Why Spreadsheets are Terrible for Complex Reporting

If you need to issue recurring, complex, lengthy documents, however, these are the wrong tools as they inevitably lead to two significant problems:

1) Time Intensive

The complexity of financial reporting means that the amount of time required to use spreadsheets and word processing tools is considerable: 

• dozens of staff working on 10's/100's of documents,
• modifying balances (accruals/adjustment from cash basis to full accrual),
• updating the documents with new balances as the reporting cycle progresses,
• basic formatting ($, underlines, margins, pagination) to make them look consistent & professional,
• linking values to graphs and narrative (MD&A etc.),
• ensuring the right versions are being used,
• last minute adjustments that require updating dozens of values in a rush,
• once the statement balances are finalized, they are often sent to communications/graphic design folks to pretty them up (while praying they don't change balances).

2) High Risk of Error

Accuracy is critical to credibility. For example, you must ensure that the total of Revenues by Type on page 212 agrees to the total of Revenue by Source on page 290. In a 400+ page budget book or a large set of financial statements, there are likely hundreds of these items to verify. Missing even one is not acceptable, but is all too easy with a spreadsheet-based solution. Want some proof?

• One study found that 88% of spreadsheets contain errors. 
• Google "spreadsheet error" to see hundreds of horror stories like these:
  • $2 billion error lead to a governor claiming credit for spending cuts that never happened,
  • $2.6 billion dividend estimate error caused by an omitted minus sign,
  • $24 million error leads to power company buying more hedging contracts  than it should have,
  • $1.136 billion error in stated shareholder equity,

You spend a tremendous amount of time to mitigate this risk. Dozens, hundreds, even thousands of hours are invested each reporting cycle reviewing and double-checking your reports and implementing many strategies to work-around the spreadsheet weaknesses.

Time Intensive + High risk = a weak solution.

If you think you could be doing something better with this time, consider better solutions.

Are cloud-based spreadsheet tools a real solution? Not for complex reporting. Read why here.