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I recently read an article wherein a commentor made the following comment:  “Excel has one longstanding bug that I know of when fitting higher order polynomials...”  Yup, I thought.  This fellow is NOT using Excel for accounting. The power and useablity of Excel has made it one of, if not the, most powerful and widely-used programs in the world.  Estimates are as high as 300 million people use Excel every day.  However, as the gentleman’s comment at the beginning of this page makes clear, we all have different needs.  I don’t think I will ever uncover that bug he mentions, but he likely won’t uncover the bug one of my clients had with operating a macro I designed for an ordering system.  And yet, both of us consider ourselves, at least, power users. This is one of the major reasons I decided to create this site.  There are a lot of general Excel courses, but once you get past the basics, very few of them address, to any significant degree, how to use this powerful program specifically for the art and science of Accounting. Here are a few of the specific needs for accounting users of Excel: 1. Show your work.  As accountants, we are supposed to be “number people”.  A sales manager can have an error on his forecast spreadsheet, and no-one thinks too much of it.  However, the slightest error on a forecast built by an ACCOUNTANT will lead to all kinds of wailing and gnashing of teeth.  Unfair?  Not really.  The sales manager is supposed to be good at selling and motivating sales people; he is not expected to be particularly good with technology or math.  The Accountant, however, is supposed to be accurate with numbers - after all, accuracy is one of the founding principles of Accounting.  And that leads to a major difference in how we approach working in Excel:  Someone is going to critically review our work. If that sales manager says he closed $5M this quarter, and you say $4.3M, you can be assured that YOU, the accountant, will be required to justify your number.  So, be prepared, and always structure your work for review. It is for this reason that many functions in Excel are functionally useless for the accountant.  Financial functions, array functions, some macros - basically, anything which obscures the underlying logic is verboten for the accountant.  A big reason pivot tables are so valuable for accountants is that they are derived directly from the underlying data, allowing the accountant to present summary information that can readily be drilled into to show the underlying numbers. Always, always, always remember that someone else will review your work, and treat it for what it is:  a presentation of your efforts and a support for your opinion.  2. Build sheets for others.  This is akin to number one, but different.  Since we are supposed to be accurate, and we are often the defacto “Excel Gurus” in our companies, we are typically required to build “spreadsheet applications” for use in the company.  Instead of people just reviewing your work, or challenging it, we are here considering that other people will use your spreadsheet as part of THEIR work product.  I’ve built spreadsheet tools for sales managers, marketing VPs, Payroll departments; virtually every department head I’ve ever worked with ended up relying on my spreadsheets for some part of their daily work. Now, the accuracy thing was still important, but equally important was user-proofing the spreadsheet.  Whether it is a Customer Service Manager or your AP clerk, some one will use your spreadsheet, and I guarantee they do NOT think like you do.  That very obvious yellow highlight on cell C15, which CLEARLY indicates an input, will certainly be seen as a constant by your user.  The instructions you put (sensibly) on the tab labelled, “INSTRUCTIONS”, will be routinely ignored, if they are even read.  And, eventually, you will get that dreaded call: “It doesn’t work!  I tried everything!  Why doesn’t it work?” Or worse, you won’t hear anything, but they will use something other than your worksheet to do their work.  If you’re lucky, the worst that results is that your time building the sheet was wasted.  However, it’s more likely that, by circumventing your worksheet, important data may be lost.  And, of course, it is your fault. The most dangerous user is, of course, your future self.  At some point, you will be looking over the structure of your spreadsheet, and while you are CERTAIN that there was a good reason for it, you can’t for the life of you remember WHY you coloured the range B15:C17 orange - it means something, surely, but...what?  You know you will never recall the reason until AFTER you erase it, right? So, always, keep in mind the hapless user of your spreadsheet.  Document everything.  Set sheets up to print without any need to adjust the print settings.  Give clear headings.  Group like things together.  Keep all the things that are related to each other in one workbook.  Use macros to automate internal spreadsheet functions, and provide buttons to execute those macros.  Learn how to protect your worksheet/workbook effectively.  In short, minimize the opportunity for the user (especially your future self) to make a complete hash of your work. 3. Our discipline does not lend itself to the computer age.  When Excel sums a range, it expects that positive numbers are added together, and negative numbers are subtracted.  Needless to say, this doesn’t make very much sense in an income statement, where the expenses (positive numbers) are subtracted from the Revenues (other positive numbers) to derive operating profit.  Even more confusing is the next section of the income statement, where “Other Revenues” are shown as negatives and Other Expenses are positives - the absolute value of the revenues is ADDED to the Gross Income, and the positive Other Expenses are subtracted from it. In general, because Debits and Credits do not neatly line up with Plus and Minus, or Increase/Decrease, we always have to be cognizant, not just of the numbers, but also the context, so that we don’t inadvertantly add Depreciation Expense to Deferred Revenue. In short, there are many functions we can’t use, though they would be helpful, and there are unusual contextual requirements to our work, and to others reliance on it, that lead to a different approach to Excel for the accountant.  And that’s what this website is about.

Why Excel is different for Accountants