Spreadsheets: Professional competence and due care
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?