• Strategy
  • CFO Magazine

Budgeting in the Real World

More companies are writing budgets that reflect strategy and reduce frustration.

Spreadsheet Nation

Love ‘em, hate ‘em, spreadsheets will never go away. Some 67 percent of those surveyed by CFO magazine, representing companies of all sizes, use only spreadsheets for budgeting and planning (B&P). But in this post-Sarbanes-Oxley era, that could be considered risky behavior.

“The built-in flexibility that has made Excel a wonderful financial tool is completely at odds with the Sarbanes-Oxley ‘command-and-control’ requirements,” says Jim Winett, managing director of IC Consulting Services LLC. “Change in controls causes the most havoc,” he says, noting that in theory any change in formula or even number of rows ought to be documented. So despite their affinity for them, one-third of CFO’s survey respondents say Sarbanes-Oxley has made it harder to rely on spreadsheets as part of the business planning process.

Marc Chardon, CFO of Microsoft’s Information Worker division (which is responsible for Microsoft Office and, therefore, for the Excel spreadsheet application), candidly admits that business users struggle with consolidation and access control in Excel. He attributes their difficulty to the application’s evolution from a tool for individuals to a tool that is increasingly used collaboratively on top of business applications ranging from ERP systems to general ledgers to revenue-planning tools.

“There’s an inherent tension between the ‘power-to-the-people’ origins of Excel and the role it is increasingly called on to play,” he says. “We’re clearly aware of that.” Microsoft, says Chardon, is working to make Excel “a better citizen in the front-end process and a better tool for collaborative work.”

Not surprisingly, Microsoft itself uses Excel and SQL Server for B&P, despite the fact that as many as 3,000 people are involved in the corporate budgeting process. At the Information Worker business group, says Chardon, “we have the advantage of having the most up-to-date version and finance people who were involved in the design of the product. That’s why I’m maybe more serene with Excel than other people are.” Indeed, the Information Worker business group is now pre-beta testing the next version of the Office suite, which he hints will contain improvements to Excel’s collaborative and control capabilities.

In the meantime, auditors have identified spreadsheet controls to mitigate financial-reporting risk, including password protection, hosting on protected servers, and locking cells within spreadsheets. — T.R.

The Spreadsheet Spread
Companies of all sizes say they rely solely on spreadsheets for budgeting and planning, although this is more common among smaller companies (as measured by annual revenues).
Less than $100 million 78%
$100 million–$999 million 67%
More than $1 billion 30%
Source: CFO survey

Discuss

Your email address will not be published. Required fields are marked *