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Spreadsheets: Professional competence and due care

25th Jun 2018
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When it comes to spreadsheets, most accountants are either self-taught or taught by the self-taught. But in a profession that features rigorous training and examinations in almost all other areas, is this good enough? Should you have to demonstrate an adequate level of spreadsheet competence before calling yourself an accountant?

In the May/June edition of Chartech, the official newsletter of the ICAEW IT Faculty was an article by its former integrity and law manager David Stevens that looked at the relevance of fundamental ethical principles to financial technology in general, and spreadsheets in particular.

Stevens posed a key question: "How many of us consider the ethical implications of asserting proficiency with Microsoft Excel?" A recent article on the IT Faculty's ‘IT Counts’ site provides a brief overview of the potential impact of this article.

In many ways, the conclusion that ICAEW members must ensure an adequate level of competence when working with spreadsheets is nothing new.

As Stevens states: “the fundamental ethical principle of professional competence and due care requires members to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional services”.

This is as relevant when working with spreadsheets as when offering tax advice or audit services.

However, there are some very significant differences in how easy it is to judge your own competence in the different service areas. As a chartered accountant, you will have undergone an internationally renowned and rigorous training and examination process that specifically covers tax and audit. You will also have access to definitive works of reference and publications on both subjects, and be able to attend a range of lectures and update courses.

However, when it comes to spreadsheets, most accountants are either self-taught or taught by the self-taught. Until recently, definitive guidance on what constitutes competence was also hard to come by.

Fortunately, the situation has changed radically in the last few years, with ICAEW's launch of two key spreadsheet-related publications. Stevens mentions these recent publications in his discussion of the issues involved.

The twenty principles for good spreadsheet practice sets out key design, management and usage considerations. Stevens gives an example of a spreadsheet design shortcoming in a financial model that perhaps “suggests a lack of professional competence and due care”.

The second publication Stevens refers to is the Spreadsheet competency framework. As well as being an extremely practical guide to the spreadsheet skills required for different types of role, it also helps address a key issue that Stevens highlights: "undertrained staff is a real cost to business, due to constant time leakage through inefficient spreadsheet package use".

(I should point out for transparency’s sake that I was a member of the teams that worked on each of these publications).

So at last, ICAEW chartered accountants at least, have some clear, published guidance as to what constitutes professional competence when working with spreadsheets. This should immediately increase the confidence with which they are able to make decisions concerning their ability to handle internal and external spreadsheet projects.

In the longer term, it should also help increase the profitability of the organisations in which they work, through addressing the 'inefficient spreadsheet use' that Stevens mentions.

Although I have been involved with ICAEW spreadsheet projects for some time, I don't have much knowledge of how other professional bodies deal with the spreadsheet competence of their members.

It would be very useful if anyone could contribute their knowledge or experience of how these bodies deal with the use of spreadsheets, whether this be through their examination system, their provisions for continuing professional development, or other regulations and guidance.

In addition, if you employ accountants directly, or engage them to provide spreadsheet services, what are your expectations of their spreadsheet capabilities and how has actual experience compared with those expectations?

Replies (35)

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All Paul Accountants in Leeds
By paulinleeds
28th Jun 2018 11:38

When it comes to the emails, the internet, cloud software etc, most accountants are either self-taught or taught by the self-taught. But in a profession that features rigorous training and examinations in almost all other areas, is this good enough.

When I started as an accountant 31 years ago, the internet had not been invented, at least not on a commercial basis. We have had to learn many new skills and not through exams.

Without these modern skills and knowledge I could not do my job. I do not remember do taught we to use the internet or send an email or submit my first tax return.

Similar for using spreadsheets!

Is that not a way of modern life now!

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By david wilks
28th Jun 2018 11:40

What an amazing article!

Did accountants have to demonstrate "an adequate level of competence" when completing analysis sheets prepared by hand?

I have to say I find this article mindblowingly rubbish.

Any accountant worth his/her/gender neutral salt would know if the result of an incorrectly formulated spreadsheet was right or wrong.

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Replying to david wilks:
Simon Hurst
By Simon Hurst
28th Jun 2018 17:05

Hi David. Could you expand a bit on your point about completing analysis sheets by hand? I’m not sure I fully understand the comparison with spreadsheet competence.

With regard to the right/wrong bit, are you equally convinced that they would know if there spreadsheet solution was the most efficient available?

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Replying to shurst:
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By Wilbyman
30th Jun 2018 10:19

I presume he means the good old 12 column cash book sheets what we used to use for bank reconciliation before spreadsheets.

