Nearly three-quarters (72%) of accountants have rated “spreadsheet risk” as a major business risk, with many errors remaining unspotted, meaning the damage is difficult to quantify, according to new research.
Over half (58%) of the 100+ accountants surveyed by tech firm ClusterSeven claimed the frequency of errors found on spreadsheets was either ‘fairly high’ or ‘very high’.
What’s more, two-thirds of respondents believe a large UK firm will suffer major financial and/or reputational loss in the next two years due to a spreadsheet-based failure.
In addition, 90% claimed they thought that regulators and auditors would begin to take a much closer interest in spreadsheet and data management over the same period.
Richard Anning, head of the IT faculty at the Institute of Chartered Accountants in England and Wales (ICAEW), claimed that flawed spreadsheet design and a lack of formalized training can increase costs significantly for organizations.
“Errors, however, often remain unspotted which means the damage is difficult to recognize or measure,” he added in a statement. “With nine out of 10 respondents agreeing finance professionals will increasingly rely on spreadsheets and data management, this is a major concern for both businesses and UK economy.”
According to the research, the number-one reason for spreadsheet errors is that there’s no system in place for checking or tracking who has made changes and when (54%).
The second most popular reason was too many employees having access to spreadsheets (42%), followed by insufficient training or understanding of how to use them (39%).
Only half of respondents claimed they could fully understand historical changes to formulas, data and macros.
The study calls to mind an incident suffered by JPMorgan a couple of years ago. The US banking giant lost an estimated $6bn caused in part by avoidable errors on Microsoft Excel spreadsheets which were used to calculate risk.