What did 2013 look like from a financial model's perspective?

So what did 2013 look like
from a Financial Model’s perspective?

Excel’s 2013 World
2013 went by quickly, and few would deny that it was a significant year for the world.
China landed a rover on the moon, the US government shut down for the first time in 17
years, Bitcoin rose in popularity, and we mourned the passing of legends such as Margaret
Thatcher and Nelson Mandela.
So in keeping with the really big questions in life, we asked ourselves, “What did 2013 look
like from a Financial Model’s perspective?”
Here’s what we came up with …

1. MICROSOFT’S $500 EXC EL BILLBOARD ERROR
The spreadsheet in the image below has a miscalculation of $500 on a $9,500 budget.
It was obviously an incredibly complicated financial model!
While insignificant in amount, this error was material from a reputational perspective,
especially since it was slapped on a 50-foot billboard near San Francisco’s high-tech
SoMa district.

Fortunately, this error had no real financial impact, but the
Financial Models of 2013 thought this was hilarious!

© ACCESS ANALYTIC SOLUTIONS PTY LTD

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W:OPERATIONSEXCELWHITE PAPERS - AAWHAT DID 2013 LOOK LIKE FROM A FINANCIAL MODELS PERSPECTIVE.DOCX

2. REINHART AND ROGOFF’S FAMOUS PAPE R ON DEBT
SUSTAINABILITY
In 2010, economists Carmen Reinhart and Kenneth Rogoff released a paper, “Growth
in a Time of Debt” (http://www.nber.org/papers/w15639.pdf). They found that
countries with debt-to-GDP ratios above 90 percent have a slightly negative average
growth rate of -0.1%. Consequently, this became one of the most cited statistics in
economic debates among politicians in Europe, the US and UK.
In 2013 however, their conclusion was challenged by Thomas Hendon, Michael Ash
and Robert Pollin, who found an error in Reinhart and Rogoff’s paper. The paper
(Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart
and Rogoff) found that the average growth rate for countries carrying public debt to
GDP ratios in excess of 90% is 2.2%, not -0.1%.
The disparity between these two papers arose from a coding error in one Reinhart and
Rogoff’s spreadsheets that entirely excluded five countries i.e. Australia, Austria,
Belgium, Canada and Denmark. Have a look at the screenshot of the supposed
spreadsheet.

Financial Modelling help:
http://www.accessanalytic.com.au/Financial-Modelling.html

The Financial Models of 2013 were rolling on the floor laughing at
this one!

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3. MODELOFF 2013
“ModelOff”, described as the World Championships for Financial Modelling, saw an
increase of over a thousand participants from the previous year.
This is not something you’d only find in “Obscure Sports Quarterly” or on ESPN8, it
really does exist!
With over 3,000 participants from more than 100 countries, the competition had a
strong representation from accounting firms and investment banks that included the
Big 4 Accounting firms and bulge brackets like Goldman Sachs.

The 2013 Financial Models held their breath as they waited with
great anticipation for the winner to be announced …
“Congratulations Hilary Smart from Operis, UK”

Catch the Excitement! http://vimeo.com/80177852


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4. BIG BIG DATA?

Google Trends shows that internet searches for ‘Big Data’ have gained traction over
the last two years.
With the definition provided by Gartner that it is ‘high-volume, high-velocity and high–
variety information assets that demand cost-effective, innovative forms of information
processing for enhanced insight and decision making’, people began to question
Excel’s ability to cope with this new trend i.e. whether it has the serious processing
power to deal with large amounts of data productively.
As a result, a growing number of companies have invested in Business Intelligence (BI)
software solutions such as BOARD to help them centralise, better access and get a
better understanding of key business data such as sales and to predict future
performance.
BOARD & Business Intelligence tools:
http://www.accessanalytic.com.au/business-intelligence-software.html

The Financial Models of 2013 were wondering why they felt a bit
heavier … it wasn’t all those mince pies after all!


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So what’s a Financial Model Supposed
to do in 2014?
1. COME OF AGE
Financial modelling as a skill and industry has experienced substantial change and growth
over the last few years. We have seen the rise of specialist service providers like Access
Analytic, widely available training, a competition that has boosted its popularity and the
increasing popularity and adoption of standards such as FAST, BPM and SMART.
The modelling standards advocate good financial model design rules, with the objective
that models should be easily used and reviewed by others, and readily adaptable as
circumstances change.
As mentioned above, FAST, BPM and SMART are among the more notable standards.
While there are no material differences in concept and practice, we believe that the
setters of these standards should work together to create a single standard that regulates
terminology, assumptions and methods employed when building models. This should
lead to the production of financial models that are more consistent and transferable, and
will hopefully lead to an increase in confidence in the industry.
White papers (including Financial Modelling Best Practice Guidelines):
http://www.accessanalytic.com.au/White-papers.html

