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Audit Assistance, Best Practices, Compliance, Corporate Income Tax, Cost-Basis Reporting, Forecasting, Global Tax Compliance, ONESOURCE, Risk Assessment, Tax Automation, Tax Provision, US Income Tax Compliance, WorkFlow Manager February 23, 2012

A Closer Look at What Controls Your Excel Add-in Provides and What it Doesn’t

The day has finally come when tax technology professionals have great reasons to recommend the use of spreadsheets for tax processes.  The growing array of new Excel Add-in tools, responding to many of the historical risks related to spreadsheets, are giving flexibility back to corporate tax departments.  Now is a good time to review best practices for spreadsheet usage and understand the efficiencies and controls your new Add-in  may or may not provide.  We have probably all experienced the frustration of a broken spreadsheet. A risk historically associated with spreadsheets is calculation accuracy.   


The controls to address this risk include:

    • Test (and document) the spreadsheet calculations before putting into production
    • Protecting spreadsheet formulas
    • Control who has access to the spreadsheet to make changes with passwords or protected folders
    • File naming convention with dates and versions

While the new spreadsheet tools improve data collection, manipulation, and computation efficiency, it is still up to the spreadsheet developer (me, you and others in your tax department) to apply appropriate safeguards. 

Recommendations for spreadsheet development even in the new integrated environment include:

    • Test the calculations with a range of data values, for instance, is the result accurate if the input value is negative rather than positive.
    • Document the purpose of the spreadsheet and each tab (either in a separate tab or at the top of each tab in the spreadsheet).
    • Clearly describe the sources of data needed in the spreadsheet and used in initial testing.
    • Adopt a framework or standard format when possible.
    • Sequence the spreadsheet’s execution (what happens if executed out of order).
    • Include a maintenance log to document specific updates made to the spreadsheet, the date and reason for the change.
    • Update your workflow process to include the new tool (does the file type need to be manually refreshed and under what circumstances).

Excel Add-in tools provide increased automation in data collection and movement of data between data sources and tax software. Well-designed spreadsheets can provide standardization of calculations and minimize “ad-hoc” Excel user modifications, reducing risk. There are a variety of Excel Add-in and other spreadsheet automation tools available. Understanding which controls are inherent in a particular tool and which ones require the standard protections is critically important when implementing the new Add-ins. 

Questions to Ask:

Does the tool automatically provide version control?  Are all formulas locked and what level of access security and training is required to make changes?  Does the sheet refresh automatically or require a manual operation? 

The new tools available for integration with your software and process clearly provide flexibility and automation that will benefit your tax function.  Risk is generally reduced relative to a stand-alone spreadsheet, but care is still required when developing a spreadsheet that will be imbedded into your tax process.  Welcome back Excel – we missed you!

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