Accounting Best Practices, Fifth Edition

5–19. Purchase Budgeting and Planning Software

The vast majority of businesses create and maintain their budgets using an electronic spreadsheet such as Excel. Though this approach works fine for small organizations, it is quite unwieldy for large ones. The trouble is that individual departments create their own budget models using formats that vary from the one used by the budgeting department. When the budgeting staff receives these models from the various departments, they must manually reinput the information into a master spreadsheet, which is quite labor-intensive. Also, when any significant variable is added to the model, all related formulas must be manually altered and then tested to ensure that the model still operates properly. Further, it is difficult to track which department has submitted budget information or when it made its last update. For these reasons, larger companies have considerable difficulty using spreadsheets as the basis for a budgeting system.

The solution is to purchase budgeting and planning (B&P) software. This software maintains a central database of budgeting information that is automatically updated when users enter information. They can enter information in a variety of ways—via dial-up modem, through a local or wide area network, or the Internet (depending on what software is purchased). The software can also be maintained off-site by an application service provider (ASP). In addition, the software generates templates for data-entry use by each ...