The Financial Models of 2013 are being dragged kicking and
screaming towards the standards!
2. ERRORS, DAMN ERRORS AND AUDITS
The model building process is tedious and prone to errors. PwC’s Deals Modelling team
once stated in a publication that the average model has more than 5 errors in it, usually
due to factors that include the fat finger syndrome and fatigue. Many other studies have
shown significant errors occur in around 80-90% of large models.
Any model used to support the output required for decision making should be checked
and tested at some level by an independent party (whether internal or external to the
organisation) for both logic and accuracy before being handed over to end users.
Reviewing your models regularly is a good habit that will mitigate, though not eliminate,
the risk of material errors.
Auditing Services & Free Spreadsheet Risk Assessment Checklist:
http://www.accessanalytic.com.au/Spreadsheet-Auditing.html

The 2013 Financial Models are living in eternal hope that they will
contain less errors in 2014!


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3. OVERCOME EXCEL’S LIMITATIONS
The availability, cost and ease at which Excel can be used still makes it the individual’s
tool of choice for analysing and reporting on corporate data. This means that Excel is not
about to go anytime soon, but organisations must be aware of its limitations.
In industries that move at break-neck speed, the need for real time information is critical.
This requires tools that have the potential to quickly get answers to business questions
and metrics when required.
The rapid pace of development means that users potentially spend most of their time
gathering out-of-date information in their spreadsheets. This has created an opportunity
for tools like BOARD to fill that gap, and improve organisational efficiency and decisionmaking.
In addition, because spreadsheets are best suited for use by a single user, they really
struggle in situations where lots of people need to view and/or have input such as
budgets, forecasts, and KPI systems.
Better Budgeting and Forecasting:
http://www.accessanalytic.com.au/budgeting-and-forecasting-software.html

The Financial Models of 2013 are happy , relieved and jumping for
joy at the thought of giving up some of the fragile, tortuous messes
they’ve been contorted into and handing these over to more
suitable, enterprise-level applications.

Thank you
We hope you’ve had a great 2013 and have enjoyed our tongue-in-cheek look at the year
that was.
We look forward to greater things happening in the world of financial modelling and
business intelligence, and believe that 2014 will be another exciting year!
Have a great 2014 and if you don’t want your financial models to suffer another year of
pain, get in touch with us!
Access Analytic
www.accessanalytic.com.au
info@accessanalytic.com.au
Ph +61 8 6210 8500


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Access Analytic Overview
OVERVIEW
Access Analytic provides modelling, reporting and analysis for medium and large organisations
to enable them to improve their financial and operational performance.
Our services include:
1. Financial Modelling – financial models to forecast projected results (e.g. for an acquisition
or merger, equity/loan capital raising, business planning, feasibility studies, project
economics etc.) under a variety of different variables and scenarios to allow the right
decision to be made with confidence. Access Analytic is the Asia-Pacific reseller of Invest
for Excel, Europe’s leading financial modelling software. We also audit financial models to
provide assurance and confidence.
2. Reporting – we have extensive experience in providing management reporting and
business analysis, having produced a wide variety of budgets, forecasts, board packs,
management packs, what-if analysis, and data visualisation models to help companies
streamline and manage their businesses processes to stay on top. Access Analytic is the
West Australian partner of BOARD software, for budgeting, forecasting, reporting, and
analysis.
3. Training – specialist courses in: Financial Modelling, Advanced Budgeting and Forecasting,
Company Valuations, Oil & Gas Financial Modelling and Project Evaluation, Petroleum
Rent Resource Tax modelling, Advanced Excel for Accountants & Finance Professionals,
VBA for Accountants & Finance Professionals, Invest for Excel, and Spreadsheet
Professional. Our suite of training options incorporates open or in-house courses, local or
international locations, and classroom or one-on-one styles.
We are based in Perth, Western Australia and the business was established in 2000.

Figure 1: Access Analytic Solutions Overview
Further details regarding Access Analytic Solutions have been included at Appendix A: Access
Analytic Details on page 13 below.


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Access Analytic provides services to clients located in: Australasia, Asia, Africa and the Middle
East. A selection of our clients is shown below:

ACCESS ANALYTIC: 201 2 RISING STAR

Access Analytic was named as one of the WA Business News’ Rising Stars for 2012, recognising
the success and achievements of our company.


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KEY STAFF
Jeff Robson, Principal Business Analyst
Masters (Applied Finance), BCom (Accounting & Information Systems), CISA, MAICD,
FAIM, F Fin, Microsoft Excel Expert

Jeff is the founding Director and Principal Business Analyst at Access Analytic
Solutions. He has over 20 years’ experience in chartered accounting, business
management and consulting.
Jeff holds a Masters in Applied Finance and is a Certified Information Systems
Auditor. He is highly regarded and recognised around the world as an expert in
the field of financial modelling.
His achievements have been recognised by his peers and he is a Fellow of both
the Financial Services Institute of Australasia and the Australian Institute of Management.
Jeff has extensive experience in best practice financial modelling, management reporting,
business analysis, and spreadsheet auditing and is also an entertaining international presenter
and trainer on these subjects.

