Before you choose a certain strategic path, chances are that a spreadsheet has helped inform the decision. From choosing which mortgage is right for you to divesting a billion dollar asset, spreadsheets are the weapon of choice when it comes to making financial and strategic decisions. A single spreadsheet can stand behind million and billion dollar transactions, make the case for or against critical infrastructure projects and form the basis of corporate budgets, forecasts and strategic plans.
The ubiquity of spreadsheets gives employees access to a powerful tool. However the incidence of user error is high. There is a lack of standardisation and consistency within teams let alone departments and corporations and there is no one universally adhered to set of guidelines or standards when it comes to governing the develoment of spreadsheets.
Common failings of spreadsheets include:
- Presence of errors
- Overly complex
- Hard to use
- Expensive to build, maintain and audit
- Time consuming to build, maintain and use
- File size is too big
Calculations can be complex. However, there are ways of bringing transparency to the complexity including stepping out the calculations, helpful use of formatting and including explanatory notes.
The Commandments is a series of best practice guidelines aimed at financial modelling and general spreadsheet use. The four cornerstones of the Commandments are the 4 C’s:
Clarity – planning and structure
Content – assumptions, outputs, calculations etc
Control – for a robust spreadsheet
Communication – informing the spreadsheet user
Implementing the Commandments will result in consistent, transparent and robust spreadsheets with reduced risk of error and significant efficiency gains.