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Accounting Technology Changes and How they Impact Nonprofit Accounting

January 06, 2012

How has the spreadsheet changed our lives?

The electronic spreadsheet has changed our lives forever. I am old enough to remember the era prior to the advent of these marvelous tools so I truly understand how and the extent to which they have changed the way we do business.

In the not-for-profit area, where the financial resources for sophisticated computer programs do not exist, the electronic spreadsheet may be used for any number of applications, many of which are very important to the efficient operation of the organization. The purpose of this bog is to share some of tips and tricks that I have learned during my experience using electronic spreadsheets.

Electronic spreadsheets frequently live beyond their author. It is important to remember that even if the spreadsheet’s author has not left the company, it is common that they will be used by someone else who takes over the task for which the spreadsheet was created. All too often, I have seen clients using a spreadsheet that they did not understand. Before working on a spreadsheet make sure you know what you are looking at and how to interpret the data.

Even a small error in a spreadsheet can have a significant impact on the accuracy of the information and calculation it was designed to produce. If the spreadsheet’s user does not fully understand the purpose and computational logic initially designed into the spreadsheet, they are unlikely to realize that it is no longer working properly. There can be cell referencing problems; data exporting issues; range definition errors as well as basic data entry mistakes.

What can one do? Unfortunately, the answer is more work. Your organization should adopt spreadsheet controls. Develop documentation standards so that a worksheet in the workbook fully explains what the spreadsheet is for and how the spreadsheet is supposed to work.

Build in cross checks. In the pre-electronic spreadsheet era, accountants used to total down and across as a double check that the math of their manual spreadsheet was accurate. However, today since the computer formula does the math, seldom do I see people checking the math to be sure the formula is correct. How many times have you inserted a row only to find that it did not change the formula?

Here are some tips I have found useful for using electronic spreadsheets. Determine the variables on the spreadsheet and lock all of the other cells so that cells and formula which should not change cannot be accidently changed. Maintain a list of all spreadsheets and what they are used for. Restrict access to the spreadsheets to only those who are trained on their use. Use passwords to access the spreadsheets. Make backup copies. Implement a rotating testing program where spreadsheets are periodically tested to assure that they are still working as designed. Realize that spreadsheets are valuable company assets and treat them accordingly.

Electronic spreadsheet can be a budgetary sound financial resource for Nonprofit organizations but it is important to know exactly what you are looking at and how to manipulate the data.

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