Wyn Hopkins, Senior Manager
B.Sc. (Hons) Accounting & Financial Management, CA, MS Excel Expert

Wyn gained his Chartered Accountant qualification at
PricewaterhouseCoopers in the UK in 2000.
He has extensive Business Analyst experience in FTSE 100 financial services
companies (HBOS and Barclays in the UK) as well as GESB in Perth and
telecommunications companies industry in Australia.
Wyn is skilled in financial analysis, strategic financial modelling, management
reporting and forecasting, and value-based management techniques.

Yury Tokarev (Manager)
CA, PhD (Finance & Economics), GradDip (Accounting), BBS, Microsoft Excel Expert

Yury joined Access Analytic from WHK Chartered Accountants, where he was
involved in business services and advisory for four years.
Prior to this, he worked as a Corporate Finance Consultant at one of the top
European Investment Banks.
Yury has highly advanced skills in Excel and financial modelling, including the
development of VBA macro solutions.


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Rachel Gregory, Senior Business Analyst
BCom (Finance & International Business), MPA, SA Fin, Microsoft Excel Expert

Rachel previously worked as a Senior Accountant in the Business Recovery and
Insolvency division of an International Chartered Accounting firm.
Rachel then moved to commerce, working with an international energy
company as a Business Analyst.
Rachel brings a high level of expertise in financial modelling,
budgeting/forecasting and management reporting.
She is also an experienced and energetic communicator who specialises in
training and presentations.

Philip Aquilina, Senior Business Analyst
CA, B.Com (Accounting & Finance), Microsoft Certified Technology Specialist (C#
.net), Microsoft Excel Expert

Philip has many years’ experience in financial modelling having previously
worked at several Chartered Accounting firms.
He has also partially completed a BSc and is fluent in Microsoft Technologies
such as VBA Macro development and C# .Net

Brendan Broughton, Senior Business Analyst
BEng (Elec. & Comm.), Grad. Dip. App. Fin, Excel Expert

Brendan has a strong background in both engineering and finance. He has
worked in the finance and superannuation industry for over 7 years.
Using his unique background, he brings a diverse perspective to client
projects.
He is also fluent in VBA macro programming, has extensive financial modelling
experience, and has a strong analytical background.


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Sean Vincent, Senior Business Analyst
Masters (Economics) – current, MPA, BCom (Management & Marketing), Cert IV
(Property)

Sean has extensive experience as a financial analyst and previously worked in
this role in both London and Copenhagen for some of the world’s largest
companies.
He has also worked in consulting roles in KPMG and other Perth
consultancies.
Sean brings a high level of expertise in financial modelling, finance and
strategic analysis.

Jonathan Lim, Business Analyst
CPA, BCom (Accounting & Finance), Grad. Dip. (Applied Finance)

Jonathan has significant experience in banking and finance, having previously
worked as an Analyst for the Royal Bank of Scotland,
PricewaterhouseCoopers and Ernst & Young.
He has experience across a wide range of industries including stock-broking,
motor vehicles, life sciences, shipping, and banking.

Neale Blackwood, Contract Business Analyst
CPA, B.Bus (Accounting), Microsoft Excel Expert

Neale is a CPA with over 20 years’ experience in accounting, budgeting,
management reporting, and developing spreadsheet applications.
Neale has extensive experience across a broad range of industries including
mining, education, property, forestry, government, and construction.
Neale is the CPA magazine’s authority on spreadsheets and related subjects,
and writes a monthly column for this publication.
He is also a sought-after speaker and trainer regarding the use of Excel,
particularly by accountants.

Brett Rawcliffe, Senior Database Analyst
MACS

Brett is a highly experienced database analyst and is regularly in contact with Microsoft
regarding their Access database software.
Over the last 13 years Brett has developed over a 100 database solutions for companies of all
sizes, from sole traders needing a simple contact manager to multi-nationals needing to
develop specialised systems to complement their organisation-wide systems.

PAGE 12 OF 13


Appendix A: Access Analytic Details
Access Analytic Solutions Details
Full Name:

Access Analytic Solutions Pty Ltd

Address:

Suite 143, Level 1 580 Hay St
Perth WA 6000
Australia

Phone:

+61 8 6210 8500

Fax:

+61 8 6210 1662

Web:

www.accessanalytic.com.au

ACN:

091 625 697

ABN:

64 091 625 697

Contact:

Jeff Robson, CEO
E: jrobson@accessanalytic.com.au
M: +61 4 1258 1486


PAGE 13 OF 13


What did 2013 look like from a financial model's perspective?

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What did 2013 look like from a financial model's perspective?