For three decades, Excel has been the standard for report generation and data analysis. However, it’s not a one-size-fits-all solution and a simple error can cause disastrous results.
It’s been reported that almost 9 out of 10 spreadsheets carry errors. Here are 5 of the most catastrophic:
The easiest error to make is via copy-and-paste as JPMorgan Chase discovered in 2012, to the cost of $6.5 billion. A finance employee copied and pasted the wrong information between spreadsheets. The formulae weren’t adjusted within the copied cells, resulting in a miscalculation of their synthetic credit portfolio. It became the largest financial loss they had suffered.
Too many zeros
Another common and often costly error comes from not counting those zeros carefully enough. Back in 2005, an employee of Eastman Kodak (or Kodak as it was then) added a few zeros too many to the employment termination benefits and pension data of another employee. It inflated severance pay figures by $11 million. News of the error caused the company’s stock to fall sharply, at a time when Kodak was already losing money.
Fannie Mae, a US Government sponsored enterprise that guarantees mortgages, made an error in its financials to the tune of $1.136 billion. The discrepancy was described as being due to honest mistakes made in a spreadsheet.
Missing minus sign
In 1995, Fidelity Investments had to cancel a share dividend they’d promised to pay on their Magellan fund, due to their dividend estimates being out by $2.6 billion. The fund had a net capital loss of $1.3 billion, but while transferring records onto an Excel spreadsheet, a tax accountant had missed off the minus sign, making it look like a net capital gain.
A missed cell in the formula
Emerson Electric ended up with a discrepancy of $3.7 million, due to the contents of a single cell being excluded from a formula that calculated total expenses.
Simple errors can lead to catastrophic results if work is not checked carefully. Even PDF to Excel conversions using tools such as https://pdftables.com/convert-pdf-to-excel require some kind of manipulation afterwards and a second pair of eyes to check for errors.
To avoid becoming the subject of the next Excel horror story, always make sure you get a colleague to check your work first.