|Stanley Zarowin is a senior editor on the Journal . Mr. Zarowin is an employee of the American Institute of CPAs and his views, as expressed in this article, do not necessarily reflect the views of the AICPA. Official positions are determined through certain specific committee procedures, due procedures and deliberation.|
Early in the 1970s, mainframe computers at many banks, securities firms and insurance companies began to generate unexpected errors when they calculated information involving dates that spanned the period before and after December 31, 1999. Both the managers and the data-entry clerks were baffled by the errors; not so the computer programmers. They knew what caused the problem, and they also knew it would grow more serious as the year 2000 approached. Because the years had been recorded in the computers memory as two digits instead of four—97, for example, instead of 1997—as we moved closer to the year 2000, the computers would have increasing difficulty determining in which century to place a two-digit year designation.
But for the most part those who understood the problem kept silent. After all, they figured, why worry management now? They were sure that somehow, someone, somewhere would find a way to solve the problem before the clock tolled midnight on December 31, 1999.
They were wrong.
As it turned out, the odds of finding a quick, easy solution today are no better than the likelihood that the year 2000 will never come. In fact, many of those who now labor over the problem wish that the year 2000 would never come—or at least not quite so soon. As 1997 ends and with only two years before 2000, its become clear that, while surely fixes are available, in many cases they are not going to be easy, fast or cheap—and, in some cases, they probably wont resolve the issue entirely.
UNTANGLING THE PUZZLE
The problem goes by the shorthand name Y2K (for "year two thousand"); however, an increasing number of those struggling to untangle the puzzle describe it in language that cant be repeated here. As it turns out, Y2K affects not only large computers and their software; its poised to foul up personal computers (PCs) and any software application programmed with a two-digit year field rather than a four-digit field. And that includes accounting software, computer operating systems, programs that run VCRs, time-controlled vaults and hundreds, if not thousands, of other date-dependent electronic equipment.
Whats behind the problem?
In the early days of computers, when hard-disk memory storage was expensive, programmers were cautioned to conserve memory space. So, instead of creating a four-space field in an application program where a year was to be inserted, they economized with just two—after all, they figured, 2000 was in the next century. Two digits may sound like an insignificant savings, but when you consider that two digits were being saved in hundreds of millions of data fields, the savings actually added up to a significant sum. Although, in retrospect, the savings may not be as significant as the expected cost now of inserting those two blank spaces in both application software and the billions of data fields.
However, not everyone agrees that economizing then was wrong. Two professors writing in a recent issue of the Journal of Systems Management calculated that, over the 30-year period when two-digit economy was designated, a typical organization saved over $1 million per gigabyte of total data storage. And, they added, if that savings had been invested wisely during the period, it could have produced a fifteenfold return—more than enough, they speculate, to pay for the remedy today.
That reasoning, however, doesnt satisfy many enterprises facing the daunting task of fixing their software.
THE ULTIMATE PRICE
In reality, no one is really sure how much the fix will cost. The Office of Management and Budget estimates the federal government itself will spend $3.8 billion. Commercial banks forecast their price tag at $9.3 billion. J. P. Morgan, the investment bank, came up with a worldwide estimate of $200 billion and the Gartner Group, a think tank that does computer consulting, upped that estimate and reported a worse-case worldwide cost of $600 billion.
While the mechanical cost of the fix is not known for sure, what is known is that its going to cost more than just a massive software and database fix. Its more than likely that multimillion-dollar lawsuits will be filed by shareholders and others who either will be injured by the problem or will maintain that a companys management, or its accounting firm or other consultants, failed to take effective and timely action. For more on the legal and professional impact the Y2K program will have on CPAs, see the article "Risks and Liabilities" .
Complicating the solution is the fact that much of the two-digit software was written in a computer language thats no longer popular—COBOL—and, as luck has it, there arent many experienced COBOL engineers around. However, considering the sudden demand for such specialists, you can bet that loads of programmers are cracking open how-to COBOL textbooks. One such book, Teach Yourself COBOL in 21 Days, by Mo Budlong, has been selling at the rate of 2,000 a month. And you can bet that those elite COBOL programmers are charging fat premiums to do the emergency fix-ups.
Further complicating the problem is that most of the COBOL code written for old mainframes was not well documented, which means the only way to locate the errant code for the two-digit-year fields is to laboriously go through every single line of code for the application and then sift through the even more numerous data fields themselves. For a typical application, that could mean several million lines of code and many more millions of data fields.
