'Computer errors cost banks'
Jonah Iboma
Chris Ekeigwe,Managing consultant, EDP Audit and Security Associates, has revealed that computer errors can cost banks billions of naira annually principally because they are largely undetected.
Speaking to newsmen on the scheduled training on Bank Revenue Assurance with Digital Data Analytics for August 24-27. 2007, at EDP Tecknowledge Education Center, in Lagos, he stated that, “no amount of testing will guarantee that computer programs will work perfectly as specified. There is always some residual risk. The solution lies in continuous post implementation testing and assurance”. Stop-go control measures are not suitable for Nigeria’s high technology banking environment;, he added. He lamented that most top managers, unfortunately simply think that once the user acceptance testing (UAT) is done and signed-off the computer will work as proven, as desired.
Ekeigwe revealed that the Nigerian banking industry loses billions of naira every year due to unaccountable computer errors noting that automated continuous control with ACL audit software is the key solution. Banks should be able to leverage ACL digital data analytics software to provide continuous analysis of data and internal controls to capture and correct problems before they become material. The ultimate goal should be to provide an independent assurance of the integrity of transactions." That is where consultants like EDP are required.
The systems security reliability enthusiast said that it is to help banks deal with the problem, that EDP Audit & Security Associates has developed a new line of service called Bank Revenue Assurance. EDP has worked with some top tier banks in Nigeria to prove this revenue assurance concept. The banks that have taken advantage of this service have been able to identify and recover billions of naira. According Ekeigwe, “EDP pioneered bank revenue assurance in the world; we are the first firm to introduce the service to the banking industry of the world. We are set to export the services now to South Africa, Europe, North America and Asia; our consultants are technologically poised for the challenges.”
According to him, “Based on our field experience and many ‘proof of concept (POC)’ projects, our consultants have developed a Bank Revenue Assurance training stream for bank auditors and internal control officers to transfer skills to bank executives. Internalizing the revenue assurance skill is a good strategy to enable banks does it on a continuous basis. This course is based on the world’s number one audit software, ACL, a Canadian product. Utilizing ACL data analytics technology, EDP consultants develop audit and control scripts that test the integrity of business data, isolate error exception, recalculate the transaction to accuracy and determine recoveries to be made. Because ACL is technologically powerful, it can deal with multiple platforms, simultaneously analyzing terabytes of data according to established business rules to detect income eroding deviations.
Chris Ekeigwe defined Bank Revenue Assurance Analytics as "an emerging business assurance role critical to the achievement of concrete internal control objectives. It is a service that detects and excises the ‘devil in the details’ which other internal services might not notice. The benefits come in concrete cash flow terms, such as recovery of lost revenue. The ultimate goal of internal control is to help an organization achieve its objectives which translates to profitability and cash flow. Revenue assurance helps to liberate lost profitability and cash flow entrapped in system errors.
H insisted, “in fact, most frauds are rooted in unaccountable errors discovered by employees who then exploit the condition. Therefore, it is important, from the point of view of fraud prevention, that revenue assurance activities should identify these errors before the bad guys do.”
Computers have become ordinary part of business all over the world, perhaps inalienable part of business operations. Many benefits have accrued from the use of computers in offices. However, recent events have shown that the downside of computers may cost a business billions in revenue losses and in some cases may result in liabilities too. This calls for due diligence on part of management to ensure that appropriate steps are taken to realize only positive benefits from the use of computers by auditing systems to reliability on a regular basis.
In May 2006, Citibank computers (branches in Japan), the world’s most secure private sector computer facilities, glitched the bank’s operations, resulting in the misplacement of 275,000 transactions (duplications, outright omissions, income udercharges, etc). The errors were so massive that the financial regulatory authorities in Japan had to step in to protect depositors and reprimanded the bank. According to the BBC, “Citibank said that the computer problems from 2 May to 8 May were caused by errors in a new computer system that occurred despite testing.”
Chris Ekeigwe,Managing consultant, EDP Audit and Security Associates, has revealed that computer errors can cost banks billions of naira annually principally because they are largely undetected.
Speaking to newsmen on the scheduled training on Bank Revenue Assurance with Digital Data Analytics for August 24-27. 2007, at EDP Tecknowledge Education Center, in Lagos, he stated that, “no amount of testing will guarantee that computer programs will work perfectly as specified. There is always some residual risk. The solution lies in continuous post implementation testing and assurance”. Stop-go control measures are not suitable for Nigeria’s high technology banking environment;, he added. He lamented that most top managers, unfortunately simply think that once the user acceptance testing (UAT) is done and signed-off the computer will work as proven, as desired.
Ekeigwe revealed that the Nigerian banking industry loses billions of naira every year due to unaccountable computer errors noting that automated continuous control with ACL audit software is the key solution. Banks should be able to leverage ACL digital data analytics software to provide continuous analysis of data and internal controls to capture and correct problems before they become material. The ultimate goal should be to provide an independent assurance of the integrity of transactions." That is where consultants like EDP are required.
The systems security reliability enthusiast said that it is to help banks deal with the problem, that EDP Audit & Security Associates has developed a new line of service called Bank Revenue Assurance. EDP has worked with some top tier banks in Nigeria to prove this revenue assurance concept. The banks that have taken advantage of this service have been able to identify and recover billions of naira. According Ekeigwe, “EDP pioneered bank revenue assurance in the world; we are the first firm to introduce the service to the banking industry of the world. We are set to export the services now to South Africa, Europe, North America and Asia; our consultants are technologically poised for the challenges.”
According to him, “Based on our field experience and many ‘proof of concept (POC)’ projects, our consultants have developed a Bank Revenue Assurance training stream for bank auditors and internal control officers to transfer skills to bank executives. Internalizing the revenue assurance skill is a good strategy to enable banks does it on a continuous basis. This course is based on the world’s number one audit software, ACL, a Canadian product. Utilizing ACL data analytics technology, EDP consultants develop audit and control scripts that test the integrity of business data, isolate error exception, recalculate the transaction to accuracy and determine recoveries to be made. Because ACL is technologically powerful, it can deal with multiple platforms, simultaneously analyzing terabytes of data according to established business rules to detect income eroding deviations.
Chris Ekeigwe defined Bank Revenue Assurance Analytics as "an emerging business assurance role critical to the achievement of concrete internal control objectives. It is a service that detects and excises the ‘devil in the details’ which other internal services might not notice. The benefits come in concrete cash flow terms, such as recovery of lost revenue. The ultimate goal of internal control is to help an organization achieve its objectives which translates to profitability and cash flow. Revenue assurance helps to liberate lost profitability and cash flow entrapped in system errors.
H insisted, “in fact, most frauds are rooted in unaccountable errors discovered by employees who then exploit the condition. Therefore, it is important, from the point of view of fraud prevention, that revenue assurance activities should identify these errors before the bad guys do.”
Computers have become ordinary part of business all over the world, perhaps inalienable part of business operations. Many benefits have accrued from the use of computers in offices. However, recent events have shown that the downside of computers may cost a business billions in revenue losses and in some cases may result in liabilities too. This calls for due diligence on part of management to ensure that appropriate steps are taken to realize only positive benefits from the use of computers by auditing systems to reliability on a regular basis.
In May 2006, Citibank computers (branches in Japan), the world’s most secure private sector computer facilities, glitched the bank’s operations, resulting in the misplacement of 275,000 transactions (duplications, outright omissions, income udercharges, etc). The errors were so massive that the financial regulatory authorities in Japan had to step in to protect depositors and reprimanded the bank. According to the BBC, “Citibank said that the computer problems from 2 May to 8 May were caused by errors in a new computer system that occurred despite testing.”
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