Breaking the Excel Habit


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Many years ago, a survey of computer usage showed that Lotus 1-2-3 was the most commonly used spreadsheet, database, graphics package and word processing package used by members of the American Institute of CPAs. Replace the nearly forgotten Lotus package with the almost universally used Microsoft Excel, and the results would probably be the same. Accountants use Excel for everything, including tasks it really wasn't designed for.

"In the Lotus days, I used to try to teach our staff that a spreadsheet is not the correct tool for everything," says Peter Frank, principal with Manhattan-based Cornick, Garber & Sandler

Frank, a CPA and CITP, is the firm's technology partner and hosts regular staff luncheons to discuss technology issues, such as the use of software applications.

Partner Insights

There have been changes - the firm once used a spreadsheet for write-up work but now uses Quicken and QuickBooks, which are quicker to use, but which are inherently more secure than Excel since they are built on a database.

But he notes that, "We still use Excel as much or more for that we ever did, but not deliverables." That's in part due to a fact that Cornick Garber's consulting business is smaller than it once was.

However, the use of Excel to produce budgets for corporations and for generating financial reports, especially for publicly held companies, has become an even greater concern than ever.

SOX Sharpens Focus on Excel

The fact that Excel can create problems in generating and distributing financial information has long been known. But it took the new generation of regulation to put some urgency in doing something about overuse of Excel.

"This is something that really came into focus when Sarbanes Oxley was rolling out," says Tony Munns, the member of Brown Smith Wallace, who runs the risk management practice for the St. Louis-based firm.

And it's not just the small businesses that are using Excel the wrong way.

"So many companies, right up to the Fortune 500, do their final analysis and consolidation in Excel spreadsheets," says Munns. "Anyone can deliberately or accidentally change a field and it won't necessarily be found."

It's not uncommon for Munns and his team to work with Fortune 500 companies, which utilize the spreadsheet for rolling up accounts, but end up with new accountants that are not picked up for a long time.

Another problem is one that is often found in home-grown financial systems - a software application is written by a staff member who then leaves. After that person departs, no one in the organization understands the consequence of changing fields. And spreadsheets often have some complex programming underlying formulas.

"Often these spreadsheets were written by a very bright person," says Munns. "You see logic in spreadsheets that are three pages long.

And sometimes there are features in Excel that don't get used. Microsoft once provided a utility that could strip out history from a spreadsheet that a company did not want seen by others. It's now built into Excel, but users don't necessarily know about it.

"It's something you have to specifically select. There's not necessarily good education out there," says Munns.


Companies still have multiple versions of budgets and they run great risk in using a spreadsheet to generate financial reports since it is so easy for numbers to be changed, hidden information accidentally distributed, links broken and formulas corrupted.

Auditing spreadsheets has become a major issue, says Randy Johnston, a partner with K2 Enterprises, a well-known technology consulting firm that works the accounting market.

Through mid-February, Johnston had performed seven consulting engagements and he noted that "auditing spreadsheets has come out everywhere I've been."

What audit teams are telling the CFOs and CEOs about the changes is that they must take control of the process.

"When you tell them their final financials are prepared in Excel and are not tied back to their accounting system," he says, "they start to realize they are the ones that could be in jail."

Johnston says Excel's capabilities keep it from working to prevent those security problems, but they are being overcome by Microsoft Office 14.

There are several reasons financial professionals continue to use Excel for things that it wasn't designed for. It is easy to use and since accountants already know how to use it, they are loathe to learn other products, such as budgeting and analysis tools, which are more secure.

And reporting tools simply aren't yet adequate, Johnston continues. Especially in the midmarket accounting packages, he says, "What I haven't seen is reporting inside products that is elegantly done." But he believes that reporting tools are improving and if those serve users better, they are likely to work inside the accounting application instead of going outside to Excel.

"There are some indicators practices are beginning to change," says Johnston. "I think there is more than one motivating factor. Management teams are starting to recognize how many mistakes are being made."


Budgeting remains a major area in which Excel is used instead of a specialized program. Having multiple versions of budgets with no one sure which is correct is a fairly common problem.

There are many budget software packages on the market. But they haven't made a lot off headway against Excel. And the basic difference between Excel and most budgeting applications is that they utilize a database, which offers far greater security.

"We are using one database and everyone is working off the same assumptions," notes Holly Intravia, director of marketing for Natick, Mass.-based Centage. "You can lock it down so they can't change IT."

Centage markets the Budget Maestro line, whose version 5.9 was released last year for the Vista operating system and SQL Server 2005. The company also markets a Web-based model which was being rolled out gradually and had eight users as of January. The desktop product is priced at $4,000, while the Internet version has a $2,000 annual subscription.

While Excel users don't know if everyone has the same number in their spreadsheets, Budget Maestro offers control over the numbers and that makes it possible to have departments participating in their own budgeting. They can work on their own departmental numbers, but are prevented from seeing information that's not in their purview.

"Suppose I'm in marketing," Intravia explains. "In marketing, I have my own chart I can enter and change my budget. I am prevented from looking at payroll information and I am prevented from looking at any of the models."

Another problem with Excel is its two dimension presentation of data which means that it can't serve as an adequate analytical tool, according to Joel Feldman, director of financial planning and analysis for Otis Spunkmeyer.

When Feldman arrived at the San Leandro, Calif.-based cookie dough maker just over a year ago, the budget process was through the popular Microsoft spreadsheet. And Feldman wanted to provide views into more dimensions.

"We try to cut it by channel or customer, by product - cookies, muffins, browns, Danish - and we also have a unique distribution method," he says. The company has direct shipment of dough from 52 mini-warehouses to customers

Microsoft a No-show for Story

Microsoft was requested through its public relations firm, Waggener-Edstrom, to provide a person who could discuss the issues regarding Excel and security.

However, a spokesman said that he was unable to find anyone with the company that manufactures the popular spreadsheet who would discuss these issues.

Microsoft has been working with some of these issues. Mbwana Alliy, the project manager for Office Enterprise, has conducted sessions on human errors in spreadsheets, according to Randy Johnston, a partner with K-2 Enterprises.

The August edition of a newsletter, PraxIS, reported about a presentation made at the Eurosprig 2008 conference by Alliy and Patty Brown of Two Degrees in which the two "gave their opinions on controls and compliance, standards, and end-user training, assessment, and certification. They gave a set of 12 questions that guides the assessment of criticality and risk in the use of a spreadsheet."

That newsletter also reported about a session regarding Excel errors and newsletter editor Patrick O'Beirne referenced his own book, "Spreadsheet Check and Control: 47 best practices to detect and prevent errors."


"When we do a sales plan, we want to look at it through any of those three dimensions. It gets pretty cumbersome when you try to do it in Excel, they had hundreds of linked Excel spreadsheets," Feldman says. "Not only do you run into the problem of broken links, but they weren't getting into a level they really wanted."

Under Feldman, Spunkmeyer began using Host Budget, an online budgeting application from Host Analytics, and he says that the application has dramatically change the process.

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