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

Spreadsheet Development, Auditing, & Control Tools

INFORMS 2004, Denver

Roger GrindeWhittemore School of Business &

EconomicsUniversity of New Hampshire

[email protected]

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.)

Recent Errors (Made Public) 10/12/04. Business Council (125 US CEOs) revised

economic forecast. From 0-2% growth, to 2.1-4.5% 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.”

Confluence of Interests

Organizational “embarrassments” Regulations Spreadsheet Auditing & Control

Software Consultant, Developer, and User

Community Academic Research

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

Current Focus

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

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

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

Design Tools Diagramming/Framing Tools Possible Interface to Spreadsheet Model

Example: Influence DiagramModulesInputs/OutputsInitial Spreadsheet Layout

Alternatives (among others) Visio iGrafx FlowCharter Built-In Office Tools

Currently, not much of a direct link to spreadsheet model design.

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.

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.

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).

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

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

Feature Mapping: Auditing Tools

ProductPrecedence/De

pendence

ID Unique & Copied

Formulas

Data & Referencing

ProblemsWorkbook Summaries

Version Control / Comparison

Execution Testing

Productivity Aids

Multi-Model Management

Excel Smart Tools Auditor Y N Y Y Y N N NExChecker Y Y Y Y Y N N YOperis Analysis Kit Y Y Y Y Y N Y NRainbow Analyst Y Y Y Y Y N N NSpACE (HMCE)

Spreadsheet Detective Y Y Y Y Y Y N NSpreadsheet Professional Y Y Y Y Y Y N NThe Excel Auditor Y Y N Y N N N NXLSior N N N Y Y Y N NXLSpell (with XDrill) Y Y Y Y N N NCode Tracer Y N N N N N N NDSLimited Tools - dsCopyFinder N Y N N N N N NDSLimited Tools - dsSummarizer N N N Y N N N NExcel Compare N N N N Y N N NExplode Add-In Y N N N N N N NMaster Tools Y Y N N N N Y NReference Browser Y N N N N N N NSpreadsheet xlNavigator Y N N N N N N NSynkronizer 8.0 N N N N Y N N NXdrill Y N Y N N N N NXL Analyst N Y Y Y N N N N

Features: Development Tools

ProductPrecedence/De

pendence

ID Unique & Copied

Formulas

Data & Referencing

ProblemsWorkbook Summaries

Version Control / Comparison

Execution Testing

Productivity Aids

Multi-Model Management

ActiveData N N N Y Y N Y YAppsPro Utilities N N N N N N Y NASAP Utilities N N N N N N Y NEAT Toolpack N N N N N N Y NFastTrack for Excel Y N N N N N Y NModeling ToolPack Y N N N N N Y NNavigator Utilities N N N N N N Y NOZGrid Analysis Collection N N N N N Y Y NPower Utility Pack N N N Y Y N Y NSpreadsheet Composer N N N N N N Y N

ProductPrecedence/De

pendence

ID Unique & Copied

Formulas

Data & Referencing

ProblemsWorkbook Summaries

Version Control / Comparison

Execution Testing

Productivity Aids

Multi-Model Management

CIMCON einfotree N N N N Y N N YClusterSeven XiGence Suite N N N N Y N N YDaCS N N N N Y N N YPerpetual Workbook N N N N Y N N Y

Features: Control Tools

Illustrations: Using Galletta Spreadsheet (1996)

Seeded with Errors

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1011121314151617181920

A B C D E F GCash Budget Assuming 2%

Fall Spring Summer OverallCash, beginning $1,000 $1,360 $673Outflows - School costs $4,468 $4,474 $4,480 $13,422

Living Costs $4,172 $4,213 $4,485 $12,870Inflows - Loans $3,000 $3,000 $3,000 $9,000Support from home $6,000 $5,000 $6,000 $17,000Cash, end $1,360 $673 $980 $3,013

======= ======= ======= =======School (contractual): Tuition $4,115 $4,115 $4,115 $12,345Fees $53 $53 $53 $159School (other): books/supplies $300 $306 $312 $918Living (contractual) MONTHLY MONTHSHousing $450 4 $1,800 $1,800 $1,800 $5,400Insurance $53 4 $212 $212 $212 $636Living Costs (other)Food $330 4 $1,320 $1,346 $1,373 $4,039Entertainment $150 4 $600 $612 $624 $1,836Transportation $40 4 $160 $161 $164 $485Clothing $21 4 $80 $82 $84 $250

inflation/semester

Precedence & Dependence

Examples Explode Add-In Spreadsheet Detective Ex Checker

P/D: Explode

Shown with Explode Add-In

Text-based precedence & dependence browsing.

