Spreadsheet errors marked as major business risk
As business accounting becomes increasingly reliant on technology, errors in spreadsheets could pose a threat to the financial stability of many companies, according to the Institute of Chartered Accountants in England and Wales (ICAEW).
A report reveals that half of accountants feel that errors occur in spreadsheets with a frequency that is “very high” or “fairly high”. Three quarters of those surveyed labelled spreadsheet errors as a major potential risk for businesses.
The report found that:
- 54% of errors come from not being able to track who has made changes
- 42% come from too many people having access
- 39% of mistakes are the result of a lack of training.
Two thirds of respondents believe that it is likely that a large UK company will suffer financial damage as a result of spreadsheet failures in the next 2 years.
Richard Anning, head of ICAEW’s IT faculty, said:
“We know flawed spreadsheet design and lack of formalised training can lead to significant costs. Errors, however, often remain unspotted which means the damage is difficult to recognise or measure.”
Minimising spreadsheet risk
There are a few simple steps that a company can take to reduce the risk of spreadsheet failure:
- make sure you have a system of peer review in place
- ensure people have the right training
- limit the amount of people who can actually make changes to a spreadsheet, even if the number of people using it is higher.
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