Spreadsheet risk revealed
Written by Janet Swift   
Monday, 06 June 2011

Some disturbing statistics have emerged from a survey of spreadsheet users which suggests that businesses may be placing undue trust in the integrity of the analysis captured in their spreadsheets.

Spreadsheets are widely used with business-critical data and yet they are not subject to the same scrutiny accorded to programming or to databases.

Rather they are treated as if they were ad-hoc tools for making estimates or coming to informal conclusions - and this can have serious implications as pointed out by ClusterSeven, a company which provides strategic spreadsheet,  and data management software.

In an interview survey conducted on its behalf May by Consumer Intelligence  72% of  1498 respondents admitted that no internal department checks their spreadsheets for accuracy. Only 12.9% said that Internal Audit reviews their spreadsheets, while a mere 1.1% receive checks from their risk department. It was also revealed that 56.5% of spreadsheet users have never received formal training on the spreadsheet package they use.

Ralph Baxter, CEO of ClusterSeven, said:

"This research is a clear indication that organisations are systemically failing to properly control the way in which spreadsheets are being used and managed. Over the last number of years, high profile cases have brought spreadsheet usage to the forefront of organisations risk management procedures, but unfortunately governance has yet to catch up.. Organisations need to understand the risks they now face, and not when a serious financial error has arisen."

Further research by ClusterSeven has shown that 47.2% of users made between one and four errors on their spreadsheets, while 11.6% made between five and 10 errors and 6.6% made more than 11 errors.

Ralph Baxter commented:  

"It is clear that the prospects for serious errors occurring within spreadsheets are very likely, with over 65% of interviewees admitting to making mistakes. This is extremely worrying considering that organisations rely on carrying out business critical data processes using this tool, which some cases involve millions of pounds in transactions."

Yes it is disturbing that spreadsheet errors are so prevalent in situations where they could and should be eliminated by suitable auditing procedures. Many spreadsheet users are unaware of the standard auditing facilities that are available to them and this in turn probably calls for training.

So the fact that over half of the survey's respondents have never been offered any formal training in the use of the spreadsheet package they have to work with is a disquieting finding.

 

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