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By jamiea4f
28th Jun 2018 11:41

Having been a user of Lotus 123 (!) for many years when the Company I was working for in 1995 was taken over we had Excel thrust upon us with little or no support, other than the functionality within Excel itself for converting 123 ways of doing things to Excel ways. I don't think you can enforce "standards" of Excel competence, as long as the user can make whatever is required using Excel in whichever way works best, that should be enough. I do think sometimes that professional bodies assume that their members have unlimited budgets for training purposes, which we don't, I learned on the job and through experience with other users! (I'm CIMA). I use Excel every day for client accounts and find it far easier than other packages, but maybe that's just me...

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Replying to jamiea4f:
Simon Hurst
By Simon Hurst
28th Jun 2018 17:09

I’m not sure that the original article suggests ‘enforcing’ standards. I think the key point you make is ‘in whichever way works best’. Stevens makes the point that you need to keep informed and up-to-date with spreadsheet developments to ensure you know which way does work best.

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Replying to jamiea4f:
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By Wilbyman
30th Jun 2018 09:52

You didn’t have Microsoft thrust upon you. Lotus Software was bought out by IBM who discontinued its production in 2012 giving MsOffice the complete market place.

My guess is that some skullduggery was in play to get around the monopolies and mergers commission.

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Replying to jamiea4f:
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By edhy
03rd Jul 2018 10:05

I have seen "users" using Spreadsheets for typing letters (in those early days). We have to ensure certain practices (not standards) so that error risks are minimized, if the file is handed over to another user, they can work without bothering the "author" too much. It is not only effectiveness but also efficiency, well accountants are always cost conscious :)
Even on those lovely columnar paper sheets the user had to write obeying those columns, not between columns or whatever way they liked.
We keep Revenue on the top and then costs / expenses in certain order, what is harm if I keep Revenue at the bottom (In some situation we like this but generally not).

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By leon0001
28th Jun 2018 11:46

Participation in internal courses on the correct use of spreadsheets was mandatory when I was a student accountant at one of the then Big Four firms more than 30 years ago. I also benefited from an advanced spreadsheet course after I had qualified.
It is true that the software covered by the early courses comprised Visicalc and Supercalc. The advanced training was on Lotus 123.
I never received any formal training on Excel but the basic principles and disciplines were properly taught and our competence assessed.

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By Roy Price
28th Jun 2018 11:51

I think I must be the same age as Simon and started just after Quill pens went out of fashion. Then and now one needs to quality check the calculations and output along with making sure the presentation is adequate. It is also easy to get lazy with modern tech e.g. 10% of functionality commonly used - I find a spell looking at functions quite often reveals some surprises.
There is also the current problem of over reliance on excel when safer software is available e.g. using Excel to budget when Sage 50 Forecasting may be a better choice. I could go on - a 'Best Practice' guidance would be welcome. I never use Excel for company accounts or tax work as the risk of a mistake in Excel is too high.

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Replying to Roy Price:
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By leon0001
28th Jun 2018 12:25

I have my doubts that Sage could be a better choice for anything.

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Replying to Roy Price:
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By Wilbyman
30th Jun 2018 09:59

Sage 50 forecasting???

Hahahaha!

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Replying to Roy Price:
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By Wilbyman
30th Jun 2018 10:24

You obviously have no idea as to how use excel, otherwise you wouldn’t make such stupid comments.

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Replying to Roy Price:
Simon Hurst
By Simon Hurst
01st Jul 2018 10:41

Hi Roy

Thanks for the useful comments. I think the knowledge of when spreadsheets are not the best solution, and when the risks outweigh the benefits, are both key in assessing whether to embark on a spreadsheet solution.

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By markabacus
28th Jun 2018 12:15

I go back to the late 70's when today's equivalent of spredsheets [SS] was called financial modelling performed via 300 baud terminals to an IBM mainframe elsewhere in the country.
I progressed from there thru Lotus 123, Quattro Pro, Excel amongst others.
In the early days and possible some still, if the report coming off a computer it must be right!! Really, garbage in garbage out. You should always have an idea of what result to expect, is it where you expected it to be?
In my SS's I tend to add in extra columns and/or rows to perform cross checks so at least everything should add up, with generally my starting point being a template I've setup and used for other clients.
Training courses .v. self taught - Well I suppose that depends on the individual. Personally I've been self taught from day 1 and that's 40+ yrs. I did attend with a colleague in the mid 90's and Excel for power users course in Leeds. At the end of the day we learnt one thing, oh and taught the lecturer one as well. Ours came FREE, we paid for his :-)

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Replying to markabacus:
Simon Hurst
By Simon Hurst
28th Jun 2018 17:14

One of the key aims of the Spreadsheet Competency Framework is to help ensure we all mean the same by such phrases as ‘power user’ in order to better match training etc. to requirements.

