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Only 8% of all responding companies report that they are able to complete their revenue reporting process without having to take data offline and into spreadsheets. The rest of the surveyed companies use spreadsheets, which are prone to errors, lack audit capabilities and resist internal controls. These results should be a concern for corporate finance departments, executives, and investors and auditors alike, because the risks introduced by spreadsheets go against basic compliance principles.

Spreadsheet Use Highlights Business Process Weakness In Largest Companies

According to the survey, more than half of all companies use spreadsheets to create their accounting entries for revenue. Other spreadsheet-based tasks include revenue scheduling, allocation, and redistribution based on accounting guidelines. Surprisingly, public companies with more than $200 million in revenue are substantially more reliant than the overall sample on spreadsheets for revenue accounting entries.

Improving the Processes — Top Priorities

When asked to identify the single most important change they would make to improve their revenue accounting processes, the top three answers were:

1. Enhance revenue recognition functionality in financial systems (22%)

2. Establish single source of “clean” revenue data (19%)

3. Implement business intelligence solution for analyzing revenue (18%)

Source: www.RevenueRecognition.com and IDC, 2006 (n="685)

Message Behind the Results

Even with corporate compliance at stake, there are significant obstacles to overcome in automating revenue reporting processes. “Revenue recognition processes are dependent upon information from multiple sources and typically cannot be executed in existing enterprise systems,” said Kathleen Wilhide, Director of Compliance and Business Performance Management (BPM) Research at IDC. “What is required is automation across this function which will yield a host of benefits, including: more accurate results, better internal controls, less reliance on uncontrolled spreadsheets, and freeing up time for performance analysis.”