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Blog part 1: Excel is your consolidation environment today

Excel is and will always be an accountant's go to tool for any requirement as it is familiar, easy to use, and can be manipulated to accomplish any mathematical task or exercise that is required. Please understand that I would never say, “don’t used Excel” as I use it extensively myself for many things both personally and for work purposes but rather than say “don’t use it” I will just take a moment to say why it may not be the best tool for consolidation purposes.

 

Possible issues with excel as a consolidation tool:

 

1. Security – while you can password protect an Excel file today, almost anyone can do an Internet search and download and free password removal tool for any Excel spreadsheet.


2. Collaboration – multiple users cannot work on one excel file at the same time. To accomplish this you need to break your consolidation down into multiple Excel file with file linking and while this does work most of the time the dreaded broken links in excel can really cause your headaches during your close when time is of the essence. Let’s not forget the famous user changes such as adding rows and columns to the excel file which will cause erroneous information to be carried forward through the links to the overall consolidation file. 


3. Auditability – while Excel continues to advance very nicely on its audit features and tracing features, it is nowhere near the transparency and accountability required by today’s standards (whether they are Sarbanes Oxley [SOX] driven or even Frank Dodd requirements). 


4. Process compliance – Again you can leverage Excel with a SharePoint environment but again this does not provide the transparency and visibility into the close process and provide detailed information on who has done what and when that is required for compliance purposes, let alone internal audit controls which are sometimes even more stringent than externally mandated requirements. 


5. Reporting – you can leverage Excel and an Access database to provide various possible reporting combinations but now the technical savvy required starts augmenting exponentially. Let’s face it, as finance users we have enough things to know and master with the ever changing accounting landscape (IFRS, GAAP, industry regulated reporting, compliance standards [both internal and external] as well as one off ad hoc reporting requirements) that having to become a technical guru that can make Excel “dance”, incorporate SharePoint for collaboration and an Access database to enable Reporting is really not what we should be required to do. We are not IT specialists on top of it and if we are then is this really the best use of our time? 


6. Other Close items – how does using excel to accomplish other area of the close help? Account reconciliations? Compliance checklists? Internal reporting (such as PowerPoint presentations)? External reporting (annual reports – 10K, 20F or 40F, quarterly reports, XBRL filings, Basel, Solvency, Pillar etc.)? 


7. Employee Retention – Why would a designated or simply an experienced accountant want to stay in an organization where their skills and qualifications are boiled down to their Excel skills want to stay in your organization? What about the work/life balance during the close when you can’t take advantage of technological advances outside of Excel to accomplish your consolidation and close reporting?

 

As you can see there are lots of things to worry about when using excel. There are also many studies that show that even if you have a well oiled Excel consolidation environment today, it does not mean that it is perfect and devoid of errors. That compounded by the continuous audit costs required each year when excel is used should really cause you to start questioning if the status quo is worth staying with or is it time to move one.

 

Again, I am no savant and I would never tell someone that I know what is best for his or her specific solution but there are just too many hoops to jump through when you rely on Excel as your consolidation solution. Compound that by the fact that your finance department is now viewed as a team of Excel Jockeys and not value-added thinkers/collaborators in your organization and you can see that maybe a change is required.

 

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