From startups to factories, every type of organization relies on data. Business plans, strategies, and major decisions are made based on data collected and managed over a certain period of time. For all of these organizations, the quality of their information is vital.
The term data integrity “refers to the reliability and trustworthiness of data throughout its lifecycle.”
Finance departments rely on vast amounts of data, all managed in Excel spreadsheets. The importance of data accuracy is clear, and yet it is still allowed to be subject to something as uncontrollable and unpredictable as human error. One mistake hidden in thousands of rows of data can influence bottom line numbers and official reports in public companies, and mislead important insights.
It is no wonder that professionals in the finance industry are concerned.
The real issue is, there is no good alternative to Excel. And the matter of fact is- finance departments, organizations, and professionals will undoubtedly continue to use it.
How Are Errors Missed?
While data can be collected and calculated using algorithms and automated programs, there is still quite a lot of human intervention along the way. Files are shared with and edited by different people within an organization, making it very difficult to track the most updated file.
Many changes are made by employees and not computer programs, which introduces the element of human error once again. The finance department usually needs to collect and manage this data from various sources, and with the volume involved, finding one mistake is near impossible.
When it comes to financial statements, with calculations upon calculations that rely on data from different locations, one mistake can make a significant difference to the end result.
Financial Horror Stories
Take for example the case of TransAlta, a Canadian power generator company that once suffered a $24 million loss due to a simple spreadsheet error.
TransAlta chief executive Steve Snyder said the snafu was “literally a cut-and-paste error in an Excel spreadsheet that we did not detect when we did our final sorting and ranking bids prior to submission.”
Worse still, sometimes financial mistakes can come at the expense of everyday people. One such recent unfortunate mishap occurred in Ireland and was reported in RTE. A State fund that was supposed to support jobs in the country lost €750,000 on an investment due to a human error that wrongly categorized a sum of money as euro, when it should have been in dollars.
What To Do? Stop Using Excel?
Excel is a powerful tool with obvious benefits (i.e. flexibility, VBA, ease of use, etc.), and while there are significant issues with regards to data integrity, that does not mean that an alternative to Excel needs to be found.
Organizations need to understand the issues they are facing and find solutions that address each and every one of those issues, including tools and best practice guidelines for company employees. In this article, we introduce a few guidelines that can help companies significantly reduce errors and improve data integrity.
Monitor and Control
The larger the organization and the more people that work on the same data, the higher the chances of making mistakes. Data is shared and edited throughout the organization, and this can quickly lead to lost and wrong data. Monitoring and tracking spreadsheets and their most updated versions at all times can prevent this and significantly reduce the risk of errors. While this can be done manually, larger organizations would benefit from a technology solution that can make this process more efficient and reliable.
Permission and Access
Preventing access of certain files to unauthorized personnel is not only about security and protecting private data. It also helps avoid situations in which someone opens and edits, or erases, important data from spreadsheets by mistake. When managing large amounts of data, it is important to define who has access to which files in order to increase security and improve data integrity.
Tracking and Monitoring Changes
Assuming only authorized personnel can access the data, and management knows what the most updated version is, there is still a matter of ensuring that all changes are approved. These changes include both direct changes made by a user, or changes to formula results. Being able to see who made what change, and at what time, can help detect errors as they occur instead of further down the line, when it is much more complicated.
Understanding the EUC Landscape
The EUC (End User Computing) landscape refers to the integration of non-programmers in the data management systems. It is important to document and constantly update all EUCs. The more information that can be provided, the lower the risk of errors. Examples include data owner, dependencies, risk level, department, lifecycle stage, etc. This helps managers and decision makers within an organization to identify what spreadsheets, data, and applications require their attention based on priority. It also provides an opportunity to identify and embed best practices to improve EUC and data management. For example, changes on important spreadsheets should be approved before accepted, either by another employee or using automated review processes to look for anomalies.
These types of frameworks are also a great way to ensure compliance with industry or government regulations.
When data integrity is compromised, it is almost exclusively a result of human error. Manually ensuring data integrity and accuracy is not only impossible when dealing with large volumes, but worse still leaves organizations vulnerable to further human error. Automation in review and management processes can therefore mitigate risk and save organizations both resources and man hours.
Spreadsheets aren’t going anywhere in the foreseeable future, but that doesn’t mean companies and organizations need to settle for unreliable data.
Throughout the stages of data collection, management, and review, there are many ways technology solutions can be used to automate entire processes and make them more efficient.
Enhance Financial Processes With Datarails
With Datarails, financial processes can be completed in a fraction of the time without asking you to leave the familiar environment of Excel.
Organizations benefit from an enterprise-class platform that lets employees use Excel, a tool built for personal use, on an organizational scale without running the risk of inaccuracy, unnecessary errors, or data loss.
Finally, decision-makers can rest assured that they are basing organizational decisions on solid foundations thanks to the system that transforms tedious, labor-intensive processes into coherent, simple ones within days.
Datarails is an enterprise-class FP&A software that empowers each finance professional to independently work with data and deliver actionable, data-driven insights. Finally, count on numbers you can trust and reduce inefficiencies without having to change how you work on Excel. With Datarails, strengthen the connection between finance and operations to drive better organizational decisions.