Most accountants have a love/hate relationship with Microsoft Excel. For complex calculations where data is continually changing and those that require the use of cell functions, Excel is often the go-to tool to get the job done. Spreadsheets are used for budgeting, forecasting, financial reporting, determining tax computations, operational analysis and much more.
However, spreadsheets are by no means perfect. On their own, they provide little to no protection against data corruption, and no way to validate numbers or error checking, nor do they offer the transparency that accountants and audit teams require today. As many accountants have learned first-hand, simply double-checking numbers will not cut it.
For example, last fall Tibco Software suffered a $100 million spreadsheet mistake during a sale to Vista Equity Partners. Goldman, Tibco’s advisor in the deal, used a spreadsheet that overstated the company’s share count in the deal. This error led to a miscalculation of Tibco’s equity value, a $100 million savings for Vista, and a slightly lower payment to Tibco’s shareholders. Similarly, a spreadsheet error cost Fannie Mae in excess of $1 billion and a significant reduction in share price, from $73.10 to $2.25, after the error was announced publicly.
In spite of costly examples like this, it seems accountants are no closer to giving those spreadsheets up. Why? Because spreadsheets continue to provide the flexibility that accountants need, with no waiting for the IT department to make changes to systems, no workarounds needed, and no compromises.
With reporting requirements growing and the sheer volume of work increasing, accountants are forced to work longer hours to meet non-negotiable deadlines. As a result it is easy for mistakes, such as accidentally hitting a key when a cell is open or inadvertently transposing numbers, to go unnoticed.
For example, spreadsheets are often edited many times to allow multiple people from within an organization to see numbers in different ways. This scenario is particularly true when preparing for a Securities and Exchange Commission filing. Product line managers, business unit directors and executives will request numbers in a specific format so they can make their own business decisions. During this process, it is not uncommon for spreadsheets to break.
Fortunately, advances in technology are enabling accountants to overcome spreadsheet complexities. Automated risk and analysis solutions provide the much-needed insight into potential risk and errors that may be hiding in spreadsheets. Yet most organizations don’t utilize spreadsheet management solutions simply because they are unaware this technology exists.
Taking a methodical approach to understanding where risks may hide is the first step in managing spreadsheets across an organization. Spreadsheet management solutions offer detailed insight into spreadsheets regardless of where they reside on a network or how many exist. These solutions provide visibility into who is working on a file, how many people are working on it, when something changes, what changed, and who made those changes. The ability to monitor and track this information over a period of time provides valuable insight into whether policies are being met, while making it significantly easier for accountants to identify potential risks.
Advances in technology are not only ensuring the integrity of data, they are also enabling accountants to be much more proactive in their role within the business. Instead of just filing taxes or pulling together a financial report, accountants now have the opportunity to become more of a business partner. For example, utilizing spreadsheet management technology, accountants can help the negotiations team to come up with better proposals or a better counter. The ability to quickly pull together a what-if analysis allows the team to look at a deal from all angles, as opposed to simply agreeing to what is on the table.
Developing a what-if analysis within Excel can be difficult, particularly when it is unclear which path leads to the best deal, as multiple save-as copies are required. When creating multiple copies, mistakes are easily introduced. However, spreadsheet management technologies let accountants make comparisons on screen and take snapshots to review all of the available options.
If at any time it is decided that the path is not working, snapshots are available to take the accountants back to a previous version, making what-if analysis much easier and more reliable.
Advances in technology are providing accountants with greater confidence in the numbers they are presenting. These improvements are also enabling accountants to have a larger role in key financial decisions. Despite the risks, accountants are comfortable working in Excel. Now organizations can be comfortable, too, knowing that technology is in place to eliminate errors. For companies that continue to turn a blind-eye to spreadsheet usage — and risk — it’s not a matter of if, but when they too will be affected by a costly spreadsheet mistake. With the right controls and technology in place, visibility can be achieved, and costly errors avoided.
Diane Robinette is chief executive officer of Incisive, a developer of spreadsheet analysis, control and
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