The research done to date in spreadsheet development presents a very disturbing picture. Every study that has attempted to measure errors, without exception, has found them at rates that would be unacceptable in any organization.
With such high cell error rates, most large spreadsheets will have multiple errors, and even relatively small ‘scratch pad’ spreadsheets will have a significant probability of error.
Professor Panko has formally studied the prevalence and cause of spreadsheet errors. Many errors go unnoticed or the firms can keep their mistakes hidden away, but occasionaly the errors are revealed and make the newspaper headlines.
Panko’s research found that accross 7 studies, 88% of spreadsheets contained errors.
- Coopers & Lybrand found 91% of spreadsheets with over 150 rows produced results that were off by over 5%.
- KPMG found 91% of spreadsheets had serious errors
- A Price-Waterhouse consultant audited 4 spreadsheets and found 128 errors
- Mercer Finance & Risk consulting audited 30 most significant spreadsheets, all had errors
- 64% of spreadsheets audited by Powell, Lawson, and Baker had errors over $100K, 6 errors were over $10M and 1 over $100M
More published examples of spreadsheet nightmares caused by simple spreadsheet errors…
- Spreadsheet error forces purchase of toxic Lehman contracts
- Fannie Mae $1.16Bn accounting error due to spreadsheet
- AstraZeneca accidentally disclose confidential data
- Academic research reveals prevalence of spreadsheet errors