SPREADSHEET ERRORS 1
Spreadsheet Errors and How They Can be Minimized
Name
Institution

SPREADSHEET ERROR AND ROLE OF EUC 2
Spreadsheet Error and Role of EUC in Organizations
Background
Cymru Capital Investments (CCI) is a mid-sized investment bank, with offices
throughout Europe and the United States. So far, the company has employed 20,000 people,
whose core role is to underwrite securities, e.g. shares and bonds, from other financial
corporations as well as the state. The company also engages in active trading of derivatives,
foreign exchange, and other commodities, thus recording profits as high as $2.9 billion, as at the
end of the last financial year. Just like other typical financial institutions, CCI has incorporated
two formal systems to help with its underwriting activities, namely ‘Deal Capture System’ and
‘Aladdin Model Builder’. Nonetheless, it was recently discovered, during an internal audit, that
the bank’s employees frequently used the MS Excel spreadsheets for execution of majority of
their underwriting tasks, e.g. expense accounting, data storage for their clientele contact
information, critical decision making on security risks, resource planning, and financial
modelling among other administration activities. The internal audit also revealed that the
spreadsheets developed had not undergone testing or formal documentation. Worse still, the
heads of departments disclosed that they had a lean understanding of how spreadsheets function,
hence could not confidently conclude that the information derived from the spreadsheets was
thoroughly accurate. Instead, the heads of departments admitted that they merely signed off the
EUC policy documentation, which stipulates that it is the duty of HoDs to declare that the
information held in the spreadsheets is accurate, in good faith. From the information given
above, it is evident that CCI might be putting itself at great risk with regards to underwriting

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securities, thanks to its heavy reliance on spreadsheets, and the lack of surety of the HoDs
regarding the accuracy of the information obtained. For this reason, the auditors reported their
concerns to the senior management team, who have, in turn, requested a report outlining the risks
to CCI and a pragmatic approach to managing the risks to which the bank is exposed.
Task 1
The purpose of Task 1 is to outline the risks associated with spreadsheet use and relate
this to CCI’s spreadsheet activities and practices. The section shall also highlight the specific
risks CCI faces and comment on any poor practice evident.
As earlier stated, CCI is a mid-sized investment bank, whose core business purpose is to
purchase and underwrite securities, such as shares and bonds, from other financial entities and
the government. To perform these tasks, a financial platform is required for purposes of
accounting and computation of voluminous numerical data in order to assess a client’s cash flow
analysis, credit worthiness, and loan portfolio risk factors (Anderson, Mostert, & Mostert, 2014).
The MS Excel spreadsheets suffice as the ideal financial platform with which to perform these
underwriting computations; since the spreadsheets application is fitted with built-in arithmetic
and mathematical functions, as well as logic, financial, and statistical operations, which enable
the end-user to conduct any math-related tasks in the infinite rows and columns. For this reason,
many underwriters, accountants, and financial experts regularly resort to the MS Excel
spreadsheets as their main operations program.
1.1. Benefits of Using Spreadsheets
As Bralow (2016) explains, there are several reasons why many individuals prefer using
spreadsheets for their computation activities, as opposed to other programs. To begin with, the
program, spreadsheets, is simple to use and increasingly flexible. Spreadsheets contains a

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multifold of features that eases the computation process of tabular data (Data Science, 2019).
The application contains built-in formulas and statistical operations, charts, data tools, and data
analysis capabilities, thus enabling the end-user to perform quick automated calculations and
analysis on data given. Also, the program is designed using a user-friendly concept, hence is
interactive and easy to learn. Actually, Locsin (2019) states that end-users of the application are
longtime consumers of the product, since their days in high school and college, hence are well
accustomed to the ins and outs of the program prior to entering the workforce. The ease of use
and familiarity with the program is clearly evident in the case of the CCI’s employees, who when
questioned, reported that they prefer using spreadsheets, as opposed to the two formal systems
incorporated in the company, namely Aladdin model builder and Deal capture system. They
further justified their preference for spreadsheets, claiming that the spreadsheet software is
simple, flexible, and easy to use, hence making it the primary means of calculating risk levels,
pricing levels, brokering deals, negotiations. The reliance on spreadsheets in CCI is so pervasive
that the report by the internal audit reported an excess of 50,000 operational spreadsheets across
the organization, which range from trivial expenses claims through to complex financial
spreadsheet models.
1.2 Risks and Disadvantages of Using Spreadsheets
1.2.1 Potential System Crashes and Data Loss
In as much as spreadsheets have their distinct benefits in a company, Weedmark (2019)
asserts that the application is not the optimal platform for performing large volumes of
accounting or underwriting data or decision making. Several reasons justify this statement. To
start with, spreadsheets is configured to compute small volumes of data, and not large volumes,
hence is ill-equipped to incorporate or consolidate all the input entities of underwriting data