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What next for DIY Excel accounts production?

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9th Oct 2009
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The proposed changes in online filing rules for Corporation Tax are also causing accountants who develop their own accounts production tools to think again. John Stokdyk looks at an Any Answers query that reopened an age-old debate.

AccountingWEB.co.uk member Tony Lecart recently started an Any Answers thread that touched on some of the founding ideas behind our ExcelZone. In a new twist on the classic “build or buy?” software conundrum, Tony explained that he had created his own statutory accounts templates in Excel. It took him a while to do, but he loved the flexibility and control his self-developed worksheets provide.

Then he discovered the problem that haunts all software projects: requirements change. In the case of statutory accounts (and Corporation Tax), there are only 18 months left until accountants will need to output their final accounts and computations in inline XBRL format and file them via the Government web gateway.

Looking that the task ahead, Tony pondered whether he would need to abandon his moonlight career as a programmer and buy a commercial product.

“So am I in a minority or not?” he asked. “If I had to buy commercial software it would cause me a lot of disruption. Most of my clients use spreadsheets for analysing expenses as I do.”

By a rough calculation from the 19 members who participated in the debate, Tony is in the minority, but it’s a pretty significant group, suggesting that up to 30-40% of small practitioners could be in the same boat.

“I’m glad to know that I'm not the only one out there!” replied Stephen Argent, who was one of five other DIY Excel developers joined in. In his case, Stephen developed a full accounts production system using linked workbooks to generate full Companies Act accounts from an extended trial balance, with another Excel workbook for standing data.

“Like you, I have to keep this up to date manually but it is far more flexible and cost effective than a commercial software package,” he added.

David Toohey of The Accountants Circle also trod the same path, but now has a foot in both camps, building and selling Excel templates to fill gaps that accounts software such as Sage, Iris, OpenAccounts to help extract management accounts quickly.

“There's nothing wrong whatsoever with using any tools that you feel make life easier or your services more valuable for clients,” argued Toohey. “Our core concept is focused on saving that time creating templates, and of course the learning involved too. Some do like to spend their own time though with tools such as Excel.”

AccountingWEB.co.uk member Greehays was another DIY practitioner who acknowledged the problem that iXBRL would pose, but viewed the challenge as a development opportunity in more than one sense. “I have no idea as yet how I'm going to make Excel sing to this tune,” he admitted. “But I've ordered the Dummies Guide to XBRL (more CPE!) which comes out in November...”

But moving along the scale, the majority vote went to commercial software, relying on the likes of Digita, IRIS and Sage to sort any problems out in their software releases.

“I can relax in the knowledge that although I pay more each year I will not have to stop working to update (and learn how to) Excel to submit accounts in this tagged format. I get on with dealing with clients. For me this is the way I want it and why I pay for more expensive software,” commented coolmanwithbeard.

One developer emerged from the pack in this situation, VT Software, which provides Excel-based bookkeeping and final accounts solutions.

“I used to do exactly the same as you but several years ago discovered VT. I wish I'd found it earlier,” commented Stephen Kendrew. “It makes the accounts for limited companies in particular much easier. I think its annual cost is £199+VAT and I'm sure you would more than recover this in the chargeable time you currently have to spend on your DIY spreadsheets. If you understand spreadsheets, you will have no trouble with VT.”

This issue has exercised people like Simon Hurst for years and was the crux for a similar debate in 2005, Is Excel the right tool for accounts production? While accountants have a duty to learn and appreciate the tools of their trade, their core discipline is accounting and financial management rather than software coding. Unless you apply suitable disciplines for designing and testing your system and subjecting them to the quality assurance processes commercial developers go through (and look how often they still get things wrong), you run the risk of using substandard tools for the job.

Another member, nickja, updates the argument for 2009: “Only in extremis would I do any bookkeeping in Excel; it's just not cost-efficient to re-invent this wheel... The package of Money Manager, Final Accounts, Payroll Manager, VT Accounts and the tax programs recommended by VT would cost around £1,000 to buy and £850 for annual renewals and give you a pretty comprehensive suite of programs you couldn't possibly develop and maintain for anywhere near as little.”

Having enjoyed such glowing references, VT Software founder Philip Hodgson still understood the attraction for the Excel-based DIY approach. After all that’s exactly the route he took when he decided to create a commercial accounts production application based on Excel.