And as if thats not enough, many of those old COBOL applications, which were written for the big mainframes, were updated to operate on midsize computers and even on personal computers—which simply spread the two-digit "infection" to other, more popular applications.
|... As If Thats Not Enough|
The coming of the year 2000 raises another, more mundane problem. No one is certain how to pronounce it. Is it twenty hundred or two thousand ?
And, while we keep speaking of the new millennium, technically the new millennium doesnt begin until January 1, 2001. January 1, 2000, actually is still in the 20th century.
But tell that to your computer.
There is yet another dimension to the problem that has nothing to do with application software and the number of digits. Older computers contain a special hardware chip, called a BIOS, which, among its many other functions, tells the computer what time, day, month and year it is. Since those chips are hardwired (a built-in program), they cant be reprogrammed, and many of them are not prepared to recognize dates beyond December 31, 1999. So on January 1, 2000, the BIOS chips in many computers will read the year as 00 and will conclude the date is January 1, 1900. Others, because of a slightly different design by its manufacturer, will default to the year 1980 and still others to 1984. The only way to get the right date is to remove the chip and replace it with a new, correctly programmed one.
Most newer computers have whats called a flash memory chip that serves the same purpose; luckily, that chip can be reprogrammed to be Y2K-compliant, and vendors are supplying updates to do that.
Thats the good news; the bad news is that, so far at least, there is some doubt whether all the new chips will totally solve the problem. Even after youve reprogrammed or manually changed the BIOS internal clock to January 1, 2000 (for details on how to make the change, check the instructions that come with your PC or call the vendor), and your screen date actually reads January 1, 2000, theres no guarantee your applications will accept the new date. As a test, after youve changed your PCs setup data, run some date-sensitive applications with test information and see how it will deal with the new date; you may find the data is calculated correctly or you may discover that some files get saved to one of those odd default dates: 1990, 1980 and 1984.
Quicken 3, for example, has problems with the year 2000 even after a computers internal setup has been changed to January 1, 2000. When you input transactions for the next century, it sometimes reverts back to 1900. A fix is in the works and may be ready by the time you read this.
Commercial software is available to confirm that a BIOS change is effective; check your local software retailer for such products. Also, free software (called freeware) is available to help run tests. To get such software, search for the following programs on the Internet (key word: freeware): DOSCHK, 2000Test, 2000Fix and Year2000.
Now for the really bad news. After youve done everything you can to make your computer systems Y2K-compliant, you will likely run into at least one more minefield if you regularly import data from the outside world and its year-designation information is in the two-digit format. If the year designations in your data have only two digits, and your application and database have been updated to four fields, your computer will have to decide in which century to locate the data, and without some help, its likely to decide incorrectly much of the time.
In the following article—"Can Your Software Make It Into the Next Century?"—that problem is addressed with whats called the two-digit windowing or the pivot solution. As that article explains, there are multiple ways to address the Y2K problem: Some are relatively easy and some are relatively hard. But, alas, none are foolproof.
To find out how the popular spreadsheet applications—Microsoft Excel and Lotus 1-2-3—handle the Y2K problem, see the article "Spreadsheets Face the Millennium" .
But as one wag recently said, "I dont know why everyone is
hurrying to solve the Year 2000 problem. December 31, 1999, falls on a
Friday, so theyll have the whole weekend to work out a solution."
|AICPA Has Help at Hand for the Y2K Issue|
The American Institute of CPAs published a new book that further explains concerns involving the Y2K issue as well as a video on the same subject.
Solving the Year 2000 Dilemma , by Sandi Smith, CPA, features case studies and offers CPAs timely information on the Y2K issue in plain English. The book addresses where the problem exists and how to recognize it and offers readers possible solutions. It also gives insights into the corresponding accounting, legal, insurance and business issues involved. The book costs $29; pricing is slightly higher for nonmembers. The product number is 093008JA.
The video, Y2K: The Year 2000 Crisis, is 8 minutes long and calls attention to the Year 2000 issue and the impact it will have on the accounting profession. The video is free; however, there is a $7.25 shipping and handling charge. The product number is 889565JA.
Call the AICPA order department at 800-862-4272 to order either of the above.
Also, a detailed publication, The Year 2000 Issue: Current Accounting and Auditing Guidance, developed by a task force of practitioners and the AICPA technical services staff, is available on the AICPA Web site— http://www.aicpa.org/members/y2000/index.htm .