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Spreadsheet Development, Auditing, & Control Tools INFORMS 2004, Denver Roger Grinde Whittemore School of Business & Economics University of New Hampshire.

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Presentation on theme: "Spreadsheet Development, Auditing, & Control Tools INFORMS 2004, Denver Roger Grinde Whittemore School of Business & Economics University of New Hampshire."— Presentation transcript:

1 Spreadsheet Development, Auditing, & Control Tools INFORMS 2004, Denver Roger Grinde Whittemore School of Business & Economics University of New Hampshire

2 Context Spreadsheet Errors Happen Regulations VAT, FDA, SOX Spreadsheet Risk Likelihood of Errors Impact of Errors Love them or hate them, spreadsheets exist! “Business always moves too fast for traditional systems to keep up. The gap is filled by the ubiquitous Microsoft Office suite of desktop programs, particularly Excel.” (Cluster Seven Ltd.)

3 Recent Errors (Made Public) 10/12/04. Business Council (125 US CEOs) revised economic forecast. From 0-2% growth, to % growth “It was a computational error. The spreadsheet shifted so the wrong numbers appeared in the wrong columns…It was just one column on the spreadsheet.” “…has never happened before in the survey’s history.” 8/12/04. City of Richmond, VA. Overstated sales revenue from new shopping mall. From Sept-Dec 2003, sales reported to be $80 million; actual sales were $57 million. “The city blamed its mistake primarily on an error in a spreadsheet formula, which amplified a subtotal amount.” “It was a clerical error.”

4 Confluence of Interests Organizational “embarrassments” Regulations Spreadsheet Auditing & Control Software Consultant, Developer, and User Community Academic Research

5 Literature Spreadsheet Error Research Empirical studies. Detecting errors in small spreadsheets, building spreadsheets, code inspection, peer- and self-audit, classification of spreadsheet errors Spreadsheet Auditing Research Field audits, spreadsheet risks, which models to audit, development of auditing tools, comparison of tools Spreadsheet Software Research Theoretical models of spreadsheet software, user- centered approach for functions, alternate paradigms

6 Current Focus Tools for related phases of spreadsheet life cycle Design Development/Productivity Auditing: Review & Testing Management & Control

7 Types of Spreadsheet Users (Jones, Blackwell, Burnett 2003) Basic Managing & printing a list of information Very simple formulae, e.g., =SUM(A1:A10) Moderate Understand spreadsheet paradigm fairly thoroughly. Mastered pre-requisites, tackle more ambitious and long- lived applications e.g., mastered absolute and relative cell references Advanced Understand Visual Basic and can write user-defined functions and procedures e.g., mastered array functions

8 Classification of Spreadsheet Errors References Panko & Halvorson (1996); Chadwick, Knight, & Rajalingham (2001), Rajalingham, Chadwick, & Knight (2002) Software Errors User Errors Quantitative Errors Mechanical Errors Logical Errors Omission Errors Qualitative Errors Structural Errors Temporal Errors

9 Design Tools Diagramming/Framing Tools Possible Interface to Spreadsheet Model Example: Influence Diagram  Modules  Inputs/Outputs  Initial Spreadsheet Layout Alternatives (among others) Visio iGrafx FlowCharter Built-In Office Tools Currently, not much of a direct link to spreadsheet model design.

10 Development Tools “Productivity” Tools. Primary purpose is to ease the development of a spreadsheet model/application Example Capabilities Assistance in writing formulas, manipulating data, type conversions, text handling. Range name management Sheet/workbook management Enhanced selection & search tools Conversion tools (e.g., export as JPG or EPS) Number of available tools with a variety of capabilities. Some fairly specialized.

11 Auditing Tools Tools to help the modeler perform spreadsheet model verification. Review (“Code Inspection”) Execution Testing Example Capabilities Workbook Summaries Formula Analysis, Referencing Problems Precedence/Dependence Analysis Structure analysis, model design Worksheet/book comparisons Execution testing Native Excel has a level of some of these tools. Several “suites” available as well as a number of “focused” tools.

12 Management & Control Tools Tools to assist in the management and control of spreadsheet models within the firm Example capabilities Version management & control Access and change control Change logging Security Sarbanes-Oxley Act of 2002, Section 404 “The requirements under Section 404 of the Sarbanes Oxley Act increase the focus on controls related to the development and maintenance of spreadsheets.” (PWC, July 2004).

13 Spreadsheet Tools Sources Web searches Lists of add-ins Mentioned in papers Reviewed literature for tools, categorized into one of four categories, assessed feature set at high level Tools found Design: none (with direct spreadsheet integration) Development/Productivity: 10 Auditing: 10 “suites”, 11 “focused” Control: 4 Overlap between categories exists

14 Features Precedence & Dependence Browsing Identify unique vs. (apparent) copied formulas, identify inconsistent formulas Data & referencing problems Workbook summaries Version control and comparison of worksheets/workbooks. Execution testing Productivity aids Multi-Model management

15 Feature Mapping: Auditing Tools

16 Features: Development Tools Features: Control Tools

17 Illustrations: Using Galletta Spreadsheet (1996) Seeded with Errors

18 Precedence & Dependence Examples Explode Add-In Spreadsheet Detective Ex Checker

19 P/D: Explode Shown with Explode Add- In Text-based precedence & dependence browsing.

20 P/D: Spreadsheet Detective Precedent Reports (Galletta example from SS Detective)example

21 P/D: Ex Checker

22 Source/Copied Formula Analysis Shown with Spreadsheet Detective Add-In Identifies “unique” formulas, and effective copying operations Can reduce amount of manual code inspection required.

23 Formula Analysis Formula Reports (Galletta example using SS Detective)example Map and Complexity Measures (Galletta example using Power Utility Pack) example

24 Workbook/Worksheet Reports Galletta Example using Power Utility Pack Galletta Example Galletta Example using XLAnalyst Galletta Example

25 Native Excel Precedents/Dependents Error Checking Trace Error Evaluate Formula Watch Window Track Changes

26 Observations “Advanced” Excel features (e.g., Solver, Pivot Tables, VBA) are not treated in great detail by the auditing tools. Lack of design tools that help user/modeler to frame problem and develop initial model structure. Anticipate a stronger linkage between auditing tools and control tools as regulations become more widespread.

27 Questions How effective are auditing tools in identifying errors? How effective are auditing tools in helping user identify errors? How common are false positives and false negatives? For which users can auditing tools be of benefit? Which models should be audited? (Butler, 2000) Can using these tools help to improve skills of users/modelers? How much structure can be imposed on the user/modeler in the design stage (e.g., Lotus Improv)?

28 Need for Research Detailed survey of tools, capabilities Comparison “Shootout” Laboratory models Real-world spreadsheets Empirical Studies Use of audit tools by end users Do users find more errors? Are they faster? Effect of larger models Spreadsheet Engineering Control tools can help track model development process Tools to help improve a “basic” user’s modeling capabilities. Spreadsheet software improvements and paradigm shifts. Reverse Engineering a “spaghetti” spreadsheet Use of tools in teaching Auditing tools to assess student spreadsheets Control tools to track development process Student use of auditing tools

29 Thank You! Questions?

30 Spreadsheet Auditing Tools Main goal is to assist the user in locating errors in a model. What constitutes an “error” in a spreadsheet? What are the different types? What types of errors can SA tools help to detect? How effective are they?


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