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By rawa363
28th Jun 2018 12:21

Agree with the sentiments of most that this is nonsense. The key test of competence self taught or otherwise is are you getting the right results. Having a certificate of competence from an alleged competent body is meaningless. The number of people I have come across over my career who had certificates up to the eyeballs but were to put it mildly were incompetent. Certificates prove nothing it's competence on the job and a willingness to learn and teach yourself when you need to to keep at the top of your game that's important.

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Replying to rawa363:
Simon Hurst
By Simon Hurst
28th Jun 2018 17:19

I think Stevens is suggesting pretty much the opposite of a meaningless certificate. The onus is very much on the individual to assess their own current, and required, level of competence - exactly as you recommend. The two publications potentially help in so doing.

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Replying to rawa363:
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By edhy
03rd Jul 2018 10:14

Yes, "it's competence on the job", subject to competency of your boss :)

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By david wilks
28th Jun 2018 13:28

Ok Hurst.

Just what is your agenda in writing this article?

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Replying to david wilks:
Simon Hurst
By Simon Hurst
28th Jun 2018 16:56

Hi

I wrote the article for several reasons. Firstly, I thought that David Steven’s article raised some interesting questions and deserved a wider readership than just ICAEW IT faculty members. I also think that the two ICAEW publications are worth reading (but then, I would say that wouldn’t I).

Most of the more critical responses seem to concentrate on spreadsheet errors, I believe that spreadsheet inefficiency is a bigger issue. Over 30 years of lecturing to accountants and running training courses for accountants, from partners to new intake, has convinced me that many, though certainly not all, could create more efficient spreadsheets with more knowledge of some key spreadsheet features and techniques. Because accountants work in, and advise, so many businesses, this could contribute greatly to overall business spreadsheet efficiency.

Finally, I was interested in receiving answers to the questions posed at the end of he article.

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By Wilbyman
28th Jun 2018 13:42

I’ve attended just about every spreadsheet training course available from VisiCalc and Lotus123 right through to the latest versions of MsExcel.

I have delivered my own in-house training courses.

I can make my spreadsheets mine data from almost any system and can produce magnificent reporting suites, especially in SAP BW/BI.

In my experience 90% of spreadsheet users are only able to basic things as sub-total columns and rows and subtract and divide to analyse data.

Sad really!

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Replying to Wilbyman:
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By richardterhorst
28th Jun 2018 13:54

[quoteIn my experience 90% of spreadsheet users are only able to basic things as sub-total columns and rows and subtract and divide to analyse data.

Sad really!

[/quote]

And in my experience in 90% of the time I only need to do basic things.

Clients do not want all dancing spreadsheet work and will not pay for it. I use some fancy ones but just to make my life easier and I had some time to build them.

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Replying to Wilbyman:
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By winwater
30th Jun 2018 12:28

Totally agreed.

There are so many formulas and data arrangements that you can do with excel which can eliminate human errors as well as cut down processing time to 75% of those who only do normal stuffs with excel.

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By winwater
29th Jun 2018 10:53

Hi,
I have always worked in the industry as a bookkeeper/ Finance manager. I have also worked with a few practices. I have self-taught excel myself based on the requirement that comes with the job. If you only use excel as a reporting purposes, you only need to know a few basics to make the spreadsheet printable format with presentable colours and lines as well as with a few hyperlinks.

But when it comes to volumes of data transactions to be processed onto accountancy package software, that's when one will need serious excel skills.

Another thing I find is that staffs working for practice do not have or given enough opportunity to learn and be creative within their work to do with excel, due to time pressure from jobs. Within industry, that's where you have to keep developing your excel skill to thrive for data analysis and efficiency, especially when I work with new clients who are fairly sizeable businesses. They have thousands of card receipt transactions or they are sitting on a vase amount of database and didn't occur to them to use to analyse business capacity and performances in all sort of areas.

What I also find is that not everyone knows that you can import journals onto sage and other accountancy cloud packages. I help businesses to cut down staff hours by introducing excel processes whether 1000 transactions or 10000, it will be the same length of time to process them.

So excel is very valuable and time saving tool if you know how to use it or design data arrangement, only for the industry. Not so much for the accountants who are only interested in filing year end accounts/ tax computation for compliance purposes or reporting purposes.

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By listerramjet
29th Jun 2018 10:41

you do know that this is drivel?

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Simon Hurst
By Simon Hurst
29th Jun 2018 21:26

Thanks for all the comments.

In spite of the several eloquent and well-reasoned criticisms, I’m not sure I yet understand exactly what issue some people have with the article. Is the conclusion so obvious that you feel insulted that I have bothered to write about it? Are people objecting to the application of competence and due care to working with spreadsheets? Or are their issues with the specific content of the two publications mentioned? If the latter, then please provide details. It was always intended that the publications should be open to revision for new, or alternative, ideas and suggestions.

