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Regulatory Update

Regulatory Update. Dean Buckner UK Financial Services Authority July 2005. Summary. In 2003 I made keynote speech to Eusprig Highlighting areas where FSA concerned about spreadsheet use in financial industry Today I shall review progress made in these areas

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Regulatory Update

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  1. Regulatory Update Dean Buckner UK Financial Services Authority July 2005

  2. Summary • In 2003 I made keynote speech to Eusprig • Highlighting areas where FSA concerned about spreadsheet use in financial industry • Today I shall review progress made in these areas • As always, there is good news and bad

  3. Issues in 2003 • Change of mindset (senior mgt, IT) • User training • No “good practice” • Accreditation • Audit awareness • Data standards • The “M” problem

  4. Management mindset • We would like firms to have an IT strategy on spreadsheets • More than just “aim to replace them”! • Some good news • IT directors increasingly admit need for strategy • One bank now explicitly recognise this (Case study I) • Sarbanes Oxley implications • Bad news • Hard to see “big picture”

  5. User training • Most problems the result of poor use of EUC solutions • Falls under “stupid practice” • (Case study II) • Good training the obvious solution • But no IT budget! • This would mean explicit acceptance of supposedly “tactical” solutions • Connects with IT strategy issue

  6. Good practice • Good news • EUC policy now becoming a standard (in banks at least) • Bad news • Policy tends to be very high level • Eusprig has no view on good practice • FSA’s position is that this is industry issue

  7. Accreditation • No good news • Accreditation seen as burdensome and risky • And difficult (implies generally accepted view on good practice, for a start)

  8. Audit • Very good news • We are seeing more mention of spreadsheets in audit reports • Doesn’t mean spreadsheet use increasing! • Does mean that auditors now recognise spreadsheets exist! • And EUC part of audit plan • Thanks to Eusprig • Impact of Sarbanes Oxley?

  9. Data • Data processing is the biggest problem • Mostly done on spreadsheets, via ad-hoc and “hacky” downloads • Increasing use of ACCESS in bad ways • No “vested interest” in good data (even in Eusprig community) • Basel has helped a bit • Concept of “data ownership” • Sarbanes-Oxley may help

  10. “M” problem • Some good news • Dialogue opened up with banks and FSA • Apparent willingness • But obvious difficulties • Which problems are “M” specific? • Or is it just bad use of a good tool? • Some issues: code fragmentation, poor help, poor data transfer (try moving UK date formats from ACCESS to EXCEL), 256 column problem, ACCESS security &c &c

  11. Sarbanes Oxley • Requires firms to demonstrate that controls around financial reporting are adequate • Requires auditor to • Assess effectiveness of management assessment of internal controls • Assess effectiveness of internal controls • Requirement to demonstrate EUC controls is particularly onerous (because they are usually not documented)

  12. Questions & Comments

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