Spreadsheets are widely used in finance and business planning, as 95% of U.S. firms use them for financial reporting, and 85% use them for forecasting, budgeting, and reporting. However, spreadsheets are prone to errors, with studies finding that 20-40% of spreadsheets contain errors, and 90% of complex spreadsheets audited had errors. The most dangerous errors are logic errors, as they are difficult to detect and can lead to large financial mistakes despite appearing valid.

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 RatherHuman error rates:Simple mechanical tasks, e.g. typing = 0.5% error rateComplex logical activities, e.g. programming = 5% error rateSpreadsheet errors:Consultants have said that 20% to 40% of all spreadsheets contain errorsCoopers and Lybrand found that 90% of all spreadsheets with more than 150 rows that it audited contained errorsSource: 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 detectSource: 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