A new fraud case just surfaced in the Financial Times involving spreadsheets. This time, a fund manager at BlueBay Asset Management named Simon Treacher “carefully cut out and pasted different figures on to seven original broker quotes”. The quotes (i.e. spreadsheets) were then provided to administrators who were valuing the assets in the UK-based fund he managed.
The result: an artificial boost in valuation of the fund by $27 million. Nice, unless your an investor. When BlueBay discovered the mis-markings, they closed down the fund, which lost 80% of its value as a result. Then came the fines and damage to company reputation and image.
Bottom line: all firms are at risk when uncontrolled and unmonitored spreadsheets, Access databases and other EUCs are used in critical processes such as reporting on book values. If you combine the autonomy of users who can make changes to spreadsheets, personal motivation, and the current economic environment, then you have the perfect storm for spreadsheet fraud. The best way to mitigate the risk of spreadsheet fraud is to develop a culture of awareness and a new controls to mitigate it.
Last month I wrote about The Spreadsheet Risk Continuum in which spreadsheet and EUC risk can efficiently be mitigated through by adopting a formal policy on EUC control, defining internal controls for EUCs, leveraging best practices, and deploying new technology. It’s worth a read for any organization evaluating their EUC risk.
For more details on the BlueBay fraud case, you can access the full story at FT.com.
Eric Perry
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