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By Wilbyman
30th Jun 2018 09:54

Simon, I suspect people don’t like being rumbled when they realise that their Excel skills really are poor.

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Replying to Wilbyman:
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By winwater
30th Jun 2018 11:39

That's exactly what I thought. They get really agitated.

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By edhy
01st Jul 2018 09:07

There should be "practical" exam as part of qualification. ICAP (Pakistani Institute) conducts practical exam covering IT, spreadsheets are part of it, not covering in-depth but giving a foothold.

When I started in profession there were only main frames and minis with a few clients. Desktops (PCs) were available in west but very rare in Pakistan.

I focused on technology, have good knowledge of both arena, but was labelled by fellow professional as techie and not accepted in the group and tech professional did nor accept as I had no academic back ground and was "over age', so my career in wilderness.

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Replying to edhy:
Simon Hurst
By Simon Hurst
01st Jul 2018 10:20

Thanks Edhy - very interesting to hear about how ICAP covers IT in general and spreadsheets in particular. I know what you mean regarding the techie issue: https://www.accountingweb.co.uk/community/blogs/john-stokdyk/dont-call-m...

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By sysmod
02nd Jul 2018 11:46

Very timely Simon - there is a conference in London next Thursday 6 July on spreadsheet risks and there's a case study from an insurance company which covers their self-assessment experience. http://www.eusprig.org/annual-conference.htm The European Spreadsheet Risk Interest Group (EuSpRIG)

At the recent Edinburgh ISACA conference, Christopher Rentrop gave a session on using Cobit 5 to manage end-user-computing ("Shadow IT") where he stressed the bottom-up involvement of pilot tests, and the need to assure the quality of the self-assessment programme.

Accountants often have an advantage over other modellers in that they are automating data processing tasks and have reconciliations they can rely upon to spot errors. Such as, from last period to this. With no easy way to check, others are prone to expectation bias - if they get the answer they want they believe it, but it could be wrong.

As for other standards, there is a commercial certification body called Spreadsheet Safe (spreadsheetsafe.com) that offers a training course followed by an online multiple-choice quiz where the pass requirement is 70%. (Disclaimer: I am one of their accredited trainers and the content remarkably resembles my book "Spreadsheet Check and Control") . A number of public sector bodies who are really motivated to avoid embarrassing mistakes put new hires through this each year.

Basically, people don't know what they don't know, and often simple tools and shortcuts to check your own work are most effective because they are easy to adopt and embed the habit of self-reflection on your work.

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By timothyvogel
03rd Jul 2018 09:54

So, have I got this right. Using Excel is OK if I attend a course given by someone whose qualification is that they were self taught (or better still that they hold a qualification issued by the people selling the software and with a vested interest in you using it).
The fact that I am self taught and have been using it for longer than the instructor on the course has been alive, have written a software package using Excel that sold many thousand copies across England Ireland and Germany and because of my Maths degree actually understand the principles and formulae used in spreadsheets, is not as a good as attending a course that does not have any validated exam!

The words twaddle and self-interest are very mild but I can not think of anything stronger that the moderator will leave.

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Replying to timothyvogel:
Simon Hurst
By Simon Hurst
03rd Jul 2018 10:23

Thanks for your comment and for making your point with enough detail to understand the argument. The point I was trying to make regarding 'self-taught' was the difference between spreadsheet and other services a qualified accountant might be involved in providing. Because spreadsheets have only been in widespread use for a few decades, they were not necessarily an integral part of the training of all accountants in the way that, say, tax and audit are. Although many who are self-taught will have perfectly adequate skills, for others, there is the risk that they might not have come across particular ways of doing things that would make their use of spreadsheets more efficient. With more 'traditional' services, this would larger be addressed through the experience of those they work with and for but, again because spreadsheets are 'new', there is no guarantee that partners and managers will be any more aware of spreadsheet techniques than the people they employ. Hence the self-taught by the self-taught phrase.

The article was intended to explain that Stevens' original article at least showed that the ICAEW had produced some publications that provided some guidance as to the range of spreadsheet skills that would enable accountants to achieve a reasonable degree of efficiency in their use of spreadsheets. If you read the publications and find that you already know, and use, what they cover, or that your spreadsheet expertise is good enough for you to disagree with their contents because you know a better way, then that's fine.

For me, having seen a great many spreadsheets set up and used by acccountants, there is considerable opportunity for accountants to use spreadsheets to do more, more efficiently. As a result, I support anything, such as the original article, that helps those who could benefit from additional spreadsheet skills focus on appropriate areas - whether through courses, books or self-learning.

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Replying to timothyvogel:
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By Wilbyman
03rd Jul 2018 10:30

No you haven’t got it right. Your comment is a complete load of twaddle

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