Watch now: Break the Spreadsheet Spiral™
Latest research by the FSN Modern Finance Forum entitled “The Future of Financial Reporting Survey 2017”, reveals that reporting inventory is out of control in finance departments and yet, its resolution is way down on the CFOs’ list of priorities. This is high risk for the business as potentially, finance teams may not be using the correct data for financial reporting. Today, 43 percent of CFOs are unable to identify their business-critical spreadsheets.
A major reason for this is that the reporting inventory, which largely consists of spreadsheets and end user computing (EUC) applications, is out of control in finance departments. Often, because enterprise systems in organisations aren’t able to accommodate the evolving needs of the business (compliance, regulation, reporting), finance teams resort to spreadsheets to bridge the gaps in functionality. Spreadsheets are therefore widely used for final mile reporting for example as well as for financial modelling, data aggregation and manipulation.
Due to a lack of internal usage policies and control processes, as the spreadsheet and EUC landscape grows, finance teams lose visibility of key data and business-critical files. Today, 33 percent of finance teams do not know which reports are being used for financial reporting.
It doesn’t take long for the spreadsheet landscape to spiral out of control. A simple scenario – a spreadsheet is created for a specific financial calculation, shared with other team members, and soon the application evolves into a sophisticated financial model/process. Data is then fed into this tool from other sources, but there is no visibility of the data flows and lineages across the broader feeds. It becomes impossible for finance teams to guarantee that the data used in their models is correct and up-to-date; and therefore, whether the model outputs are accurate. Many similar scenarios are typically replicated in the business across departments. Perhaps this lack of clarity coupled with fear of losing the right data might be why 50 percent of finance teams don’t remove the redundant information from their reporting packs; and 41 percent of CFOs continue to produce redundant reports.
36 percent of CFOS can’t see the status of the reporting process at any given time. For accurate, real-time reporting, gaining auditable transparency and control of reporting inventory is critical. Given the high dependence of finance teams on spreadsheets for reporting, adopting automated processes for spreadsheet management is the only efficient and effective way of ensuring control over reporting inventory. Such processes help to gain visibility of the spreadsheet landscape via an exhaustive reporting inventory. The inventory of spreadsheets and EUC applications can then be classified into categories based on the level of risk posed by each to the business. This risk-based visibility of reporting inventory is crucial to accurate reporting, which in turn is essential to facilitating informed decision making by the business.
An infographic of the findings on this topic is available to view here.
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