Who relies on spreadsheets? Too many: a survey finds a surprising inability of companies to reduce their dependence on spreadsheets as a primary means of controlling/accounting for treasury-related transactions that supported future actions or decisions.

• Author: Falck, Peter
• Position: Treasury

Despite numerous technological advances in the area of treasury management, let's face it: many companies still rely on spreadsheets to keep track of their cash and determine whether their plan is being met and whether the company is in compliance with various regulatory edicts.

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How pervasive are they? Nearly two-thirds (64 percent) of companies continue to depend on spreadsheets, despite the availability of more sophisticated financial systems, according to a recent treasury technology survey conducted by SimCorp USA Inc. and the Financial Executives Consulting Group (FECG).

While spreadsheets are inexpensive and easy to use "out of the box," in this age of Web-based, real-time information, dependency on spreadsheets creates unacceptable levels of operating risk, especially for those senior managers responsible for certifying, under penalties, that their company has well-established financial controls.

There are many disadvantages to using spreadsheets for treasury management. They are difficult to audit; their outputs are not well integrated with other data sources; they can present information in non-standard formats; are usually dependent on a single individual to "program"; and they do not live up to the recent regulatory demands for internal control that The Sarbanes-Oxley Act requires.

Today's headlines are filled with examples of what can happen when good companies go bad. Last year, a Canadian company made a spreadsheet error resulting in losses of $24 million, and in October 2003, Fannie Mae reported that it uncovered errors in unrealized P/L valued at more than $1 billion because it was unable to integrate various spreadsheets with its internal financial systems when marking its portfolio to market.

Survey Eyes Resources

The SimCorp/FECG study was designed to determine the role of technology and the resources available to treasurers as they struggle to manage their company's banking networks and cash balances and access the capital markets to invest/borrow in a manner that minimizes financial risks.

More than 220 companies of all sizes responded to the 19-question survey. Forty percent were small companies (annual sales under $100 million), 31 percent mid-sized ($100 million--$1 billion) and 29 percent were large (over $1 billion). Thirty-nine percent of the respondents were CFOs, 17 percent treasurers or vice presidents of finance and 14 percent directors of treasury. The remaining 30 percent of respondents held other titles such as controller, assistant...