According to research from the Fast Standard Organisation (FSO), there is no standard way of presenting financial information across Whitehall and so finance professionals waste too much time working through complicated spreadsheets.
The report found that the cost to the broader UK economy is at least £300m, and the cost to the taxpayer around £70m.
The FSO is a joint industry not-for-profit body which has been created to campaign for higher standards of financial modelling, supported by firms Grant Thornton and Mazars. This research has been published to coincide with the body’s launch.
“No major budgeting decision in government or business is taken without a financial model being created”, said FSO board member Kenny Whitelaw-Jones, “yet finance professionals have no common spreadsheet modelling language or standards to work from.”
“The waste and extra work this creates is costing taxpayers at least £70m a year on our most conservative estimates and the damage to the broader economy is outrageous – certainly reaching hundreds of millions and possibly billions. The frustration here is that the solution, a common standard, exists and is simple to implement, proven and is readily available.”
The FSO is urging financial bodies and government to sign up to shared guidelines called FAST that are continuously updated and give a “global language” for building financial models. The FSO says this unified approach could save government a lot of money and time, and points to the example of Edinburgh council, which has saved £100,000 a year from adopting FAST method of standardising financial modelling.
Jerome Brice, partner at Mazars, said, “The FAST Standard could be of real benefit in government procurement processes. If procurers insisted on bidders models being FAST compliant it would ensure greater transparency and an uplift of standards across the industry”.
“It is time for financial modelling to grow up”, said FSO Board Member Morton Siersted. “And it is time financial professionals adopted one clear standard for financial modelling that will allow better decisions to be made in less time, with less risk of serious error.
“Just within government this could return millions to the Treasury”.