Regulatory Update Dean Buckner UK Financial Services Authority July 2007

Regulatory Update

Dean Buckner

UK Financial Services Authority

July 2007

Summary

• As is now customary I shall review progress in the areas of compliance and spreadsheet risk management, over 2006-7

The issues …

• Change of mindset (industry, senior mgt, IT)

• User training• No “good practice”• Accreditation• Audit awareness• Data standards• Spreadsheet support

Management mindset

• Spreadsheets are increasingly accepted as strategic solutions

– A major change from five years

– Many firms have given up on the ‘big solution’

• Risk magazine takes note

– The house journal of quantitative finance• June 2007 issue

User training

• Most problems are still the result of poor use of EUC solutions

• Good training the obvious solution

• But little budget!

– Some changes from last year

– But I am still seeing ‘dumb solutions’ that training would have easily prevented

• A mitigating factor is the increasing use of spreadsheet control systems

Other mitigants

• More firms using spreadsheets in a way that makes sense

– E.g. using the strong pivot functionality in Excel with back-end relational databases

– Commerzbank switching data aggregation from spreadsheets to computing grid

– More technical solutions that take the compliance burden away from the user

Good practice

• Little change from last year

– Policy tends to be very high level

– No industry view on good practice

Accreditation

• No change

– Accreditation seen as burdensome and risky

– And difficult (implies generally accepted view on good practice, for a start)

Audit

• Continues to improve

– Increasing mention of spreadsheets in audit reports

– General progress over 2003-6

– And EUC part of audit plans

Data

• Data processing – spreadsheets now standard across the industry

• Increasing use of compliance tools

• Limitation on spreadsheet size was only constraint (but not any more!)

Microsoft

• Biggest development of 2007• Dialogue between firms, Microsoft and

FSA• Attempts to address:

– Code fragmentation problem– Lack of audit trail– Version control

• However, now 1m rows, 16k columns!

Eusprig

• Getting away from early obsession with ‘errors in spreadsheets’

• Needs to understand control environment in firms

Questions & Comments