2. Importance of Spreadsheets “Spreadsheets are integral to the function and operation of the global financial system” -FSA Regulator, 2005 95% of U.S. firms use spreadsheets for financial reporting (Coda) 85% of business leaders use spreadsheets in reporting and forecasting and budgeting (IDC) 47% of mid-sized companies use stand-alone spreadsheets for planning & budgeting (Hacket Group) Source: Panko 2008

3. Human and Spreadsheet Error “To err is human but to really foul up requires a computer. ” - Dan Rather Human error rates: Simple mechanical tasks, e.g. typing = 0.5% error rate Complex logical activities, e.g. programming = 5% error rate Spreadsheet errors: Consultants have said that 20% to 40% of all spreadsheets contain errors Coopers and Lybrand found that 90% of all spreadsheets with more than 150 rows that it audited contained errors Source: Panko 2008

4. Common Types of Errors “A man's errors are his portals of discovery.” - James Joyce > Logic error rates higher than mechanical errors ! Most dangerous type of error; difficult to detect Source: Panko 2008

5. Error Stories from Consulting “I updated a spreadsheet with some new data and this resulted in invalid cell references which I didn’t catch – this was a $50M error!” “My officemate just yesterday forgot to copy something down once, and it resulted in numbers being way off.” Source: Interviews with Analysts at Cornerstone Research