Manager Altered Spreadsheet...Violates SOX or Not? 959
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Hello, All -
My manager changed an incorrect formula in an Excel spreadsheet that provides source documentation for trainer evaluations used in performance appraisals. A formula in the workbook for each of 4 trainers worksheets was supposed to calculate the numeric values in the spreadsheet to provide an average point value for several criteria (training delivery, pace of class, instructor’s knowledge, etc.).
Apparently, the formula in every criteria category on trainer #1’s worksheet contained a formula that actually pulled the numbers from a trainer #2’s worksheet instead of averaging the numbers for Trainer #1. The incorrect information (as a result of the erroneous formula) on Trainer #1’s worksheet resulted in a negative impact on the annual performance review for Trainer #1. In a nutshell, the trainer received an inaccurate and unfair rating because the formula used to average the scores was in error.
When the Manager learned of the error, Manager proceeded to change the formula and not attempt to correct the error on Trainer #1’s performance appraisal (which resulted in no promotion, no raise, and no consideration for a recent promotion). As a team member, I found out quite by accident about the error and this alleged altering of corporate documents.
I have found that actually two different Excel files used as source documentation for performance appraisals…one was changed and the other was not…the erroneous formula still exists on Trainer #1s worksheet in the second file…manager forgot to change the formula in Document #2. I have captured the information in screenshots just in case Manager discovers that changes were not made to file #2 and tries to go back and change the information.
Is the altering of corporate documents (including source documents that provide information for performance aprpaisals and other HR functions) illegal according to SOX? What would you do?
Thank you.
Cricket
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It does not sound to me like there was any impact on the company’s financial statements. OK, you may need to give the person a backdated raise, but as long as the transactions are all recorded correctly in the payroll and then the FS, the impact for SOX is nil.
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Why would correcting a formula error be considered a policy violation?
SOX does not address any types of controls specifically. It only requires that you have selected a suitable control methodology to follow and that identified controls over financial reporting are tested for effectiveness.
The only violation of SOX would be if the annual assessment of the effectiveness of your controls was mis-reported.
I understand your concern about someone making an change to a significant spreadsheet. Do you have a corporate policy on spreadsheet controls? If not, how could there be any violation of the control? If a policy is in place, did this individual have authorized access to the spreadsheet? Was he authorized to make any changes?
It sounds like there may have been inadequate controls in place to follow through on the impact of any changes made to the spreadsheet, but these (to me) represent operational controls, not financial controls.