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$10B Annual Tab for Spreadsheet Errors?
theodp writes "According to PWC and KPMG, more than 90% of corporate spreadsheets have material errors in them. With each error costing between $10K and 100K per month, one expert estimates corporate America loses in excess of $10B annually through the misuse and abuse of spreadsheets." From the article: "The key point about spreadsheets is that you need to know which ones are critical to your business, which ones are merely important and which ones you do not have to bother too much about. Once you know that, you can start to apply appropriate policies depending on the criticality of the spreadsheet involved."
I am an excellent proofreader. Pay me $10K per month to proof all of your spreadsheets. My job will pay for itself!
I run both perl and excel on my windows computers. Perl versions for windows have been out for a long time.
it's like proof that god exists and he doesn't want us to be happy using computers.
sorry, but I think it has been stated many many times that he just doesn't want us to be happy period.
This is why double bookkeeping was invented in the first place: Having one column being the checksum for the other column. Spreadsheets don't necessarily provide checksums (you have to code them into the spreadsheet, and people are lazy), so it is not easy to spot if there is a typo somewhere.
And if it goes about error margins: I once was programming for a large real estate bank, and we had to do a report for interest coverage calculation (that is: proving that you didn't lend more money to your customers than you can cover with your own capital and enough debt bills from the finance markets). At first the sums our report was showing were $20 mio away from the sums the Finance Controlling was calculating. Finance Controlling was refusing the report until the sum was below $2.5 mio. So the report was reworked, differences in the interpretation for contracts were ironed out, errors corrected, and finally we had a report which was close to the $2.5 mio error. This was the point when Finance Controlling themselves started to look for their own errors. In the end their spreadsheets proved to be wrong for about $3 mio, and they used our report to consolidate.
There were two lessons for me:
First: For a large bank a bookkeeping error of $2.5mio is acceptable.
Second: Computers don't solve problems double bookkeeping is pointing out. So if you have a chance to recalculate your finances from a new point of view, do it. It might save you $$$. Computers and double bookkeeping are orthogonal to each other when it comes to finances. Both cover completely different areas of correctness.
Recently I have been working for a company redoing their budget model, basically a lot of interlinked spreadsheets. Using the model I made there was a fair difference between my end conclusion and the original messy sheets that cross/circularly linked to each other... I think its defiantly worth rebuilding critical financial models such as this from the ground up and leaving as little hard typed values as possible. In the model I made there was a minimum of input data and everything linked from that. This makes it a lot easier to check mistakes and it enabels every report to be spontaneously generated as and when data is avaliable.