“There’s a great beauty of doing it if you know your stuff,” Hodgson said. “You know how it works and you don’t have to scratch around trying to find your way around someone else’s program. It’s not really economic, but if you’ve got time to do it I think it’s a perfectly sensible way of doing their accounts.”

However, as Tony Lecart pointed out, the advent of iXBRL will change the rules. “One can’t imagine a more complicated format for generating accounts,” said Hodgson. “XBRL is fantastically flexible, but with more than 4,000 tags, there’s enormous complexity. Accountants who develop their own spreadsheets are stuck with iXBRL coming along. It’s the end of that world.”

Replies (6)

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dave tallett
By martintallett
16th Oct 2009 14:35

How to output XBRL from Excel

This link has the insructions for creating XML files from and Excel spreadsheet. XBRL is only an XML standard so it will all go swimmingly !!!

http://office.microsoft.com/en-us/excel/HA011019641033.aspx

 

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By vtsoftware
19th Oct 2009 09:05

iXBRL generation is not built into Excel

Excel has facilities to generate XML, but iXBRL is quite different to that. Even if the facility existed, you would have to manually mark up the data from a very long list of XBRL tags.

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By User deleted
19th Oct 2009 09:06

Excel accounts, iXBRL compulsion
This seems yet another example of Government forcing taxpayers, etc. to have to buy expensive commercial programmes, just in order to comply with the law. We have seen it particularly in tax, where the Revenue's online software fails to cover many common circumstances. We have seen it in the compulsory submission of PAYE data by employers. It seems to be coming to V.A.T. and, no doubt, it will be extended to other areas. It is immoral to force ordinary people to buy not only these programmes but also the computer itself and the broadband service, just to comply with the law. The lack of tax relief (at least for ordinary people) in having to spend these sums just adds insult to injury.

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By vtsoftware
19th Oct 2009 09:10

HMRC could make iXBRL easier

I have been looking at iXBRL (from the perspective of filing the annual accounts with HMRC) in considerable detail over the last month or so, and have reached the following conclusions:

From HMRC’s point of view, iXBRL is extremely clever because they have very little to do! XBRL International maintain and update the XBRL standard. XBRL UK devise and maintain the UK taxonomies. HMRC just have to receive an iXBRL accounts file that they can view in a standard web browser. If they want (and no doubt they have), they can write software to scan key items. That is not difficult.

On the other hand, a large number of companies will have to go to considerable effort to prepare a potentially vast array of data in the most complicated accounts format known to man. In all probability, most of that data will never be used.

HMRC could alleviate the difficulties a little by:

Making the minimum tagging requirement (a cut down version of the full 4,000 or so items) a permanent simplification, and further reducing the number of tagsPhasing in when iXBRL accounts become mandatory. Large companies first in April 2011, medium sized companies a year later and small companies a year after that

Philip Hodgson
VT Software

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By Greenheys
20th Oct 2009 11:53

XBRL

I concur with Phil almost completely.

As to XBRL and the availability of affordable software to deliver these XBRL instances...

It seems that microsoft did have a tool for producing xbrl documents from excel back in 2005 - but if you follow the link it now takes you to a case study.  Apparently they stopped making it available when third party commercial software became available (and there was me thinking microsoft were the commercial ones...)

It seems that only Dragon Tag are willing to publish their prices on line - $1,295 for a single user single computer licence.

I would accordingly go further than Phil, and suggest that this move be cancelled altogether until HMRC come up with an effective free office to XBRL tool which will allow us to comply with their demands.

On a legal front, is this requirement to file in XBRL in the Companies Act 2006?  "XBRL" is not mentioned once in the act, neither is "online".  Sections 441 et seq refer only to the Duty to deliver, without specifying how.

Cheers,

Greg.

 

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By cbales
29th Oct 2009 18:02

Looks as if TaxCalc are well on the ball in this area

https://www.accountingweb.co.uk/partners/press/xbrl-concerns-addressed-taxcalc 

Follow the above link to an article in the Suppliers Area.

They are also offering free software and I think it might prove quite popular, follow

https://www.accountingweb.co.uk/partners/press/taxcalc-offer-free-tax-software

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