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

The Spreadsheet Detective Precedent ReportDouble click on a row to go to the corresponding cell, press F5 to return to this worksheet

Cell Label Formula Depth

'Model Copy'!F8 `Summer`CashEnd = F3`CashBegig - F4`Out-SchCos - E5`Spring`LiviCosts + F6`Infl-Loans# + F7`SupFroHom +

'Model Copy'!F3 `Summer`CashBegig = E8`Spring`CashEnd ++

'Model Copy'!E8 `Spring`CashEnd = E3`CashBegig - E4`Out-SchCos - E5`LiviCosts + E6`Infl-Loans# + E7`SupFroHom +++

'Model Copy'!F4 `Summer`Out-SchCos = SUM(F10:F12`SchoTuitn:`SchBoo/su) ++

'Model Copy'!F12 `Summer`SchBoo/su = ROUND(E12`Spring * (1 + $D$1`Assumng#) , 0) +++

'Model Copy'!E5 `Spring`LiviCosts = SUM(E14:E20`Housing:`Clothng) ++

'Model Copy'!E14 `Spring`Housing = D14`Fall +++

'Model Copy'!E17 `Spring`Food = ROUND(D17`Fall * (1 + $D$1`Assumng#) , 0) +++

'Model Copy'!E19 `Spring`Transon = ROUND(D19`Fall + (1 + $D$1`Assumng#) , 0) +++

'Model Copy'!E20 `Spring`Clothng = ROUND(D20`Fall * (1 + $D$1`Assumng#) , 0) +++

'Model Copy'!F7 `Summer`SupFroHom = ROUND(1000 + F4`Out-SchCos + F5`LiviCosts - F3`CashBegig - F6`Infl-Loans# , - 3) ++

'Model Copy'!F4 `Summer`Out-SchCos = SUM(F10:F12`SchoTuitn:`SchBoo/su) +++

'Model Copy'!F5 `Summer`LiviCosts = SUM(F12:F19`SchBoo/su:`Transon) +++

'Model Copy'!F3 `Summer`CashBegig = E8`Spring`CashEnd +++

P/D: Ex Checker

Source/Copied Formula Analysis

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1011121314151617181920

A B C D E F GCash Budget Assuming 2%

Fall Spring Summer OverallCash, beginning $1,000 $1,360 $673Outflows - School costs $4,468 $4,474 $4,480 $13,422

Living Costs $4,172 $4,213 $4,485 $12,870Inflows - Loans $3,000 $3,000 $3,000 $9,000Support from home $6,000 $5,000 $6,000 $17,000Cash, end $1,360 $673 $980 $3,013

======= ======= ======= =======School (contractual): Tuition $4,115 $4,115 $4,115 $12,345Fees $53 $53 $53 $159School (other): books/supplies $300 $306 $312 $918Living (contractual) MONTHLY MONTHSHousing $450 4 $1,800 $1,800 $1,800 $5,400Insurance $53 4 $212 $212 $212 $636Living Costs (other)Food $330 4 $1,320 $1,346 $1,373 $4,039Entertainment $150 4 $600 $612 $624 $1,836Transportation $40 4 $160 $161 $164 $485Clothing $21 4 $80 $82 $84 $250

inflation/semester

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

Formula Analysis

Formula Reports (Galletta example using SS Detective)

Map and Complexity Measures (Galletta example using Power Utility Pack)

Workbook/Worksheet Reports

Galletta Example using Power Utility Pack

Galletta Example using XLAnalyst

Native Excel

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

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.

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)?

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

Thank You! Questions?