How about a database as a financial tool?
Ever since the advent of the personal computer, I've been trying to convince my employers and clients of the benefits of converting their hopelessly complex spreadsheet processes into database processes, using general-purpose database software (such as Microsoft Access, to use today's standard). The benefits include greater data integrity as a result of more numerous, uniform, and inviolable integrity rules; increased efficiency as a result of greater data integration; reduced risk of error because of the absence of data duplication and the separation of the data from the logical operations exercised upon the data; and a much clearer audit trail because, with a database, it is so much easier to decompose summary data into the detail from which it is derived than it is when using spreadsheets. With the passage of the Sarbanes-Oxley Act and the increased emphasis on the reliability of internal financial processes in general, these advantages of the database take on even more importance.
Sadly, though, the notion of a database as a general Finance tool remains a hard sell. Even though Access is a generalpurpose tool that is as adaptable as Excel and only marginally more difficult for accountants to learn and implement within the Finance department, most accounting managers seem to view it as something that somehow falls within the realm of the IT department and that cannot be deployed independently by accountants. And your cover story on budgeting and forecasting indicated that more than 50% of the companies surveyed were using Excel for budgeting purposes. This can only be because of an ignorance of database software and the unfamiliarity of accountants with its use. To me, it seems highly desirable that management accountants become more familiar with software that has such ready application and utility in the Finance function of almost every organization that is using spreadsheets for off-general-ledger accounting processes and reporting.
I'm not arguing in favor of using Access as an organization's primary accounting or ERP software or as a complete substitute for Excel. For most mission-critical financial and business processes, including sales, inventory management, and general ledger accounting, an organization needs some dedicated software application designed by computer software engineers and maintained and customized by an IT department or outside IT consultants. Likewise, Excel remains a very effective means of conducting data analysis and also, at times, for straightforward data processing and presentation, as when the data is coming already from a relational database in socalled normalized form and can easily be converted into something like a pivot table.
But when it comes to integrating, relating, sorting, and summarizing data, the advantages of using a database over spreadsheets seem so overwhelming that I can only hope that more accountants will learn to apply the technology.
Mark Baur, CMA, CFM