The Alberta government is potentially losing millions of dollars by not updating a cash management system that uses spreadsheets manually updated on a daily basis, the province's auditor general has found.

"The way cash management is being handled is arguably ... antiquated," Auditor General Merwan Saher told MLAs on the public accounts committee on Tuesday.

An audit of Treasury Board and Finance released in the auditor general's February 2016 report found government staff updating spreadsheets manually every day.

The need for a new system was first identified in 2004, but funding was never granted.

The report says the absence of a modern system prevents the government from managing cash efficiently and economically.

The audit found the government is losing $20 million in potential interest payments for every $1 billion it keeps in cash.

Saher says any change must have the co-operation of many departments and require a change in legislation. It would also be expensive, but the benefits would outweigh the costs, he said.

"Matters of this nature become far more prominent when one is in a situation of fiscal constraint," Saher said.

"It sharpens the mind. People should be looking at every way of doing business better, and if the opportunity is not seized now, I wonder when it would ever be seized."

Saher called the modernization of the system a major undertaking that would be too large for existing staff to update.

Finance Minister Joe Ceci said work on the new system started in 2015. 

"We have an IT plan that will streamline the management processes, because we can do a better job and we're going to do it," he said.