Excel Spreadsheets Should Not Be Relied On For Budgeting And Forecasting

Excel

78 per cent of local authority finance professionals are reliant on spreadsheets for budget monitoring, according to a survey by The Chartered Institute of Public Finance and Accountancy (CIPFA). CIPFA surveyed 87 local authority (LA) finance professionals who are members of CIPFA’s Finance Advisory Network (FAN).

The ‘Local Authority Budget Manager Survey 2012/13’ highlights that 82 per cent of local authority finance professionals use Excel for their budget preparation, monitoring and forecasting with 78 per cent of these admitting reliance on spreadsheets.

It’s concerning that such a high percentage of local authority finance professionals are reliant on spreadsheets for their budget monitoring. Spreadsheets are prone to inaccuracies, cannot provide real-time financial information and are very cumbersome and time-consuming to manage.

The survey also reveals that 46 per cent of respondents take more than one day to produce revenue budget reports with 24 per cent of these taking more than two days. In addition, the top three budgeting priorities highlighted by survey respondents include cutting the authority’s costs (92 per cent), gaining an accurate picture of real-time spending against budget (56 per cent) and giving more responsibility to budget holders (51 per cent).

Furthermore, 67 per cent of respondents are working closer with others on their budgeting processes as a result of the current, challenging financial situation, highlighting that 33 per cent of local authority finance professionals could be working more collaboratively on their budgeting and forecasting processes.

To achieve cost savings, real-time financial information and greater budget holder responsibility, it’s vital to have suitable software solutions in place. Excel spreadsheets should not be relied on for budgeting and forecasting as they cannot provide an instant and accurate view of current and forecasted spend and are at risk of errors, raising questions over the integrity of the data. Local authorities need to replace spreadsheets with smart, versatile and collaborative budgeting and forecasting software solutions.

79 per cent of survey respondents expect their budget monitoring processes to improve over the next three years, with reduced reliance on spreadsheets being cited as one of the top improvements sought by respondents. The anticipated improved budget monitoring processes may also be due to more councils considering devolving budgets down to local/neighbourhood committees in light of the Localism Act (2011).

According to the survey, 56.9 per cent of respondents either have local/neighbourhood committees, are looking to introduce them or they are under consideration.

Roman Haluszczak, CPFA – Senior Manager, CIPFA Finance Advisory Network, adds: “The survey results suggest that the majority of local authority finance professionals are aware of their budgeting and forecasting challenges. With 92 per cent of survey respondents under pressure to cut costs, this will be a key driver for seeking process improvements and reducing Excel spreadsheet dependency.”

Dean Dickinson is Managing Director of Advanced Business Solutions, formerly COA Solutions. Dean has been in the finance software business since 1990. He was part of the senior management team at QSP/Arelon prior to the acquisition by COA Solutions at which time he became Deputy Managing Director for the business as a whole. Since the acquisition of COA Solutions by Advanced Computer Software Group in February 2010, Dean has become Managing Director for Advanced Business Solutions. He is a specialist in consultancy and has a strong knowledge of business processes within a high volume/high value environment.