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Errors in Excel worksheets can have large consequences

Friday, April 25th, 2014 / by ExcelHelp

A small error in an Excel worksheet can have large consequences.

The use of Microsoft Excel to create spreadsheets has long been a business standard. The platform has helped numerous organizations improve how they operate and find trends. However, as with any system that has a high level of human involvement, there can be errors made by those that do not fully understand how to use the software.

An article from The Wall Street Journal’s MarketWatch examined how bad the situation can get when organizations make mistakes with their Excel worksheets.


The impact of oversights in your spreadsheet

According to Ray Panko, a professor of IT management at the University of Hawaii, bad spreadsheets practices are still widespread. In fact, he estimates that 88 percent of worksheets contain an error. Even with careful development, one percent or more of all formula cells has a mistake and when you consider how large some documents can be, with thousands of formulas, that could mean there are dozens of undetected errors.

While it is easy to think that you could have a mistake in a family budget or with the books of a small business, one would think that larger organizations would be able avoid them. But that is not always the case.

The article mentioned a Harvard economics study that was released in 2012 by Carmen Reinhart and Kenneth Rogoff. There was a mistake where certain spreadsheet cells were not included in specific formulas which caused the report to overstate the impact debt burdens have on a nation’s economic growth.


Avoiding common errors

Patrick O’Beirne, the chairman of the European Spreadsheet Risks Interest Group, said that the mistake could have easily be avoided.

“Technically, the Harvard error could have been spotted by simple tests, such as pressing Ctrl + [ on a formula, to show what cells feed into the total,” he says. “There are also many software tools, such as XLTest, to point out structural flaws.”

He went on to say that this problem is created because many companies do not double check their spreadsheets. While the text used in a press release or white paper will be passed along to multiple people for edits, that is typically not the case when it comes to a spreadsheet. This is where the small errors that have larger consequences slip through.


Preventing future complications

There has been a push for a widespread certification program that would help ensure best practices are followed by anyone making a spreadsheet.

Instead of following this path, organizations can partner with a consulting firm that can help with Excel functions and ensure errors are kept to a minimum.


Friday, April 25th, 2014 / ExcelHelp ExcelHelp / no Comments

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